Nigeria: Coronavirus Pandemic, Oil Price War Have Reinforced Resolve to Diversify Economy, Says Govt

16 March 2020

The federal government Monday declared that unfolding events of the past few months, the coronavirus pandemic and the oil price war have further reinforced its resolve to diversify the national economy.

The Minister of Finance, Budget and National Planning, Mrs. Zainab Shamsuna Ahmed, who gave the indication, observed that one of the ways of doing so is to develop a vibrant commodities trading ecosystem.

Ahmed spoke in Abuja at the opening of a two-day International Conference on the Nigerian Commodities Market (ICNM 2020), organised by the Securities and Exchange Commission (SEC), where the Vice-President, Prof. Yemi Osinbajo, also noted that the conference underscored the readiness of the government and other stakeholders to partner in order to explore opportunities and take the nation's commodities market to the next level.

In her address at the conference with the theme, "Commodities Trading Ecosystem: Key to Diversifying the Nigerian Economy," the minister recalled that several national plans, programmes and projects have been directed at diversifying the production and revenue structures of the economy.

According to her, while some level of achievements have been recorded, more still needed to be done to ensure that production and exports base become more robust, less vulnerable to external shocks and provide more opportunities to the teeming population.

She stated: "Interestingly, the unfolding events of the past few months, the coronavirus pandemic and the oil price war have further reinforced our resolve to diversify our national economy," adding that the country is well endowed with various commodities, comprising agriculture, energy and metal resources.

"For instance, the agriculture sector employs about 40% of our labour force and accounted for 22% of the country's GDP at the end of 2019. In the last five years, the sector has recorded positive growth rates, higher than that of the entire economy, and even positive in 2016 when the entire economy went into recession.

"The mining and quarrying sector, dominated by oil and gas, is also a major component of our output, accounting for 9% of GDP. The sector is responsible for the bulk of Nigeria's foreign exchange and government earnings.

"A further examination shows that commodity-dependent activities dominate our manufacturing sector. Specifically, production of food, beverage, tobacco, textile and wood products accounted for about 7.5% of our GDP, while trading activities accounted for 15.5% with many of what is traded being agriculture-based."

The minister noted that when all these endowments and activities are further expanded and formalised, greater prosperity for everyone would be guaranteed.

In a keynote address, the Vice-President Osinbajo, who was represented by the Minister of State, Industry, Trade and Investment, Ambassador Maryam Katagum, pointed out that one of the crucial initiatives of the 10-year Capital Market Master Plan (2015 - 2025) is the need to develop a thriving commodities trading ecosystem.

This, he stated, was designed as a strategy for improving the competitiveness and attractiveness of the Nigerian capital market and to improve the market's contribution to the national economy, adding that the conference is a major step towards achieving this objective.

Osinbajo commended SEC and its partners for organising the conference, which he described as a major initiative in the history of the nation's commodities market.

He said: "This conference is therefore well suited for this time as we identify and map out strategies for developing our commodities' markets as a major driver of our economic diversification efforts.

"Our country is endowed with favourable atmospheric conditions for farming as well as abundant natural resources and a teeming youthful population. Hence, the efficient use of these resources will benefit both the public and private sectors of our economy.

"With a vibrant commodities market, jobs will be created, poverty will reduce and the macroeconomic situation of the country will improve. Definitely, every responsible government is interested in seeing these improvements and this is at the heart of our administration's policies and project implementation."

In the realisation of these, Osinbajo disclosed that the federal government had put many initiatives in place to develop the agriculture and solid mineral sectors, adding that it is working towards establishing agricultural industrial parks (AIPs) across the six-geopolitical zones, with the sole aim of creating jobs, ensuring food sufficiency and harnessing the comparative advantage in each geopolitical zone.

In her welcome address, the SEC acting Director General, Ms. Mary Uduk, pointed out that one of the key initiatives of the Capital Market Master Plan (2015-2025) is the development of a thriving commodities trading ecosystem as part of the capital market's contribution to the national economy.

While it is clear that Nigeria is well endowed with agricultural, metals and energy commodities, she regretted that potential in these areas are unrealised.

"The good news however is that the capital market can be used as an avenue to unlock these potentials and diversify the nation's economy, while providing jobs, creating values and contributing to governments' revenue.

"We believe that if we can develop and institutionalise a vibrant commodities trading ecosystem in Nigeria, we can substantially address problems such as lack of storage, poor pricing, non-standardisation, as well as low foreign exchange earnings affecting our agriculture and other commodities sub-sectors," Uduk said, adding that the conference was therefore a step in this direction, following from the recommendations of the Commodities Ecosystem Roadmap Implementation Committee set up by the Commission in 2017.

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