Exploring alternatives to oil

The fall in oil price from well above $100 per barrel to below $50 per barrel has put Nigeria and other oil-dependent economies in dire straits. In Nigeria particularly, a combination of this with mindless looting of the national treasury has brought the country to the brinks economically.

Since the discovery of oil in commercial quantity in the creeks of the Niger Delta, Nigeria has remained a mono-economy, but following the downturn at the international oil market, diversification and the search for alternatives to oil have become topical issues in the country.

We recall that at the onset of the oil price fall in the international market, the federal government assured Nigerians that the impact of that fall would not be much on the economy and Ngozi Okonjo-Iweala, the coordinating minister for the economy at the time, disclosed that government had identified growth areas, including agriculture and housing, that could hedge the economy against collapse.

Though the present administration in the country has made significant provision for housing and infrastructure development in the 2016 budget, and we join investors and housing developers in welcoming the development, we nonetheless urge caution and advise that government should restrain itself from going into direct housing construction. The government should rather focus on helping to build strong housing and mortgage systems with the private sector serving as the engine of execution, just as it should also concentrate efforts at creating the enabling environment by developing the needed infrastructure.

We consider the development of a viable mortgage system critical because, for too long, it has remained at infancy, largely inaccessible and unaffordable to low-income earners due to its high interest rate and short repayment tenor.

Though some level of success was recorded in agricultural development by the past administration, it is our belief that for a country as richly endowed as Nigeria, agriculture and housing could be good alternative revenue sources, but there is much that the country could make from the large deposits of mineral resources in various parts of the country begging for development. Exploiting these resources involves creating an enabling environment by developing the right infrastructure, especially roads and power, that would aid the setting-up of both extractive and manufacturing industries.

Again, because of its capacity to create jobs for economic growth and empowerment, we also see much in the construction industry for a struggling economy such as ours. We agree with industry operators that with the right investment, construction will turn the economy around much quicker than any other sector of the economy.

Expectation is that, by 2020, the country alongside India will enjoy higher growth rates than notable nations like China, and by 2021, the construction industry will triple its investment value. It is our belief that the contribution and impact of this industry to the economy cannot be neglected as it has become a veritable index when it comes to employment generation for both skilled and unskilled employment in the country and it is estimated that it contributes 3.2 percent of the country’s GDP.

We, therefore, urge the government and its economic planners to encourage the development of this industry which has also been identified as Africa’s largest construction market expected to grow at the fastest rate in the world through 2020. This call becomes all the more urgent considering a 10-year forecast from Global Construction Perspectives and Oxford Economics that construction growth in Nigeria will be the fastest of all markets and that, though  China will overtake the US as the world’s biggest construction market by 2018, the fastest growth will happen in Nigeria.