COVID-19 and Economic Diversification

By Joy Nguri

He came into office in 2014 when commodity prices globally collapsed. International prices of crude oil, Nigeria’s economic mainstay, crashed to $27p/b. Other global exogenous factors had exposed how weak the economy was.
The Gross Domestic Product (GDP) had declined and unemployment rate flying at the speed of a rocket, sliding the economy into recession in 2016. The Nigerian economy was challenged by the continued downslide in the international price of crude, snowballing into foreign exchange crisis. No excuse also to the enterprise of currency speculators and their allies, who waged unrelenting war against the economy.
He, realizing the precariousness of the economy, was not at a loss on what to do. Using development banking strategies as the fulcrum to drive the economy, the Nigerian modern-day ‘Nostradamus’ rolled out a 10-point programme he would spend his energy and resources on in order to build a resilient financial system that will serve the growth and development needs of Nigerians. Not only that, he committed himself to creating a central bank that would be professional, apolitical and people-focused. This mission may have been propelled by his determination to bequeath a strong and sound economy to Nigerians. The man is Godwin Ifeanyi Emefiele, the governor of Nigeria’s apex bank.
In fulfilling his mission, he first asserted the autonomy of the apex bank, and came out with daring monetary policy initiatives as compass for his mission. He treaded where even lion-hearted men feared to walk. He made Nigerians know that the way out of the economic quagmire is diversification from oil to agriculture and non-oil products. Fired by his conviction of home grown medication to the economic malaise, he reinforced some of the Bank’s intervention development initiatives for agriculture aimed to replicating the pre-petrol-dollar glorious era of the 1970s when Nigeria’s economy was basically agro-based, contributing about 65 percent to the Gross Domestic Product and represented 70 percent of total exports. The petrol-dollar years came with daunting challenges which we are still confronted today.
When he launched his agribusiness policy with the shocking suspension of 41 items (later 43), he was heckled by those benefitting from importation of those items, but he was resolute. He was blamed for the economic woes, forgetting that if those before him and in government had not paid lip service to economic diversification programme for almost four decades, we would not have been trapped in this economic conundrum.
Sure, of his vision, he conceived PAVE – Produce, Add Value and Export. A concept to make Nigerians realize the need to produce and consume what we produce, add value to it and export, is akin to the South-East Asia policy export-led industrialization strategy, which changed the economic outlook of countries as South Korea, Taiwan, and Singapore. PAVE is the perfect substitute to oil, its production and export which has had little or no impact on Nigerians’ welfare in terms of employment and wealth creation. The Central Bank Governor was not given the benefit of the doubt to prove himself, but today he has turned the Biblical rejected stone that has become the rallying point for Nigeria’s economic renaissance.
To Emefiele, a nation can only grow economically if there are structures that stimulate production of what is needed, and that was the reason he reinvigorated some intervention development windows as pillars for his ‘one man riot squad economic diversification crusade’ – the Agriculture Credit Guarantee Scheme (ACGS), Commercial Agriculture Credit Scheme (CACS), Small and Medium Enterprises Development Fund (MSMEDF), Small and Medium Enterprise Credit Guarantee Scheme (SMECGS), and the very revolutionary Anchor Borrowers’ Programme.
In June 2019, and in furtherance of his mission, Godwin Emefiele organized a-stakeholder engagement, themed: CBN Going for Growth 1.0 in Lagos, to seek ways on how to move the economy forward, more importantly from oil. The gathering involved technocrats, bureaucrats, chief executives of deposit money banks and industrialists, to chart a fresh way forward for the economy. To back up the success of the first stanza and build on it, the second edition was held recently in Abuja, purposely to generate viable and actionable ideas with the CBN in its onerous mission of diversifying the economy.
The outcome of the Lagos engagement was the resultant intervention in reviving the comatose textile and cotton industry, a hitherto largest employer of labour after government. His intervention in textile industry has seen the Military and para-military agencies patronizing made in Nigeria uniforms and other accessories. His interventions in critical sector of the economy like power, aviation, education, aviation etc. were targeted at giving breathe back to the sectors to enable them create employment. The resuscitation of oil palm in the South- South region of the country through engagement with State Governors and stakeholders coupled with strings of incentives ranging from the supply of high yielding seedlings and interest rate at single digit to farmers were part of CBN’s financial inclusion drive to resuscitate the sector.
Rice pyramids are mounting in Kebbi State, as rice is now being produced in almost 26 states in the federation, making Nigeria almost self-sufficient in rice production. So also, is the bumper harvest that have been recorded in sorghum, maize, millet, cassava, tomatoes and cotton farmers under the CBN’s Anchor Borrowers’ Programme. With improved financing by the banks, to enhance capacity utilization of agricultural firms involved in the production of the 10-identified commodity models; the country has begun to witness high production as well as increased income for farmers.
However, critics of Emefiele had questioned his interventions, accusing the CBN Governor of straying from his mandate of monetary policy formulation into foggy terrain of fiscal matters. With the current reality, one could have imagined what Nigeria would have laid hands on with the devastating rampage of the COVID-19 that has dealt heavy blow to the global economy, coupled with the crude oil price war between Saudi Arabi and Russia. These have exposed the fragility of the Nigerian economy and the need to wake up and join Godwin Emefiele’s crusade on economic diversification which previously seemed elusive.
With the coming of COVID-19 and the reality of the economy, the clamour for diversification from oil has heightened, and this was the consensus at the second edition of CBN’s Going for Growth 2.0: Coronavirus and the Economy. The crash of stock market globally therefore underscores the role central banks play not only in regulation, but in the economy. This has been exemplified by Godwin Emefiele’s intervention in agriculture and manufacturing.
The Nostradamus Emefiele foresaw this way back in 2014 when he assumed office, and had been zealously pursuing economic diversification to steer the economy away from dependence on oil. Now that the rampaging virus has exposed the reality of the state of the Nigerian economy, with its mainstay – the crude oil, also attacked as the prices hover around $31 – $33pb, far below the 2020 budget benchmark, there is no better time than now to pick up the gauntlet and support the CBN Governor. It was indeed high time we stopped been at the mercy of vicissitudes of the oil market when the country is endowed humanly and materially to be self-sustained. Emefiele foresaw today years back, but he had been the lone voice crying in the wilderness.
Joy Nguri wrote from Numan, Adamawa State