Nigeria does not have the present comparative advantage for manufactured exports, but the best alternative is to start through the export of services, and later focus on domestic manufacturing, which can later expand towards manufacturing for exports.
This was stated by Andrew Nevin, Financial Services Leader and Chief Economist at PwC Nigeria in an interview with Nairametrics on Wednesday, February 9, 2021.
He added that states and the Federal government can better manage their dead assets by selling them or partnering with the private sector.
In an interview with Nairametrics on Tuesday, Nevin expanded on how Nigeria can take advantage of the expanding service export growth and also unlock value in dead assets. He stated that Nigeria could adopt the Indian I.T outsourcing model.
He said, “In terms of the I.T exports, we (Nigeria) still have a lot of time to adopt this model. It is our best source of export earnings to export value, including obviously, music and cultural services, but also I.T services. I don’t think we are too late, our alternative is what we are best at exporting.”
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Nevin insists Nigeria should obviously export manufactured products where possible, but focus should be on the export of services.
“In reality, Nigeria does not have the comparative advantage in manufacturing, we have a difficult infrastructure and power situation. Nigeria is stronger in services. We can rely on that, which is not too dissimilar to where India was in the 90s, that’s the route that they took, they now over the past 30 years do a significant amount of manufacturing, both for their domestic and export industries,” he said.
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“In terms of the extent we are able to manufacture in Nigeria, what’s going to happen is that we import substitute base of manufacturing, so that we manufacture for Nigeria’s very large domestic market and if in the course of doing that, people are able to export, then that’s fine, but in the medium term, I think the focus should be on exporting services,” he said.
He urged that in terms of dead assets, Nigeria has a few which include the Ajaokuta Steel, the refineries, and the National Theatre. He adds that in some cases it needs to sell them and in other cases, it needs to partner with investors or just manage them better.
“But really every state has investment companies that own different sort of enterprises, sometimes the whole enterprise, or majority of it. Those investment companies at the state level, they need to go asset by asset to decide how they are going to maximise the value from it.
“In terms of real estate, while the government does not necessarily own vast majority of real estate, it has some properties that should be rehabilitated, particularly many federal government properties in Lagos that are not earning a sufficient return. We should be looking around that nationwide, so those are assets the government needs to get a return from,” he says.