URGENT NEED TO ADOPT VALUE-ADDITION AND DOMESTICATION STRATEGIES TO ENSURE REAL AND SUSTAINABLE ECONOMIC GROWTH- Sponsors: Sen. Gershom Bassey.
NOTES that Nigeria is Africa’s largest economy with an estimated nominal GDP of $448 billion, as of 2019. However, Nigeria’s dependence on oil exports has hindered product diversification and export growth in the nation’s economic activities. This has consequently constrained the nation’s revenue-generating sources as well as stunted economic development.
WORRIED that Nigeria has not successfully implemented a long-term vertical and horizontal diversification strategy to propel it away from its commodity- dependent economy. Dependence on oil revenues, which accounts for over 90% of total foreign exchange earnings, has left our economy extremely susceptible to volatile commodity price fluctuations and suffering economic and human capital development.
The international poverty line as calculated by the World Bank is $1.90 per day. However, over 83 million Nigerians live on less than approximately $1 a day, and the drastic and unforgiving socio-economic impact of Covid-19 has compounded the situation.
FURTHER WORRIED that an additional 10 million citizens may be forced into a life below the poverty line by 2022, constraining the government’s goal to lift 100 million Nigerians out of poverty by 2030. Rapidly developing countries like Guyana, Ethiopia and Rwanda had an average GDP growth rate of 8.95, 8.88 and 7.06 respectively, between 2011-2020. Yet, Nigeria is projected to struggle to achieve a growth rate of 2% per annum between now and 2050.
FURTHER NOTES that recent agitations across the nation have brought the deep- rooted dissatisfaction and suffering of many Nigerians into focus. It is imperative, now more than ever, that the Nigerian government seeks out an effective approach to mitigate the adverse effect of Nigeria’s commodity- dependence. Through a comprehensive and realistic product diversification strategy, Nigeria may secure sustainable revenue generation, boost economic recovery, reduce poverty rates, and create job opportunities for Nigerians. Producing essential products and adding value to existing commodity-level sectors such as oil and gas, cocoa, rubber, and groundnut, for both internal consumption and exports, is vital in increasing the global market prices and value of these products.
AWARE that the economic revival of Nigeria’s economy can also be facilitated by relevant fiscal and industry reforms, through legislation and policies. For example, the immediate enactment of a comprehensive, well considered Petroleum Industry Bill with the relevant institutions’ and stakeholders’ ‘buy-in,’ coupled with the proper implementation of our local content laws, could finally ensure diversification that harnesses the full value chain potential of the oil and gas industry. This is applicable to other crucial industries such as energy, agriculture, mining, and technology.
FURTHER AWARE that horizontal diversification alone may not effectively advance Nigeria’s economy away from commodity-dependency. The long-term implementation of fiscal policies and developmental strategies that provide incentives for product diversification and value-addition, as well as support the domestication of the supply value chain of all industries, beyond exporting raw materials, would boost economic expansion, national GDP and the standard of living for Nigerians.
OBSERVES that Malaysia, a previous mono-economy, has successfully transitioned from an economy that was initially commodity-dependent, to a leading exporter of high-value electrical appliances, parts, and components. Due to business-friendly government policies and several Malaysian economic development plans, the country’s trade-to-GDP ratio has remained consistently high, averaging over 130% since 2010. This shows the significance of international trade in the country’s economy, measured as a share of its GDP and has contributed to Malaysia’s consistent GDP per capita growth, from $9,040 in 2010 to $11,415 in 2019.
DISTURBED that in contrast, Nigeria’s GDP per capita growth has remained low, fluctuating between $2900 and $3,250 annually, from 2010 to 2019. It illustrates the poor growth rate of income per head and economic development in Nigeria. Therefore, to truly boost the economy, Nigeria must focus on strategic diversification and domestication of high-value activities within the sectors that drive economic growth.
CERTAIN that the Nigerian government should re-evaluate its laws and policies to ensure that government articulates realistic, innovative and sustainable diversification strategies, through the provision of attractive fiscal incentives, improved infrastructure and sound education. This will seek to ensure that international quality and technical minimum standards are met, to attract foreign investment and participation. It will also provide an enabling business environment and access to high-value local content, to leverage our highly entrepreneurial, increasingly tech-savvy and rapidly growing young population.
CONVINCED that the Executive, Legislature and Judiciary should commit to short-, mid- and long-term evidence-based economic expansion in existing and emerging sectors, with value-addition at the heart of legislation and policy implementation. With that in mind, fiscal and developmental policies as well as the adoption of technology and innovation across systems, should be prioritized to propel the nation towards the fourth industrial revolution and true economic growth.
ACCORDINGLY, THIS SENATE RESOLVES TO:
- Mandate the Senate Committees on National Planning and Trade and Investment to:
a. conduct an urgent review of previous Economic Plans to ascertain why these plans, policies and legislation have fallen short of ensuring real and sustained economic growth;
b. engage relevant industry experts to investigate the current challenges to optimum production and value addition in the relevant sectors; and
c. to articulate a framework for an evidence-based and implementable roadmap to achieve value-added diversification and sustainable economic growth through future economic plans and subsequent budgetary considerations.
I SO MOVE.