By Amechi Ogbonna and Maduka Nweke
Abraham Nwankwo, a renowned economist is the Director General of the Debt Management Office (DMO).
He spoke recently in Lagos on the need for Nigerians to be optimistic about the country’s future, assuring that the crash in oil price won’t be the end of the Nigerian economy. According to him, Nigeria has no business importing food and protein because God has given us the potential to be self sufficient in those resources.
“But each of us should have a minimum of one hen in your backyard somewhere. We don’t need to import poultry, we don’t need to, whether imported poultry or egg into the country. Any way, the bottomline is that we can become self sufficient in food. That means, that in the next five years maximum, we will be talking of saving enormous foreign exchange from agricultural produce alone and that means our local currency will be stronger. It means the accretion to our reserve will be more robust cumulatively and the reserve will be growing.” Nwankwo also commented on several other national economic issues as Nigerians mark one year anniversary of President Muhammadu Buhari’s administration. Excerpts:
Nigeria’s economic challenges
A lot of the peoples’ perception about the Nigerian economy depends on what journalists do and say particularly financial correspondents. So much also depends on what they tell the Nigerian people, and what they tell the international community. Therefore we consider it important that at anytime we have the opportunity we will be able to reassure ourselves that first, it is our responsibility to continue working hard from our various platforms to make sure the resilience our economy has exhibited is sustained until we achieve the turnaround that will come from diversification. That is very important. The second is that, we need to also appreciate that some of the challenges we face are also opportunities and that at this point in time in the history of our country, what will make the big difference is the response of all of us individually and collectively and our response to these challenges that are manifesting. The way we response is the critical factor that would determine what happens next. For every problem, we could respond in the right way or the wrong way. And so if you like, the major reason for trying to hold interactions is to remind ourselves that individually and collectively, we need to respond to these challenges positively by using the challenges as an opportunity to build our economy and society. The needed fillip, the needed push and stimulus to achieve a high level equilibrium, if you like is within our control.
Response to oil price crash
Now, in respect to oil prices let me go straight to an issue to say that the dominant theme since May 2014 which is about two and a half years ago, has been the collapse of oil prices. And for many people, and for many interest groups, it becomes a depressing factor. But we need to change from that approach, and response to that development positively for a couple of reasons. First, we have to remind ourselves that in the first instance, our economy was not supposed to be dependent on oil. In the first instance, our economy was not supposed to be dependent on oil. Yes, historically, oil revenues have dominated our foreign exchange earnings with 90 per cent and above. Oil revenues have dominated our public revenues with 70 per cent and above. But we also have to remind ourselves that at least over the past five or more years, oil has not contributed more than 20 per cent of our gross domestic products. So the pillars that hold our economy in the real sense of it are really not oil because oil revenue has always been less than 20 per cent of our gross domestic product. And those other sectors that contribute for about 80 per cent are still there for us. You are talking about agriculture, you are talking about commerce, you are talking about various services, manufacturing and emerging sectors like entertainment, music, Nollywood and all that. Of course, you are talking about ICT which is open to us to take advantage of particularly given the very strong base that has been established with the privatisation of the communication sector.
So it is important for us to always remind ourselves that, the fact that oil has depressed does not mean that we all should be depressed in our aspirations, in our motivations to continue working hard to make sure the Nigerian economy attains the level of prominence, we all know it has the potential to attain. So, these circumstances, developments and challenges as they are, should be taken as another aspect of what we are experiencing on the journey we started many years back. In our journey to have an economy that is among the topmost in the world by the year 2020, which we started eighteen years ago, and so, let’s take this current development, and current challenges as just one of the things we are seeing on the way to that journey. But it should in no way abridge our movement towards that destination. It should in no way. So we should sustain that momentum which we have defined for ourselves, and for our country that we want to be among the topmost economies, among the top ten (10), among the top (20) twenty possibly in the next 10 years. We should continue with that spirit. I mean, when you are running a race and you are one-quarter of the way and something trips you and you fall, the challenge is to get up and continue so that you reach the touch line in good time. So that is one way to look at it.
Our endowments
The second way to look at it of course, is to look at the enormous potentials. Even assuming that the oil was rightly or appropriately the base for our economic growth and prosperity which it is not, it was not really the appropriate base, it was the inappropriate base and all we wanted to remove that inappropriate and replace it. But either way, the point is that luckily for us, we still have those other options, all those other alternatives, all those other opportunities in agriculture, you can go and look up the statistics, certainly we have not been able yet to exploit as much as 25 per cent of the opportunities in agriculture. We have not. And in agriculture, we have the whole world of opportunities not only to ensure internal food security but also for us to have the capacity to export agro-based products particularly in processed form. Imagine the variety of crops, the variety of cash crops, of tree crops, of food crops, from the mangrove swamps through the forest, the tedious forests, guinean savannah, high savannah to the desert. These show all the various crops, all the grains all the various roots, all the various legumes that could be groomed in these varieties of ecology. We have the advantage and they are in thousands. You are aware they are in thousands and all these belong to one single economy called Nigeria because of the territory God has given to us that captures all these varieties. Now, this is agriculture alone. If you effectively exploit agriculture, which is the simplest story to show that we have no problems. It is agriculture because if and as we are making progress, in agriculture, what are the result. First, we need to note that the major consumer of our foreign exchange are food items and agro-based raw materials, talking of sugar, you are talking of wheat, you are talking of rice, you are talking of fish, you are talking of poultry, these are things that make enormous demand on our foreign exchange. And yet these are things we have the capacity to produce in such volumes and values that we don’t need to import them at all. Then, more importantly, we have the capacity to export them to other countries.
How government policies can boost agric sector
We have the double advantage waiting for us in agriculture that if we continue with the programme government has put in place to make agriculture sustainable, I am sure if you look at what is happening in agriculture, look at the policies, the pronouncements of the Minister of Agriculture based on the vision of Mr. President, you see where we are moving to. You should have no doubt in your mind that in the next three to five years, we will be completely be self-sufficient in rice, for example, and to a large extent self-sufficient in wheat and poultry. I also challenge you financial correspondents to go and look at the volume and value of poultry we import every year yet each one of us can produce chickens at our backyard. In those days when we were growing up in the village, elderly persons who like small boys would go to the market and buy a hen and give to their mothers to keep for you and it will be laying eggs. If we count, how many of us here have a hen? Two out of about 2,000. But each of us should have a minimum of one hen in your backyard somewhere. We don’t need to import poultry, we don’t need to, whether imported poultry or egg into the country. Any way, the bottomline is that we can become self sufficient in food. That means, that in the next five years maximum we will be talking of saving enormous foreign exchange from agricultural produce alone and that means our local currency will be stronger. It means the accretion to reserve will be more robust cumulatively and the reserve will be growing. That is the essence of a strong economy. So we need not be bothering about the symptoms, because they are temporary symptoms and focus on the real issue which will help us to overcome these challenges. That is the point I am trying to make. Now, we are talking of poultry as I have given you example, remember that apart from the fact that we are saving foreign exchange, we can also export and then earn foreign exchange. So from both sides, agriculture offers us solutions to the current challenges. That is the point I am making in a simple O level economic terms. You don’t need to go to high level economics because O level economics shows that, we can produce what we need.
Stop rice import
Let’s stop importing rice and beans and poultry so we save our foreign exchange rather we produce so much that we can export that we even earn foreign exchange. So both are gains. Now the same thing can repeat in manufacturing. As you know, we have a lot of idle capacity in manufacturing and luckily they are in Ikeja around the Ogba area and you see factories that are operating at near zero or fractional capacity.