Nigeria is the largest economy in Africa

Nigeria is the largest economy in Africa, with a Gross Domestic Product greater than USD 500 billion. We grew steadily at over 7 per cent per annum between 2005 and 2014, but this growth has been slower in 2015. This growth was driven primarily by the non-oil sectors, such as financial services, telecommunications, entertainment, etc. Foreign direct investment (FDI) inflows have been strong, averaging USD2 billion per quarter since 2013, with over 70 per cent of this in the non-oil sectors. Nigeria’s economy is actually more diversified than it seems, with the oil sector contributing only about 14 per cent to GDP. Nevertheless, we ought to be doing more to diversify with the significant natural and human resources with which Nigeria is blessed. There is no doubt that oil has contributed substantially to Nigeria’s revenue since its discovery in 1956 and more especially, since 1970 when its price was on the upward trend. Yet, oil receipts and their management have challenged governance to the core over time in Nigeria. Deeper economic diversification is an urgent necessity to undertake structural transformation, buffer the domestic economy from externally transmitted shocks and accelerate growth accompanied by job creation. The task ahead of further diversification of the economy is enormous. We do not take it for granted. It will not happen quickly or easily and Nigeria shall be strategic about diversification. We are however encouraged by the strides that have been made in some sectors already. I will use three sectors or categories as examples:

First, the telecommunications sector. We have seen an increase in the number of telephone lines available in the country from about four 400,000 lines in 2001 to over 140,000,000 lines currently, because of the deregulation policy of the government. According to the Nigerian Communications Commission, the operators in the sector have created over one million – direct and indirect jobs and helped to attract over $USD25 billion. The success of the telecommunication sector, especially mobile telephony, has helped develop other ancillary sectors like e-commerce, entertainment (what we call Nollywood), among others. I am very pleased to see that the World Trade Organisation has recognised the standards being set by the Nigerian entertainment industry, Nollywood, and has reflected it on the Programme Cover for this Round Table.
Second, the financial services sector. We have seen the strong growth of the financial services sector since the liberalisation exercise that started in the 1990s. The exercise continued in 2005, with the guidance of the financial regulatory body, Central Bank of Nigeria (CBN). There were market-led mergers and acquisitions that reduced the number of banks from 89 to 24. The banks came out of the exercise bigger, with better corporate governance and have now started to operate across Africa, financing larger transactions. The market-led business combinations served as a catalyst for the stock exchange’s growth, which has grown to a market capitalisation of over USD$50 billion.
Third, the cement sector. In spite of the abundant supply of limestone, the major constituent for making cement, Nigeria primarily imported the product for our building needs. The government however implemented a backward integration agenda that has now translated the country from being a net importer to a net exporter of the product.
The success that has been recorded in growing the three sectors that I have used as examples have some basic underlying elements in common – the right enabling environment including appropriate regulation; policy consistency; and fostering competition among the industry operators. We will build on these elements to develop sectors where Nigeria has comparative advantage to foster more diversification of the economy. We realise that the task of further diversification of the economy is herculean, but Nigeria’s short and medium term prospects remain favourable (driven by strong fundamental advantages). Four of the strongest advantages are – strong demographics: a large domestic market and labour force; abundant natural resources and favourable climate; a developing financial sector with strong management teams (and ability to partner with international banks to fund businesses); and growing democratic institutions with the political will to build the foundation for the future.
Our plan for continuing to foster the diversification of the economy is predicated on three major underlying elements – implementing our industrialisation plan, improving the ease of doing business, and building out our infrastructure – both hard and soft infrastructure.
The Nigeria Industrial Revolution Plan (NIRP) launched in 2012 under the auspices of the Ministry of Industry, Trade and Investment provides a strategic and integrated roadmap towards industrialisation. NIRP provides an actionable plan across three sectors: agro-allied, solid minerals and oil and gas-related industries, where Nigeria’s comparative and competitive advantage are apparent. We will build on this plan, reviewing and updating, based on current realities while focused on implementing pragmatically and adapting as necessary as we forge ahead.
We will work assiduously to improve the operating environment for small, medium and large corporate businesses to thrive. This will require inter-ministerial coordination and eliminating the bottlenecks that impede doing business in Nigeria. I am delighted that this is a high priority for the current Nigerian government, with a strong commitment to bring change on all the needed levels. We are keen to remove the inhibitions and obstacles to investment in Nigeria. Trade and investment policies, laws and incentives are being reviewed, to bring them in line with global best practices. We will be leveraging technology to improve the speed and efficiency of business procedures, and to ensure transparency.
Modern and efficient infrastructure is key to promoting diversification and economic growth. Industries require a steady supply of electricity to function optimally, just as agricultural and mining products require robust, efficient and cost-effective transport networks to reach markets. The government is creating an ambitious national infrastructure fund, to complement the existing infrastructure component of the Sovereign Wealth Fund. This is consistent with our national infrastructure master-plan, aimed at catalysing economic activity.
Excerpts from Dr. Enelamah, Minister of Industry, Trade and Investment’s speech at the 4TH WTO China Accession Roundtable, Nairobi, Kenya

Source, Thisday, 28th December, 2015