Agora Policy: Nigeria risks staying underdeveloped without export-focused industrial plan

Agora Policy, an Abuja-based think tank, says Nigeria needs to “desperately” improve its external trade and exports to achieve economic prosperity.

In a report on Monday, titled, ‘Clear Direction, Urgent Reforms Sorely Needed on Trade Policy’, the think tank, cited several reforms, especially in the foreign exchange (FX) market, that were introduced to correct the illiquidity and wide arbitrage in the currency markets

The group said these reforms had led to depleted external reserves, overdue FX obligations and large fiscal deficits, adding that potential investors are still reluctant to invest despite improving sentiment.

He said with these various policies introduced by the current administration, priorities should be targeted at exporting more to attract more foreign  investments.

“Without meaningful external reserves cover and lack of access to debt markets due to high interest rates and weak creditworthiness, Nigeria is left with only two other options: exporting more and attracting more foreign investment,” the firm’s policy report said.

“While these are not options that can provide immediate relief, they provide a more sustainable foundation for the future.

“This should be the priority for the government: to make the strongest case for why Nigeria is a better investment destination than elsewhere, and to make choices that will enable Nigeria to participate optimally in global oil and non-oil trade.”

Agora Policy said Nigeria is at the risk of staying underdeveloped if there are no existing exports-focused industrial plan.

NIGERIA MUST SELL MORE TO BOOST INVESTMENT 

Providing recommendations, the firm said Nigeria must decide on “what it wants to sell to the rest of the world and the sectors to prioritise for investment”.

“Nigeria desperately needs economic prosperity that will lift poor people out of poverty by increasing earnings and employment for households,” Agora Policy added.

“Nigeria still needs external markets to buy what we sell. Nigeria as a consumer market has become much poorer over the past ten years, so this must be the overarching goal behind any trade and investment agenda.

“This will require reforms in some cases, like in the energy sector. In other cases, soft things like making it easy to do business and export, and reforming the tax system and land ownership, will play a role. 

“For instance, forcing exporters to convert earnings at an overvalued exchange rate will not incentivise more exports.

”The current situation is so dire that the structures supporting oil and non-oil trade are inefficient. This was not a big problem in the oil sector until recently.”

The think tank said implementing high tariffs cannot create a sustainable or competitive local industry as we have seen in cement and automobiles. 

The policy firm said Nigeria needs to take advantage of efficiencies in the global value chain to compete with the rest of the world.

“If that holds true, then exporting more and relaxing import restrictions must be part of Nigeria’s industrial strategy,” the organisation added.

“This means the CBN must equally prioritise policies that will enable Nigerian businesses to compete better in global trade.”

In addition, the group said establishing and extending fair trade routes in exports for developing economies in advanced markets is critical to creating more prosperity. 

Agora Policy said Nigeria must have the capacity to take advantage of existing and new opportunities, adding that the country needs forward-looking policies and reforms that have the potential to create mass prosperity.