The Governor, Central Bank of Nigeria, Mr Godwin Emefiele, has said the detection of crude oil and the country’s increasing reliance on crude oil revenues have led to a severe downturn in the agriculture and manufacturing sectors.
He said the development naked the economy to vulnerabilities that normally accompanied an increased dependence on a single commodity for survival.
The CBN governor said given Nigeria’s dependence on crude oil revenues for close to 86 per cent of the country’s foreign exchange earnings and over 60 per cent of government expenditure, the drop in prices in 2014 led to heightened inflationary pressures, depreciation of exchange rate, significant drop in external reserves, and eventually, the recession of 2016.
The apex bank boss said these in his economic blueprint for the economy for the next five years.
Emefiele said if Nigeria had maintained its market dominance in the palm oil industry, which stood at 40 per cent in the 70s, the country would be earning above $20bn annually from the cultivation and processing of palm oil today.
This $20bn earnings, he explained, would have provided a sufficient buffer for the nation, following the drop in crude oil prices.
He said, “At a point in our nation’s history, Nigeria survived on revenues from the non-oil sector, to the extent that we were a dominant exporter of agricultural produce into the global market.
“Some of these products include cocoa, groundnuts, cotton and palm oil. Our focus in agriculture supported the raw material needs of our industrial sector and created employment opportunities for millions of Nigerians.
“Regrettably, the discovery of crude oil and the increasing reliance on crude oil revenues led to a severe downturn in the agriculture and manufacturing sectors, while also exposing our economy to the vulnerabilities that normally accompany an increased dependence on a single commodity for survival.
“Our situation is further worsened by the unpatriotic activities of some unscrupulous individuals and businesses who embarked on massive smuggling and dumping of goods that can be produced in the country, thus leading to the demise of our agricultural and manufacturing sectors and hence the attendant high level of unemployment.”
He said the rising volatility in the crude oil market, occasioned by the rapid increase in the supply of shale oil by the United States, which had seen its production rise from 9 million barrels in 2017 to over 12 million barrels, currently posed risks to the Nigerian economy.
The governor said the development finance efforts of the CBN were driven by the need to reduce the country’s reliance on revenues from crude oil.
In order to reduce the reliance on the importation of items that could be produced in Nigeria, he said the bank restricted access to foreign exchange on 43 items while deploying intervention funds to support growth and productivity in the agricultural and manufacturing sectors.