BY KENNETH EZE
Economic diversification has been identified as one pillar on which Nigeria can rest to save itself from lingering sociopolitical crisis.
Former Deputy Governor of the Central Bank of Nigeria, Prof. Kingsley Moghalu, made the assertion in a keynote address at the 2021 Annual Conference of the Nigerian Economics Students Association, University of Port Harcourt.
He blamed the fact that the country was already borrowing externally, at frightening levels, on what he described as the inability of the Federal Government to diversify the economy.
“Economic diversification is therefore not an option, but a matter of existential importance,” he said.
In the keynote address, titled, ‘Economic Diversification and the Wealth of Nations: Lessons and the Path Forward for Nigeria,’ Moghalu explained, “Economic diversification is the process of shifting economies away from a reliance on one or a few products, such as natural resources or agricultural products, toward the production and export of a wider range of value-added products manufactured and traded competitively across the world.”
He insisted that “economic diversification is a fundamental requirement for real development,” adding that “the structural transformation of a national economy cannot be achieved without a true diversification of its value-added production.”
He identified the three main types of national economic diversification to include GDP diversification, trade export diversification and fiscal diversification.
Moghalu, who has declared his intention to run for the 2023 Presidency in Nigeria, explained that, to diversify a national economy, a country must identify its strengths in products, services or both, then build on it for the global market through strategy backed knowledge development that would support world-beating products and services that can attract foreign exchange to the domestic economy from the global marketplace.
Often, he said, this would entail a shift from the natural resources available to a country, or the processing and packaging (manufacturing) into what the world needs, in a manner that would require skills peculiar to and abundant in that country.
He pointed out that Nigeria selling agricultural commodities to other countries did not amount to any form of diversification.
Moghalu said that GDP diversification “has happened to a significant extent in Nigeria, with the oil and gas sector having shrunk as a percentage of the GDP from about 35 per cent to 10 per cent over the past three decades.”
What Nigeria should aim to do and do quickly, he said, was trade export diversification which would see the national economy move into economic complexity.
“Economic complexity is the ability of an economic system to produce and export complex products with unique knowledge and insight, and competitively, into international markets,” he said.
