Has oil-focused Nigeria forgone a diversified economy? - CNBC Africa

Has oil-focused Nigeria forgone a diversified economy?

Western Africa

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Nigeria is now Africa's biggest economy. PHOTO: Getty Images

This is according to the 2014 Economic Report on Africa (ECA) – a joint initiative between the United Nations Economic Commission for Africa and the African Union – which states that revenues from Nigeria’s oil exports have hampered efforts at diversification, leading to industry stagnation.

“Abundant oil and gas resources riches have brought billions of dollars into its coffers since the early 1960s, leading to a neglect of agriculture, which traditionally provides employment for about 40 per cent of the population and a nascent manufacturing industry,” the ECA said.

According to the 2014 report, which places strong focus on dynamic industrial policy in Africa, Nigeria’s textile sector and automobile industry have, in the past, provided clear examples of this.

(READ MORE: Nigeria surpasses S.Africa as continent's biggest economy)

However, Africa’s biggest economy seems to be renewing its commitment to industrialisation through the recent introduction of the Nigeria Industrial Revolution Plan (NIRP), which President Goodluck Jonathan branded the most ambitious industrialisation programme ever pursued in the country.

The plan aims to accelerate growth in the industries where Nigeria has competitive advantage.  Traditionally, these have been in the processing of food and agricultural products, metals and solid minerals processing, oil and gas-related industries and in the construction, light manufacturing and services sectors.

“The Nigeria Industrial Revolution Plan will address age-old constraints that have persistently limited manufacturing. It will build up industrial infrastructure, prioritise power for industrial use, reduce borrowing costs and mobilise funding for the real sector,” said Jonathan of the NIRP.

It also aims to increase the manufacturing sector’s contribution to GDP from four per cent to more than 10 per cent over the next five years.

“It will facilitate youth training in industrial skills, improve our investment climate, raise our product standards, link innovation to industry and promote local patronage of ‘Made in Nigeria’ goods,” Jonathan said.

The National Enterprise Development Plan was launched alongside the NIRP in order to deliver growth within the country’s micro, small and medium-sized enterprises (MSME).

“It will fully unlock the potential of Nigeria’s MSME sector by resolving many of the problems that most small businesses face such as access to finance, access to markets, weak business development, dearth of technical skills, lack of infrastructure and insufficient market information,” said Jonathan.

Further to the initiation of these development plans, Nigeria has insured that businesses will now receive generous tax concessions and its automotive industry is beginning to attract numerous international car manufacturers.

(READ MORE: Expansion in Nigeria’s automobile industry)

Local cement manufacturers have also been encouraged to invest in existing and new factories, ending the country’s reliance on imports.

Nigerian trade and industry minister, Olusegun Aganga stated that with 28.5 million metric tonnes produced in 2013 and more than eight million metric tonnes in excess of domestic demand, the country has now become a net exporter of the building material for the first time.