In yesterday's piece titled "Falling Oil Prices and What it Means For the Average Nigerian" I talked about the reasons behind the persistent drop in global crude oil prices. Thankfully, it seems that the Federal Government is already conscious of the fact that the overreliance of the Nigerian economy on crude oil could spell doom for our economy and the government already taking commendable steps towards diversifying the revenue base of the Nigerian economy.
The Minister of Industry, Trade and Investment, Olusegun Aganga has expressed the Federal Government's decision to list "13 National Strategic Export Products" that will augment revenue from crude oil sales. Aganga made this revelation in Abuja when he visited the Chief Executive, Nigeria Export Promotion Council (NEPC), Olusegun Awolowo.
An interesting point to note about this Federal government initiative is that it goes beyond the usual rhetoric of "we need to go back to agriculture". The 13 national strategic export products listed by the Federal Government cuts across agriculture, industrial and mineral resources sectors of the economy. The listed products include:
Agro Industrial: Palm oil, Cocoa, Cashew, Sugar and Rice
Mining Related: Cement, Iron Ore/metals
Auto parts/Cars, Aluminum
Oil and Gas Industrial Products: Petroleum Products, Fertilizer/Urea, Petrochemical and Methanol
Importance for Diversifying the Nigerian Economy
Diversification Ensures Economic Stability
The first importance of diversifying the economy is evident in the current state of the nation's economy as the Naira continues a free fall just because oil prices are falling. Falling crude oil prices means that the nation generates a lower income from crude oil sales; hence, technically, we need to reduce our expenses or borrow money in order to stay financially afloat as a nation.
In essence, the diversification of the Nigerian economy will ensure that not all our eggs are in a single basket and we can be protected from potential stormy weather when one export product starts to lose its value. Thus, a prior diversification of the Nigerian economy would have prevented the plummet of the Naira and ensure that the government is able to meet its financial obligations without stress.
Diversification Aids Infrastructural Development
Another importance of diversification is that it would aid infrastructural development in different areas of the country and across different sectors of the economy. For instance, the agricultural and industrial sectors will receive a new lease of life as the government remains committed to developing an agricultural hub that can meet the local demand and still have surplus for exports.
Diversification Generates Employment Opportunities
Another importance of diversification is that it would aid the country in generating employment opportunities by direct and indirect job creation. For one, all the 13 products that are to be exported will be produced in some places and adequate labor will be needed for the smooth operation of those industries. In addition, some ancillary business operations will arise around those industries and those businesses will create additional jobs.