Largest African Economy: Nigeria Must Increase Productivity Through Diversification – Analysts

For Nigeria to reclaim its position as the largest economy in Africa, analysts said the country need to address fundamental issues that would move the country away from being a consumption economy to a producing economy.
For them, the bottom line is increased productivity, but the primary thing to do is for the country to diversify its economy as fast as possible.
Speaking with Leadership, analysts noted that while Nigeria’s status had been affected by the depreciation value of its local currency, the issues affecting the economy still remains the same. According to them, there is need for the Government to address the major issues which bothers on the productivity of the nation.
An analyst with Ecobank, Olakunle Ezun stressed the need for government to address basic infrastructure needs so as to engender the growth of the real sector which he said remains sacrosanct to the growth of the economy.
Likewise, the Managing Director and Chief Executive of Cowry Assets Management Limited, Johnson Chukwu urged the government to focus more on economic growth which will in turn translate to a stronger currency.
Noting that the Nigerian economy still remains big, he stressed the need for both the fiscal and monetary authorities to work together in growing the real sector particularly the Small and Medium scale Enterprises (SMEs) which he referred to as the engine of growth.
Kunle Ojo, a Lagos based analyst said, the sooner the federal government relegate oil to the background, the faster it will recover from the problem it currently faces.
Ojo said, if serious attention is given to agriculture, mining and improving of infrastructure, particularly electricity, South Africa would return to its rightful position as the second largest economy in Africa.
The thinking is that, if the country diversifies, then the much foreign exchange spent on importation of agricultural products would be saved and that the country can even earn additional foreign exchange aside the one gotten from crude oil export.
On his part, Ezun urged that the government needs to focus on addressing the rising unemployment and misery index rate as well as a lower life expectancy rate of the country. He noted that until the country grows its real sector and becomes productive it will continue to face the same problems.
Nigeria’s unemployment rate has risen to 12.1 per cent in the first quarter of 2016, up from 10.4 per cent in the fourth quarter of 2015, while inflation has risen to a six year high of 16.5 per cent in June 2016.
South Africa had overtaken the Nigerian economy in terms of Gross Domestic Product as its GDP was at the end of 2015 stood at $301 billion at the rand’s current exchange rate while Nigeria’s GDP is $296 billion.
Although both nations face a recession in 2016 as their economies contracted in the first quarter of the year, the decline in the Nigerian currency had seen the valuation of its GDP in dollar terms drop below that of South Africa.
Nigerian economy shrank by 0.4 pe rcent in the first three months of the year amid low oil prices and output and shortage of foreign currency that curbed imports, including fuel, while South Africa GDP contracted by 0.2 per cent as farming and mining output declined.
South Africa’s rand had appreciated more than 16 per cent against the dollar since the start of 2016, and Nigeria’s naira lost more than a third of its value after the central bank removed a currency peg in June.

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