CBN advocates economic diversification for sustainable growth

*The Central Bank of Nigeria stresses the overbearing impact of the oil sector on the economy exposes the West African country to external shocks whenever there is a change in price in the global oil market

Isola Moses | ConsumerConnect

The Central Bank of Nigeria (CBN) has said there is an urgent need to diversify the Nigerian economy to ensure growth.

ConsumerConnect reports Dr. Ozoemena Nnaji,  Director of Trade and Exchange Department at CBN, made the call at the 33rd Seminar for Finance Correspondents and Business Editors, in Abuja, FCT.

Dr. Nnaji noted that the status of Nigeria as a mono-product economy has been detrimental to economic growth in the West African country.

The CBN Director of Trade and Exchange Department described a mono-product economy as one that depends on a single product or resource for economic growth and development.

The concept, Nnaji said, could further be referred to a case where a country depended on a single product for sales or exports for for 70 percent of its budget funding.

She said that a mono-product economy is unstable.

“An increase or decrease in the world price of the product will affect the budget of the economy.

“It may witness a high percentage of unemployment; it is import-dependent and cannot stand on its own.

“It weakens the foreign exchange base of the country’s economy,” Nnaji said.

The Director further said that such an economy weakend local production of goods that were imported into the country.

“In addition to importing finished goods, a country may also import inflation and other economic effects,” she noted.

According to her, oil and gas accounted for 90 percent of export income and 85 percent of government revenue in the first quarter of 2022.

Nnaji stressed this development makes Nigeria a mono-product economy, owing to its dependence on oil and gas.

A more committed engagement in agriculture would grow the economy faster, she said.

The CBN chief also stated: “Nigeria is a hugely agrarian economy which vast arable land, and with a large portion of the population into subsistence agriculture.

“Only less than 40 percent of the vast arable land is cultivated.”

She as well said that the overbearing impact of the oil sector on the nation’s economy exposed the country to external shocks whenever there is change in price.

Nnaji added: “To insulate the Nigerian economy from the shocks and FX shortages, there is need to develop new strategies.

“It should be aimed at earning more stable and sustainable inflows of FX through diversification of the non-oil export sector.”

According to her, diversification will guarantee sectoral dependence and balance in the economy.

She emphasised the need for more sources of export products to reduce importation of goods and services that can be produced locally makes diversification imperative.

Nnaji said: “Promotion of international trade that will lead to balance of payment position; the need for a dynamic economy capable of absorbing shocks while maintaining full employment.”

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