Brainstorming on diversification dates back decades. Suggestions on this subject for all we know fall on deaf ears. The ruling elites’ as well as those involved in oil supply chain business’ robust appetite for the business of petroleum will not allow this happen. And diversification we must go, most especially now. Who cares?

In the early days of Yar’Adua’s administration, this writer ran a series of articles to intimate Mr President on the pressing need to buy into diversification. His response to this call is his much-talked-about 7-point Agenda. Has the agenda taken off? You surely know the answer. Who cares?

Only recently, the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) held an exporters’ stakeholders forum in Lagos . The crust of discussion was the need to focus on non-oil export. The forum noted with displeasure that the Nigerian economy has been characterized by structural imbalance and that this has been responsible for the macroeconomic instability experienced over the years. The same old story again. Who cares?

The Director General of NACCIMA, Lawrence Adekunle in his welcome address at the NACCIMA at the meeting said the economy has been mono-product in nature with agriculture as the dominant sector before independence and even up to the early 1970s when oil started to dominate the economy.

Adekunle argued the economy is heavily import-dependent, both for industrial raw materials and finished products. For him, the implication of this on our lean and scarce foreign exchange is grave, resulting in huge debt profile, and unfavourable balance of payment, weak industrial base, poverty, and underdevelopment. “In realization of this, government since the 1980s decided to make policies to promote exports, as a way of redressing the structural imbalance in the economy, as well as to put the economy on a track of growth and development, he said.

The NACCIMA DG recalled the emergence of oil in the national economy since the early 1970s, making the sector the major contributor to government revenue as well as foreign exchange earnings led to the neglect of the other sectors of the economy, and therefore created serious structural imbalance in the economy. “Often, the ability of a nation to generate foreign exchange determines the strength of the nation’s currency and of the economy, especially where the sources of the foreign exchange are from diverse sources, and not from a single product as is the case in Nigeria,” he argued.

He said the policy focus “failed to adequately take cognizance of the existing structure of production, which reflects inadequate production of exportable surplus that can quickly take advantage of change in relative international prices”. “Equally, no account was taken of the raw material needs of domestic industries, even where it was clear that the supplies of such raw materials could not be increased in the short run. The effect of this, led to shortages of locally produced raw materials for domestic processing of manufacturing industries, as was the case with cocoa processing industries. In addition, the policy failed to realize that most of the country’s current manufacturing outfits grew out of the policy of import substitution, and they are therefore, not geared for export promotion. The desire to export manufactured goods therefore became a mirage.”

For him, “non-oil export promotion is an economic task that should no longer attract mere lip service. (We have heard this before). Specific programmes, assigning definite responsibilities to the banks, are now overdue. In constituting a committee that should be charged with the production of the programmes in form of an economic blueprint for non-oil export promotion, Nigerian banks, which are expected to play significant roles, must be included. The Nigerian Export-Import Bank (NEXIM) should also be overhauled in order to become more functional and more effective.” Who cares?

The director general of Standard Organisation of Nigeria (SON) John Akanya represented by the Task Force Secretary (ECOWAS), Marlin Waziri, stated that for an export driven economy to thrive in the present day competitive domestic and world market and exploit international trade and intra community trade opportunities, there is the need for the establishment of quality management system that is customer-focused with a goal of doing business right the first time.

Waziri said SON is encouraging the identification of the relevant products standards, Nigerian Industrial Standard (NIS) and standard/specification of the exporting countries of interest and also the production and packaging in compliance with the requirements of the relevant standards. He urged exporters to ensure quality of product from input (raw materials) to the finished product through effective laboratory analysis, provide adequate resources, and get product certification and system certification.

The acting executive director of Nigerian Export Promotion Council (NEPC), A. M. Lawal was also at the forum. He said NEPC has embarked on new product development in the arrears of coconut, sesame seed amongst others. Said Lawal: “NEPC in collaboration with other export stakeholders have continued to pursue the achievement of reduction of the pre-export shipment inspection fee of one per cent to 0.05 per cent, an unrestricted access to export proceeds generated by exporters, re-certification of Nigerian shrimp for export to United States by US authorities. We have also achieved reduction in the congestion and lead for export at Lagos port, re-designed the export expansion grant scheme, now transparent rule based and orderly and secured AGOA visa certification on hand-loomed, hand-made folklore, and ethnic printed Nigerian fabrics to US market duty free.”

