‘Competitive savings, others will achieve economic stability’
To tackle Nigeria’s economic challenges and accelerate its growth trajectory, the need to establish a competitive saving plan that would mop up a larger pool of funds to be deployed into specific sectors has been stressed.
The former Governor of Anambra State, Peter Obi, who identified aggressive savings as a major factor that would help the country achieve micro economic stability, and a suitable interest rate, also listed diversification of the economy towards manufacturing, and export of value added and knowledge-based products.
Obi, said this while delivering a speech titled, “Sustaining Growth through Diversification of the Economy,” at the 1st yearly conference of the Guild of Corporate Online Publishers, in Lagos at the weekend. He explained that in achieving sustainable economic growth, Nigeria needed to build its external reserve through savings, and revolutionise the manufacturing sector whose contribution to GDP is still below 10 per cent.
Furthermore, he reiterated the need to also identify other critical sectors of the economy, especially agriculture, and improve their contributions to export revenue.
“Aggressive savings will help the country to achieve micro economic stability by ensuring a suitable interest rate. Moderate inflation and strong capital inflows from foreign investors (portfolio and direct investments) will in turn help the government to raise the capital to start rebuilding deteriorated infrastructure.
“Since the beginning of the 21st century, the Nigerian economy has been on growth trajectory, growing on average above five per cent, until recently. This economic growth for over a decade led Nigeria to become Africa’s biggest economy with a GDP of more than $500 billion.
“In August 2016, following two consecutive quarters of negative growth, Nigeria went into economic recession and now has been through six quarters of negative growth.”
He pointed out that Nigerian industrial capacity utilisation, which was estimated at 70 per cent in 1980, thus, contributing over 15 per cent of the gross domestic product (GDP) has since depressed, producing merely nine per cent of the GDP.
According to him, the question to ask is how will Nigeria come out of recession and bounce back to sustainable growth?Obi submitted that the answers were two-fold, which include aggressive savings to build the external reserves and diversification of the economy from over dependence on oil to manufacturing and other value added services.
“To further elucidate on the need for aggressive savings and kick starting of an industrial revolution, it is important to compare Nigeria’s economic data with that of six other countries with similar trajectory, (military intervention, corruption, militancy, and terrorism): Indonesia, Turkey, South Korea, Thailand, Malaysia, and China.”
He said research findings indicated that these countries achievements were as a result of aggressive savings and diversification of their economies towards manufacturing and value added.
“However, the tragedy of our situation is that 90 per cent of our export revenue comes from oil. For example, the last published 2015 data shows that of the total export revenue of $45.5 billion, oil exports accounted for $42 billion, leaving the non-oil sector, which has the biggest GDP contributor to account for only about $3 billion.
“With virtually one source of export revenue and very poor savings, one does not need to be an Economist to know why the Nigerian economy is volatile and weak,” he added.
The Special Adviser to President Muhammadu Buhari on Media and Publicity, Femi Adesina, stressed the need to avoid hate speeches, blackmail and propaganda, adding that such is impeding the unity and growth of the country.