NECA counsels FG on aggressive diversification from oil, gas

THE Nigerian Employers Consultative Association (NECA) has urged the Federal Government to formulate aggressive diversification policy from oil and gas dependence to other non-oil exports.

The President of NECA, Mr Larry Ettah, stated that other oil dependent nations were also affected by the slump in the crude oil price but only aggressive diversification policies took them out of recession.

He stated that his position was based on a comparative analysis of seven countries benchmarked against Nigeria with the objective of drawing economic policy implications that may inform policy options Nigeria may consider as it seeks to exit economic recession and return to the path of economic growth and development.

According to him, “a fellow West African economy, Ghana, dependent on commodities (cocoa, gold, oil) exports with struggling economy due to fall in commodity prices but now on recovery path though currently receiving assistance from International Monetary Fund (IMF).

“Saudi Arabia, a major oil exporting country with acute dependence on oil and gas exports is pursuing an aggressive diversification and economic reform programme. Egypt with large population also experiencing severe economic and political challenges. It has signed on to an IMF reform programme. Russia, a major global power with acute dependence on oil and gas exports is experiencing economic growth presently.

“Norway, a major European oil exporting economy that has institutionalised sovereign savings and avoided punishing impact of oil price shocks due to large sovereign wealth fund investments.”

Ettah illustrated that the experience of Saudi Arabia illustrated the need for a proactive, strong and concerted policy response as oil prices began to fall. Unlike the Saudis, Nigeria is yet to articulate and communicate a coherent policy agenda in response to the oil crises.

“While we note positively that government has now formulated an Economic Recovery and Growth Plan (ERGP) in consultation with all stakeholders and with assistance from McKinsey, this step is perhaps two years late and should be implemented forthwith. We expect ERGP implementation to be based on a strong agenda to diversify exports and government revenue sources; promotion of private capital and investment; deregulation of downstream petroleum; as well as an effective flexible exchange rate system,” he said.