Article Summary
- The Nigerian economy has the potential to grow in double digits to more than $1 trillion within the next 10 years given the right regulations, policies, and infrastructure.
- Key economic drivers include agriculture, mining, industry, commerce, and services.
- Oil and gas remain the key source of diversification; the industry can support other sectors of the economy for growth.
With the right policies, regulations, and infrastructure, Nigeria’s gross domestic product (GDP) can shoot up to $1 trillion within the next ten years, from the current $450 billion it ratchets at.
This was disclosed by the Chairman, AA Holdings, Co-founder and Pioneer CEO of Platform Petroleum Limited and Seplat Petroleum Development Company Plc, Austin Avuru.
He made the revelation recently at the annual Doing Business in Nigeria Conference (DBNC), an avenue where business professionals and business enthusiasts meet to share ideas.
Speaking on the topic, Diversification of the Nigerian Economy, Avuru noted that the right infrastructure, enabling environment, and regulations are not properly utilized in Nigeria, hence the low GDP.
Identifying the key economic sectors as Agriculture, Mines, Industry, Commerce, and Services, Avuru said the government has failed at all levels to enable the private sector, which is good at business, to thrive in these sectors.
Key economic sectors
Agriculture: In the agriculture sector, he said every state in Nigeria has the potential for massive contribution to Agriculture production. He listed viable segments of agriculture to include cassava, rubber, fisheries, palm produce, cocoa and kola nuts in the South, livestock, groundnuts, cashew nuts, gum Arabic, yams, tomatoes, and pepper in the North.
He listed key enablers to include infrastructure (rail and road transport), security, technology, machinery, input seeds, and fertilizer for mechanized farming and optimal fields.
To put Nigeria’s potential into perspective, he stated that in 2021, Ethiopia earned $235 million from Flower exports and Nigeria earned $420M from Cashew Nut exports.
Mines: Regarding Oil and Gas, Avuru said Nigeria should be producing 3 million barrels of crude oil (mmbo) and 10 billion cubic feet of gas (bcfg) per day. “We should be operating at a cost of less than $7.0 per Barrels of Oil Equivalent (BOE). The current production is less than half of capacity at a cost of 300%,” he said.
He stated that the key Enablers to optimal oil and gas production are Security and Effective Regulation.
Industry: The industry includes Manufacturing, Processing, Assembly Plants, Refineries and Petrochemical. Avuru said poor power and transportation infrastructure make Nigeria’s industrial sector largely uncompetitive.
Commerce: He added that commerce, which is a large contributor to the GDP in Nigeria, is hampered by poor transport infrastructure, and limited e-commerce penetration.
Services: Services, which include ICT, banking, entertainment, transportation, etc., is the largest contributor to GDP in Nigeria, but are largely hampered by poor power and transportation infrastructure, according to Avuru
The needed diversification
Noting that the contribution of Oil and Gas to Nigeria’s GDP has fallen from 12% to 4.5%, Avuru said diversification should start from the oil & gas industry.
- “Value addition through refining, petrochemicals, fertilizer, and domestic gas supply would increase revenue through increased production; the federal government should target 3mmbo/day and 12bcfg/day. Increased revenue needed to fund critical enablers will be generated from the oil industry,” he said.
He added that the provision of critical enablers will deliver an educated workforce, a healthy workforce, adequate and efficient power, efficient transport infrastructure, security of lives and property, and effective regulation of the private sector, which will lead to a massive expansion of all productive sectors, with double-digit GDP growth.
- “Nigeria’s real GDP can surpass $1.0 trillion in ten years. “It is not rocket science,” he said.
