President of the African Development Bank Akinwunmi Adesina in a paper, titled “Nigeria’s Economic Resurgence: Learning from the African Experience” presented at a ministerial retreat in Abuja on Monday, Adesina identified infrastructure as critical for unlocking the full potential of the country’s economy. He called for priority attention to financial innovations, saying government alone cannot afford the huge financial cost.
The former Nigerian Minister of Agriculture proposed that the private sector should be given incentives in form of tax credits to encourage investment in infrastructure.
Adesina said, “To be sustainable and more efficient, Public-Private Partnerships (PPPs) should be accelerated to finance major infrastructure across Nigeria. Nigeria’s institutional investors, especially the pension funds, should invest in infrastructure.
“Governments can also implement ‘Infrastructure Asset Recycling models,’ where existing infrastructure assets on government books can be turned over to the private sector, freeing up financing for governments to invest in new infrastructure needs.”
He said sustainable financing approaches, such as PPPs and infrastructure asset recycling, would allow Nigeria to attract significant private sector investment into infrastructure.
Speaking on trade, the AfDB president stated that the Africa Continental Free Trade Area presented a major opportunity for Nigeria given that consumer and business expenditures in Africa are projected to rise to $6.7 trillion by 2030.
He said significant support should be directed toward boosting the country’s industrial manufacturing capacities, adding that Nigeria should also move rapidly to the top of selected value chains, such as automobiles, computers and electronics, textile and garments, and food manufacturing, transport, and logistics.
The former minister, however, admitted that much of the gains would depend on the ports in the country, where, according to the sector operators, the cost of exporting 100 tons of cargo in Nigeria is $35,000, compared to $4,000 in Ghana.
Adesina stated, “Today, the leading ports for West Africa are in Cote d’Ivoire, Ghana, Togo, and Benin Republic. All these countries have modernised their port management systems, leaving Nigeria far behind. Nigeria can learn from Morocco’s world-class Tangier-Med port. The port is unique in that it is an industrial port complex, and a platform that has over 1,100 companies.
“They collectively exported over €8 billion worth of goods in 2020. Companies located at the Tangier-Med port have allowed Morocco to move up the global value chains, including automobiles, automotive parts, aeronautics, agriculture and food manufacturing, textiles, and logistics. Annually, over 460,000 cars are manufactured in the zone for exports. And more interesting is that the bulk of the human resources to do these are Moroccans.
“I took a walk at the Tangier-Med Port. I actually thought they were on vacation, as I did not see people – just machines, haulers, automated systems moving containers in what looked like a well-synchronised maze, with incredible efficiency.
“There were no kilometres of trucks waiting to get to the port. Your Excellency, we should not be decongesting the ports in Nigeria, we should be transforming the ports. This must start with cleaning up administrative bottlenecks, most of which are unnecessary with multiple government agencies at the ports, high transaction costs or even plain extortions from illegal taxes, which do not go into the coffers of the government.
“Here is the lesson: Nigeria should rapidly modernise and transform its ports. Ports are not there for revenue generation. They are for facilitating business and exports, and stimulating industrial manufacturing, and competitiveness of local businesses and exports.”
He also urged the federal government to relaunch the ‘Growth Enhancement Scheme’ and the e-wallet system by putting millions of farmers at the heart of agriculture.
According to him, there would be a dramatic turn-around in national food production if this is accorded immediate attention.
Using Sudan as a case study, he said AfDB helped the country to finance the revolution of wheat with heat tolerant varieties, by producing 65,000 metric tons of seed, which is equivalent to 660 Airbus 380 aircraft parked on a landing strip.
Adesina Sudan moved from 25 per cent self-sufficiency to 54 per cent in just two seasons, and it expected to become a net exporter of wheat within three years.
He said, ”We also supported Ethiopia to cultivate the heat tolerant varieties on over 184,000 hectares. Interestingly, these same heat tolerant varieties were introduced to Nigeria when I was Minister of Agriculture and we worked hard to give them to farmers in the Lake Chad Basin.
“Your Excellency Mr. President, You may wish to know that during the insecurity in the area, my staff at the time, led by Dr. Oluwasina Olabanji, the then Executive Director of the Lake Chad Research Institute, and his team, stayed in the fields, protected the seeds being multiplied, and risked their lives.
“When insecurity became much more serious, they moved the varieties to Kadawa valley in Kano. Dr. Olabanji deserves a national award. I was on the farms in Kano with several Seriki Nomas or farmer heads.
“They could not believe that wheat could be as tall as they were! These varieties yield five tons per hectare compared to average yield of 1.5 tons per hectare – a 400 per cent increase! Nigeria should take advantage of the work of the Bank on this and scale up cultivation of heat tolerant wheat across northern Nigeria.”
He also said arising from COVID-19, Nigeria’s economy recorded a negative growth rate of 1.8 per cent in 2020, while the African continent posted a negative growth rate of 2.1 per cent growth rate, its lowest in two decades.
Adesina said AfDB, which launched a $10 billion Crisis Response Facility to support countries and provided $289 million in budget support to Nigeria, projected the country’s economic growth rate to rebound to 2.4 per cent this year and reach 2.9 per cent by 2022.
He said the recovery would depend on access to vaccines and tackling debt issues as Africa had only two per cent of its population vaccinated, compared to 54 per cent in the United States and 75 per cent in Europe.
Adesina assured that the AfDB would invest $3 billion in support of local pharmaceutical industries in Africa, including in Nigeria, while urging the federal government to decisively tackle its debt challenges.
He said, “The issue is not about debt-to-GDP ratio, as Nigeria’s debt-to-GDP ratio is still moderate.
“The big issue is how to service the debt and what that means for resources for domestic investments needed to spur faster economic growth. The debt service to revenue ratio of Nigeria is high at 73 per cent.
“Things will improve as oil prices recover, but the situation has revealed the vulnerability of Nigeria’s economy. To have economic resurgence, we need to fix the structure of the economy and address some fundamentals.
“Nigeria’s challenge is revenue concentration, as the oil sector accounts for 75.4 per cent of export revenue and 50 per cent of all government revenue. What is needed for sustained growth and economic resurgence is to remove the structural bottlenecks that limit the productivity and the revenue earning potential of the huge non-oil sectors.”
James Emejo and Olawale Ajimotokan in Abuja
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