THE TRANSFORMATION AGENDA: ECONOMIC DIVERSIFICATION

Report
 The Outline of my presentation is as follows:
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The Transformation Agenda – An Overview
Nigeria’s Economic Structure / Diversification
External Sector Strategies
Investment Opportunities in Nigeria
NEXIM’s Role in Economic Diversification
Concluding Remarks
 The Transformation Agenda is a medium term strategy
(2011-2015), which has been designed to shape the focus
and direction of the current administration in meeting
Nigeria’s socio-economic challenges and long term
development aspirations
 It is premised on, and draws inspiration from the Vision
20:2020 Economic Transformation Blueprint, which is a
long term plan for stimulating Nigeria’s rapid growth and
development through a diversified, sustainable and
competitive economic environment.
Focus of Federal Government’s Transformation Agenda
• Government
budget
transparency
• Financial
Management
• Fight
corruption
Investment in
key sectors
Good
governance
and anti
corruption
Focus of FGN
Transformation
Agenda
Job 11
creation
• Infrastructure (power
and transportation)
• Agriculture
• Manufacturing
• Entertainment
Industry
• Education
Macroeconomic
reforms and stability
• Fiscal
Optimisation
• Accommodative
monetary and
exchange rate
policy
• Investing in priority
sectors that will
create jobs
13
 Over the last one year, the Nigerian economy has
recorded significant progress in line with the
transformation programme as follows:
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GDP growth of 7.36% in 2011, and projection of 7-8% up to 2015,
which is significant in the light of global economic crisis.
Financial sector reform, leading to improved capitalisation of
Nigerian Banks and gradual recovery of the stock market
Proactive Monetary Policy measures to manage inflation and
exchange rates
Improvements in external reserves balance, leading to increase
to US$38. 72bn in 17th May, 2012 from US$32.3 in January, 2011.
 economic performance cont’d
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Improved budget process following the launching of medium
term economic framework aimed at reducing recurrent
expenditure and freeing more resources for capital projects
Sovereign rating of B+/B by S&P, with target to achieve
investment grade (BBB) by 2015.
Implementation of Power Roadmap, leading to inauguration of
the Board of Bulk Trading Company to intermediate between
power producers and distributors, thus giving IPPs the confidence
to invest.
 While the Nigerian economy has continued to record high
growth, Crude Oil remains the dominant source of government
revenue and export earnings
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70% of government revenue and 95% of export earnings averagely
 This prevailing structure has exposed the Nigerian economy to
the vagaries of the oil market.
 One of the key objectives of government under the
transformation Agenda, therefore, is to aggressively pursue a
structural transformation of the economy from a mono product
to a more inclusive, diversified and industrial economy
 Economic diversification is further underscored by the
following:
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Oil sector accounts for only about 16% of Gross Domestic products
and has limited multiplier and linkage effects
Agriculture currently contributes about 41% of GDP and employs over
60% of the population
Over the past five years, Oil sector growth has declined, while the
non-oil sector has been the main growth driver
Solid minerals currently contributing less than 1% of GDP, in spite of
Nigeria’s huge solid minerals deposits.
SECTORAL CONTRIBUTION TO GDP
CONSTRUCTION
2%
SERVICES
18.1%
AGRIC
40.9%
TRADE
18.7%
CRUDE
PETROLEUM
15.8%
MANUFACTURING
4.2%
SOLID MINERALS
0.3%
Source: CBN Annual Report
Activity Sector
Crude Petroleum
Agriculture
Solid Minerals
Manufacturing
Communication
Hotel & Restaurant
Real Estate & Business
Source: CBN
2006
-4.5
7.4
10.3
9.4
32.5
12.9
11.3
2007
-4.5
7.1
12.8
9.6
28.5
13.0
11.4
2008
-6.2
6.3
12.8
8.9
34.0
12.9
11.4
2009
0.5
5.9
12.1
7.9
34.2
11.9
10.6
2010
4.6
5.7
12.3
7.6
34.5
12
10.4
 From the foregoing Diagram & Table, it is evident that the
contribution of services sector is growing at double digits along
with the mining sector. However, their contribution to the
external sector is quite minimal.
 Also, even though Agriculture is the largest contributor to the
GDP, Nigeria remains largely an import dependent economy
with huge food import bills.
 Non –oil Exports constitute less than 5% of total exports with
over 70% of the exports comprising of raw and semi-processed
agricultural products.
 The growth strategies under the vision objectives seek to
transform the structure of exports from primary to processed/
manufactured goods
Composition of Non-Oil Exports
Manufctured
Goods
5.8%
Solid
Minerals
11.2%
Others
9.8%
Agric
35.7%
Source: CBN
Semi
Manufactured
37.5%
 Under the current Transformation Agenda, the
agricultural value chain has been specifically targeted for
funding intervention towards value added exports of
some cash crops and other agricultural products.
