PRESIDENT of the African Development Bank Akinwunmi Adesina has asked the Federal Government to end reliance on oil resources as its key economic mainstay.
The continental bank chief, who gave the directive at the mid-term retreat for ministers, said government was running out of time to kick-start economic diversification with non-oil revenues.
Nigerian government often pegs its budget benchmark on international oil price.
This kind of reliance, Adesina said, exposed the country’s economy to global oil shocks which were not within its control
He also noted that over-reliance on oil was one of the factors exposing Nigeria to high debt risk.
“The debt service to revenue ratio of Nigeria is high at 73 per cent. Things will improve as oil prices recover, but the situation has revealed the vulnerability of Nigeria’s economy,” he said.
Adesina said to have an economic resurgence, Nigerian government needed to fix the structure of its economy and address some fundamentals.
He stated further that the country’s challenge was revenue concentration, noting that oil sector accounted for 75.4 per cent of export revenue and 50 per cent of all government revenue.
He emphasised the need for sustained economic growth through non-oil sectors by removing all structural bottlenecks limiting the productivity and revenue earning potential of the non-oil sectors.
While decrying Nigeria’s impediments to exports, Adesina said, “The cost of exporting 100 tons of cargo in Nigeria is $35,000 compared to $4000 dollars in Ghana.
“Today leading ports of West Africa are in Cote d’Ivoire, Ghana, Togo and the Benin Republic,” he said.
He noted that all these countries had modernised their port management systems, leaving Nigeria far behind.
He stressed the importance of Nigeria learning from Morocco’s world-class Tanier-Med Port.
“The port is unique in that it is an industrial complex and a platform that has over 1,100 companies.
“They collectively exported over 8 billion euros worth of goods in 2020.
“Companies located at the Tangier-Med Port have allowed Morocco to move up the global value chains, including automobiles, automotive parts, aeronautics, agriculture, and food manufacturing, textiles, and logistics.”
Adesina also noted that annually, over 460, 000 cars were manufactured in the zone for exports.
The continental bank chief, while emphasising the need for Nigeria to transform its ports said, “we should not be decongesting the ports in Nigeria, we should be transforming the ports.”
This, according to him, must start with cleaning up administrative bottlenecks, most of which were unnecessary with multiple government agencies occupying at the ports.
He further expressed concern about the high transaction costs and illegal taxes, which would not go into government coffers.