FX Crisis: Obasanjo Calls for Economic Diversification

October 24, 2023
Economics of Diversification

By Adedapo Adesanya

A former president of Nigeria, Mr Olusegun Obasanjo, has said the country must work towards weaning itself from the over-dependence on oil and embrace non-oil exports to overcome the foreign exchange problems that have adversely impacted the nation’s economy.

Despite the dwindling contribution of oil to the Nigerian economy, it is still largely responsible for more than 80 per cent of forex earnings that the country makes.

Speaking at the closing ceremony of the Agribusiness Export Readiness Accelerator Training Programme for 200 entrepreneurs drawn across the country organised by the African Import Export Bank (Afreximbank) held at Oke Ona Conference Hall of the Olusegun Obasanjo Presidential Library (OOPL) in Abeokuta over the weekend, the former Nigerian head of state lamented that the discovery of oil some years back, which was then regarded as a blessing, is now becoming a curse.

“Historically, Nigeria has been known for its near total dependence on earnings from petroleum export, and her economy has suffered devastations arising from various oil shocks without any buffer to cushion against major declines,” he said.

“What was initially celebrated as a major blessing has become what economists now refer to as ‘oil curse’. The recent volatility in the oil market and the expansive global push towards alternative energy now leaves no one in doubt about the urgency of diversifying our economic base through the promotion of non-oil exports,” he said.

Mr Obasanjo posited that with Nigeria’s enormous resource endowments, economic diversification is achievable in the shortest possible time. This, he said if robust policies with appropriate implementation mechanisms are put in place, running consistently over a period of time.

According to him, nations like Indonesia and Malaysia were once mono-product economies like Nigeria, but are now well diversified and therefore less vulnerable to global economic shocks

The former President, who ruled from 1999 to 2007, expressed his sadness that Africa has continued to remain at the bottom of the global trade pyramid and global value chain accounting for only 1.9 per cent of global manufacturing because it has failed to add value to its little export of primary commodities.

“In Nigeria, not only do we export our oil as crude, we turn around to import virtually all our petroleum products from other nations. The story is not remarkably different for our non-oil exports.

“Since international trade is a good barometer of the world economic growth and development, it then becomes quite easy to understand the poor economic performance of Africa in general, and Nigeria in particular,” Mr Obasanjo said.

Drawing a personal experience, he said he was now into exporting woods among other agricultural products, noting that those who would be successful in agribusiness exports must however be resilient, dedicated, and embrace quality standards.

Adedapo Adesanya

Adedapo Adesanya is a journalist, polymath, and connoisseur of everything art. When he is not writing, he has his nose buried in one of the many books or articles he has bookmarked or simply listening to good music with a bottle of beer or wine. He supports the greatest club in the world, Manchester United F.C.

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