Owing to the slump in the international prices of crude oil as well as decline in the volume of import shipment into Nigeria due to the outbreak of Coronavirus (COVID-19), the revenue, which the Federal Government hopes to earn from the seaports is expected to drop by 75 percent by the end of 2020.
Hadiza Bala Usman, managing director of the Nigerian Ports Authority (NPA), made this prediction on Thursday during an interactive session on Webinar tagged, ‘Non-Oil Exports: Disrupting Nigeria’s Growth Cycle’, which was organised by BudgIT.
According to her, about 191 million metric tons of export cargo passed through the nation’s ports in 2019, 78 percent of which was crude oil cargo while the remaining 22 percent was non-oil export.
“Nigerian crude shipment is tied to exportation and it contributes the highest revenue of the ports. This underscores the importance of diversification of the economy through non-oil exports in order to reverse the trend,” Usman said.
Usman, who pointed out the need to encourage local investors and make domestic investment a priority, said that as a large country of consumers, Nigeria needs to increase local production in order to earn foreign exchange through export.
Yewande Sadiku, executive secretary/CEO of the Nigeria Investment Promotion Council (NIPC) predicted that foreign direct investment (FDI) into countries in Africa is expected to fall by 30-40 percent in 2020-2021.
She emphasised the urgent need to not only attract more foreign direct investment but to also increase production capacity in-country in order to grow the non-oil export.
Sadiku, who listed countries such as United States, China, Singapore, Netherland and United Kingdom as top recipient of FDI globally, said that Africa, which contributes 17 percent of global population, is only able to attract 3 percent of global FDI.
“Whether oil or non-oil export, investors are looking for one thing, which is a conducive environment, financial return as well as sustainable and available asset,” she stated.
According to her, Nigeria needs to encourage domestic investors by increasing the rate of incentives extended to domestic investors via tax, removal of administrative and regulatory bottlenecks, quick delivery after care /investors care, and improvement in business environment.
She called on multinationals to diversify their production base without concentrating on one region.
Ugo Obi Chukwu, publisher, Nairametrics, who noted the need to do away with reliance on crude oil as a nation, said that Nigeria would continue to surfer currency depreciation, if the country does not diversify.
He noted that a country that rely on oil to earn revenue especially foreign exchange, would not develop.
Source: Business Day