 The Nigerian Incentive Based Risk Sharing System
(NIRSAL) has also been launched to de-risk the
agricultural sector and promote private sector
investment and credit flow to the sector
Measures
Comments
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Tax incentives
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Includes Tax concessions, Tax holidays (up to 7 years
under pioneer status), Capital depreciation allowance
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Improvement in
infrastructure
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Increased FGN capital budget
SURE (Subsidy Reinvestment Programme) to address
roads and power projects,
Implementation of Power Roadmap being pursued,
Infrastructure Concession and Regulatory Commission
established to facilitate private sector funding of
infrastructure
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Improved Port processes
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Reduction in number of agencies at the ports, leading
to reduction in clearing time to about 2 weeks from 4
weeks
Objective is for goods to be cleared within 48 hours
Nigerian Customs currently facilitating the Single
Window Model to facilitate trade
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Security of Life and
Property
Anti-corruption drive
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Export Incentives
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Incentive to Agric Sector
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Incentive to Solid Minerals 
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Police reform, Amnesty programme & other
poverty alleviation initiatives
Establishment of EFCC & ICPC
Increased oversight by legislative arm
Review and streamlining of the Export Expansion
Grant
Creation of Export Processing Zones
Agric Credit Guarantee Scheme
Launching of NIRSAL to de-risk and improve
funding of Agriculture
Agric machinery to attract zero duty
Enhancing effectiveness of ECOWAS Trade
Libralisation Scheme (ETLS)
3-5 years Tax Holiday
Deferred Royalty payment
Holders of mining lease to enjoy 75% Capital
Allowance in first year, and 50% subsequently
Zero customs and import duties
NEXIM’s Role in Economic Diversification
 The Nigerian Export – Import Bank was established by Act 38
of 1991 as Nigeria’s Export Credit Agency (ECA). The Bank is
equally owned by the Central Bank of Nigeria (CBN) and the
Federal Ministry of Finance Incorporated (MOFI).
 The Bank’s broad mandate is essentially to promote the
diversification of the Nigerian economy and develop the
external sector through the provision of the following
services in support of the non-oil export sector:
 Credit Facilities in both local and foreign currencies,
 Risk-bearing facilities - Export Credit Guarantee &
Export Credit Insurance
 Business Development and Financial Advisory Services
 Trade & Market Information
NEXIM’s Role in Economic Diversification
 The
Bank also complements in attracting foreign
investment capital towards the development and growth of
targeted industries and strategic sectors of the economy
through availment of concessional lines of credit, cofinancing arrangements and facilitation of buyers’ /
suppliers’ credit towards the adoption and acquisition of
new and clean technologies, assess to patents/intellectual
properties, etc.
 Highlighted below are also some targeted financial programmes
developed by the Bank in support of Government’s policy initiatives
towards economic diversification;
a) ECOWAS Trade Support Facility (ETSF)
 The ECOWAS Trade Support Facility (ETSF) was designed with the following
objectives:
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Increase the volume of recorded trade
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Integrate Small Scale traders into the formal payment system
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Assist to achieve ECOWAS & NEPAD’s goals of regional integration
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Create job and investment opportunities in line with Government’s transformation
agenda.
b) Creative Arts & Entertainment Industry Facility
 In view of Nigeria’s position as the most prolific film producers
worldwide and the 3rd largest in revenue receipts, the Bank had
developed an operating guidelines to support and enhance credit flow
to the entertainment industry with a view to:
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Facilitating the up-scaling of Nigeria’s film production quality to benefit
from the global film entertainment market valued at over US$90 billion in
2010.
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Facilitating the establishment of adequate digital production and
distribution infrastructures, etc
 To complement its financial intervention role, NEXIM maintains
collaborative relationship with other trade facilitation agencies to pursue
developmental roles that would enhance economic diversification, such
as the following:
 Regional Sealink Project
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In order to mitigate some of the non-tariff barriers to intra-regional
trade flows, especially against the background of growth of ECOWAS
trade cargo from 4.7 million tonnes to 13.2 millions in the past decade
and the absence of a maritime transport, NEXIM is facilitating the
establishment of a dedicated regional Sealink Project.
The proposed sealink project would essentially be private sector
operated and it is projected to also mitigate the issue of high
transportation costs and excessive transit time, which makes intraregional trade non-competitive and west and central African transport
and logistics costs one of the highest in the world.
 Borderless Initiative
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To complement its role as a member of the Trade Facilitation Task
Force, whose mandate is to improve Nigeria’s ranking on “Trading
Across Boarders”, NEXIM also partners with the Borderless Alliance,
a private sector-led partnership in collaboration with USAID / West
African Trade Hub and other stakeholders.
The aim of the Borderless Alliance is to promote trade and regional
integration in West Africa by addressing the problem of non-tariff
barriers.
This is to be achieved through policy advocacy in campaigns,
dialogues and information disseminations.
 NEXIM welcomes partnership opportunities in identifying viable
projects, co-financing opportunities (in areas like Renewable Energy
Projects), facilitating buyers/suppliers credits and accessing long term
funds for the purpose of investment in growth sectors of the economy,
especially in Manufacturing, Agro-processing, Solid Minerals, and
Services
 Nigeria has consistently shown over the past few years as an FDI
destination with one of the highest rate of return on investment
 Besides a large population and a growing middle class, Nigeria can be
a gateway for exports to West Africa and indeed other African countries
 Investment climate is fully liberalised with friendly incentives, policies
and laws.
 Also 100% business ownership is allowed for foreign investors under a
one-stop investment processing approval regime.
 Finally, we welcome investment interests in the Sealink Project.

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