Drop In Global Price Of Crude Oil, A Major Threat - Osinbajo
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Drop In Global Price Of Crude Oil, A Major Threat - Osinbajo

David Ugbabe

The Vice President of Nigeria, Prof. Yemi Osinbajo, has stated that the recent drop in the global price of crude oil constitutes a major threat to achieving the planned government expenditure. He added that there is an urgent need for the government to develop other channels of generating revenue.

The vice president made this known in Abuja, during the international conference on Nigeria’s Commodities Market by the Securities and Exchange Commission (SEC).

He said, “As we are all aware, Nigeria is working on diversifying its economy as well as its revenue sources. “In realization of these, the Federal Government has put many initiatives in place to develop the agriculture and solid mineral sectors."

He also said, “Broadly, the diversification of the economy through these sectors is among the major components of the Economic Recovery and Growth Plan (ERGP) of this administration. Achieving self-sufficiency in food production and building a globally competitive economy through investment in infrastructure are therefore considered pertinent in the EGRP."

He acknowledged that the value chain of the government, an initiative that helps to equip farmers with improved rice seedlings, fertilizers, and borrowing facilities for the production of Nigerian rice, is yielding positive results so also are related initiatives in the production and processing of other crops.

He also added that the government is working towards establishing Agricultural Industrial Parks (AIPs) across our six-geopolitical zones, with the sole aim of creating jobs, ensuring food sufficiency and harnessing the comparative advantage in each geopolitical zone.

Meanwhile, the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, in her remark, revealed that the coronavirus pandemic and the oil price war, have further reinforced the Federal Government's resolve to diversify our national economy.

She said, “Several national plans, programmes and projects have been directed at diversifying the production and revenue structures of our economy. While some level of achievements have been recorded in this area, more still needs to be done to ensure that our production and exports base become more robust, less vulnerable to external shocks and provide more opportunities to our teeming population."

She explained citing the agricultural sector, saying: “For instance, the agriculture sector employs about 40 per cent of our labour force and accounted for 22 per cent of the country’s Gross Domestic Product (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."

Having carried out further examination, she noted that commodity-dependent activities dominate our manufacturing sector. Specifically, the production of food, beverages, tobacco, textile, and wood products accounted for about 7.5 per cent of our GDP. While trading activities accounted for 15.5 per cent with many of what is traded being agriculture-based.

“Imagine when all these endowments and activities are further expanded and formalized. There will definitely be greater prosperity for everyone. I believe this Conference will contribute to realizing this vision,” she added.

Also, the Acting Director-General of the SEC, Ms Mary Uduk, said, “While it is clear that Nigeria is well endowed with agricultural, metals and energy commodities, our potentials in these areas are unrealised.

Ms Uduk added that “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-standardization, as well as low foreign exchange earnings affecting our agriculture and other commodities sub-sectors”.

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