The Chartered Institute of Bankers of Nigeria (CIBN), has said the manufacturing sector has huge potential to become the livewire of the nation’s economy, if it would look inward to resolve gaps in demand for both consumer and industrial goods.
According to the Institute, in the wake of developments such as the boarder closure policy, and African Continental Free Trade Area (AfCFTA) agreement, there is a need for Nigeria, now more than ever before to look inward to resolve the gaps.
Specifically, President and Chairman of Council, CIBN, Uche Olowu, said Nigeria is expected to develop the capacity to compete in an increasingly globalised market, saying that infrastructural deficits, economic recession, amongst others, have kept industrial growth negative over the past five years.
Olowu urged the government and banking community to jointly support the sector in terms of driving greater financial investments, improved infrastructure such as power supply, road networks, capacity building, as well as special policies like granting tax relief to encourage indigenous operators.
Speaking at the 6TH National Economic Outlook Session, organised by the CIBN Centre for Financial Studies, in collaboration with B. Adedipe Associates Limited, in Lagos, he said only when this is done, would Nigeria compete with other nations and comfortably take its place as the giant of Africa.
He said the session, initiated in 2014, is designed to bring together captains of industry, subject matter experts, and seasoned practitioners to discuss emerging and pertinent issues facing both the national and global economies as well as their implications for businesses in the year.
Commenting, Deputy Governor, Economic Policy, Central Bank of Nigeria (CBN), Okwu Nnanna, said notwithstanding the gains recorded, as evidenced by the many months of relative macroeconomic stability, improved production indices, and sustained exchange rate stability amongst others, the path to economic recovery and growth has been bumpy and severely tested by both domestic and global shocks.
On the domestic front, he said the key constraining factors remain the subsisting structural imbalances, insecurity, weakened infrastructure, a narrowly diversified economy, and constrained monetary policy mechanism.
Also, he noted that protracted supply constraints, controlled fiscal space, high unemployment, and elevated poverty levels have continued to plague growth, while domestic demand, private sector credit and investment remained lower than expected.
Nnanna maintained that Nigeria’s economic structure increases her vulnerability to the oil sector, which does not augur well for long-term economic stability and development.
“As a small open economy, Nigeria is vulnerable to global shocks such as negative international crude oil price, monetary policy normalisation in advanced economies, trade tensions, tightening of financial conditions and regional trade charters. Therefore, the impact of spillover from global shocks is contingent on the structure of the economy, and the degree of economic diversification.
“On the balance of evidence arising from the impact of the recent global financial and economic crises of 2007/2008; and 2016 economic recession in Nigeria, the consequences of disruptive shocks on the poorly diversified economies were quite evident,” he said.
“Diversification of the economy, therefore, offers broad-spectrum for enhanced revenue earnings to support sustainable economic growth and development. Thus, rebalancing the structure of the economy and fast-tracking economic diversification cannot be overemphasized,” he added.
He maintained that a diversified economy would assist in solving the problems of high unemployment, uneven development, persistent inflationary pressures, wide income inequality, high poverty level, and high level of insecurity.