An economic analyst and Head of Banking and Finance Department at the Nasarawa State University, Dr. Uche Uwaleke, has said that there is a need for Nigeria to broaden its economic team, by including other sectors of the economy.
Speaking with financial journalists at the just concluded seminar for Finance Correspondents’ Association of Nigeria, organised by the Central Bank of Nigeria, Uwaleke said although, the country had a good economic team, it could be made better, by including labour and the public sector.
The university don explained that the Nigerian economy was importdependent, with very little non-oil exports, adding that at independence in 1960, agriculture was the mainstay of the economy, with all the regions exporting one commodity or the other.
This narrative, he said, changed, following the discovery of oil in commercial quantities in the early 1970s and the emergence of the oil industry as the main driver of growth.
Since then, the country has relied heavily on crude oil and gas exports, with other sectors trailing far behind. He noted that the GDP rebasing exercise, which was carried out in 2014, changed significantly the structure of the Nigerian economy, with the oil and gas sector’s contribution dropping from 32.4 per cent before rebasing to 14.4 per cent.
“The size of the agriculture sector also dropped from 33 per cent to 22 per cent, while the services sector’s contribution increased from 29 per cent to 52 per cent of the GDP.
Although the size of the oil sector in the country’s economy is on the decline, it has continued to account for a disproportionate share of government’s revenue,” Uwaleke said.
However, data from the National Bureau of Statistics showed that crude oil accounts for about 90 per cent of the country’s foreign exchange earnings.
The major source of forex supply in the Nigerian foreign exchange market is the CBN, as the recipient of proceeds from crude oil exports, while the demand for forex comes chiefly from imports of visible items.
He said, during the last few years, the supply and demand dynamics have changed significantly: while supply has been shrinking on account of the collapse in oil revenue; demand has been on the rise, as a result of increase in fuel imports, education and medical tourism, among others, leading to reserves depletion.
Uwaleke said, “Nigeria’s external reserves derive mainly from the proceeds of crude oil sales. Other sources of external reserves in Nigeria include: diaspora remittances, foreign direct investments and portfolio investments.
“Data from the CBN showed that in recent time, the country witnessed a significant drop in external reserves from US$39.07 billion as at July, 2014 to US$ 26.7 billion as at January 2017.
The drop in reserves has been attributed to unfavourable developments in the international oil market, including plummeting prices, production declines due to insecurity in the oil producing region and high import bills,” he said.