But we do not have a pass mark on the AGOA project; the fine record of AGOA Nigeria has is in sale of crude oil. According Jumi Familoni, professor of management and chief executive officer International Centre for Leadership and Entrepreneurial Development (ICLED) Nigeria, one of the largest AGOA economies, heavily protects its market from imports, setting average duty levels for agricultural and non-agricultural products at average applied tariffs of 50.2 per cent and 25.3 per cent respectively, and 29 per cent overall. “As a result, Nigerian consumers and businesses spend more on everything from fruit and vegetables to electronics and machinery. Even South Africa , with one of the lowest average tariff rates at 5.8 per cent, imposes high tariffs on various consumer and industrial goods.

“Coupled with the significant and costly non-tariff barriers that exist in most AGOA countries, these rates keep the cost of imports artificially high and the benefits of access to a wide variety of foreign products low. Freer trade would enable more goods and services to reach consumers at lower prices, giving families more income to save or spend on other goods and services. Freer trade would create a level of competition that engenders innovation and job creation, the ability to diversify into new markets, and an improved investment climate. In the short run, eliminating tariffs on U.S. imports will have revenue implications and will require adjustments from African businesses. Thus, reduced tariffs should be phased in over a five-year period and facilitated by assistance for trade capacity building. The mechanisms for this are already in place, with the U.S. spending $199 million on such assistance in sub-Saharan.”

She argued “Tariff and non-tariff barriers in developed countries pose a significant obstacle to developing country exports. While developed countries generally maintain relatively low average trade barriers, their highest trade barriers tend to apply to goods that developing countries export (the Federal government must note this). The World Bank and Oxfam estimate that trade barriers erected by developed countries cost developing countries $100 billion a year. Non-tariff barriers also pose significant problems. For instance, agricultural subsidies encourage production and put downward pressure on agricultural prices. Michael Moore, former director general of the World Trade Organization, estimated that removing all tariff and non-tariff barriers ‘could result in gains for developing countries in the order of $182 billion in the services sector, $162 billion in manufactures and $32 billion in agriculture.’ The U.S. has partially addressed these trade distortions through AGOA and should commit to eliminating all remaining tariffs on goods from eligible nations and unilaterally phasing out agricultural subsidies.”

She laments the benefits of AGOA are limited. “The U.S. continues to undermine the competitiveness of African entrepreneurs with domestic subsidies and other tariff and non-tariff barriers, and African governments rob their people of the full benefits of trade by maintaining trade barriers to imports from other African nations and from the U.S. U.S. policymakers should take advantage of the next less than ten years of AGOA to use its preferential trade access as a lever to lower trade barriers on essential medicines and supplies from abroad, spur the establishment of a region-wide customs arrangement, and transform AGOA into a free trade agreement between the U.S.” Do we care?

A school of thought puts forth the argument that, without any gainsaying, Africa is the hardest hit continent by the rapaciousness of globalization. Ironically, the African Growth and Opportunity Act (AGOA) put before the American Senate by President Bill Clinton in 1998 which was passed into law in May, 2000, and, the Multilateral Agreement on Investment (MAI) of the Organisation for Economic Co-operation and Developments (OECDS) are part of the instruments put in place by the West to further deplete whatever is left of Africa’s resources. These are devices to “roll-back whatever gains the third world countries were able to make at the economic level during the cold war years”.

Familoni argued “…both the AGOA and MAI are traps aimed at foisting-without much conscious resistance by the victims of the so-called ‘global constitution’ - a ‘global economy’ on Africa and other developing economies.

“This constitution, argued Obadina, allows the powerful international corporations unfettered freedom to operate anywhere around the globe without any limitation by the policies of host nations irrespective of the consequences of their operation to the interests of the host nations.

We must go diversification now, nothing short of it. We have sat too long on the fence. But who cares?

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