The president of the African Development Bank (AfDB), Dr Akinwunmi Adesina, has faulted the Central Bank of Nigeria’s (CBN’s) exchange rate policy of foreign exchange (FOREX) restriction.
Speaking at the Manufacturers Association of Nigeria’s (MAN) Annual Adeola Odutola Lecture in Abuja Yesterday, Adesina criticised the country’s policy of limiting access to foreign exchange (forex) rather than expanding its forex earnings.
“A well-developed and policy-enabled manufacturing sector, with an export orientation will spur greater innovation, industrial policies for export market development, and structural transformation of the economy,” he said.
“Instead of being consumed with the conservation of foreign exchange, the focus would shift to expanding foreign exchange through enhanced export value diversification,” he stated.
He also faulted Nigeria’s ‘imports substitution’ economic model that tends to focus more on replacing imports and saving the naira rather than deliberately pursuing value-added manufacturing.
He stated that Nigeria has failed to diversify its export base to high-value market products over the years.
According to him, the country has failed to position itself for the type of economic growth and achievements attained by developing countries like Vietnam and Malaysia.
He also called for a policy shift that will focus on expanding foreign exchange (forex) through enhanced export value diversification rather than conservation of forex.
Adesina stated; “While for decades the share of manufacturing in Nigeria’s GDP, has hovered around 7%, the nation has not been able to extricate itself from the comatose of its industrial manufacturing sector to unleash the fullness of its potential.
“The performance of the manufacturing sector in the past five years has been poor. Between 2015 and 2017, the sector declined by -1.5%, -4.3% and -0.2%. This is in sharp contrast to the dynamic and rapid performance of manufacturing in Asian countries, such as Singapore, Malaysia and China.
“While Asian countries have focused on the export of manufactured products, Nigeria’s approach has been on import substitution. The manufacturing sector of Nigeria represents only 3% of total revenues from exports, but accounts for 50% of imports in the country.
“Instead of being forward-looking in expanding the share of the manufactured goods in its total export revenue, Nigeria focuses on the model of import substitution.
“Import substitution, while important, is a very restrictive vision. It looks towards survival, instead of looking to create wealth through greater export market and value diversification.
“The end result is a manufacturing sector that cannot develop nor compete globally, but limits itself to “survival mode, not a “global manufacturing growth mode”.”