Ekpo: Nigeria’s Manufacturing Sector Must Contribute 40% to GDP to Propel Economic Growth

Dike Onwuamaeze

An Emeritus Professor of Economics and former board member of Central Bank of Nigeria and its Monetary Policy Committee (MPC), Prof. Akpan Ekpo, has stated that manufacturing sector’s contribution to Nigeria’s Gross Domestic Product (GDP) must reach 40 per cent before the country could have a strong economy.

Ekpo, a former Director General of the West African Institute for Financial and Economic Management (WAIFEM), stated this yesterday, in an interview on Arise News Channel’s ‘The Morning Show,’ where he made the case that Nigeria must industrialise to build a strong economy that could withstand negative external shocks.

He said: “Since 1963, Nigeria’s manufacturing sector has contributed less than 12 per cent to the GDP. For you to have a strong economy, that sub-sector, and its value chain, must contribute at least 40 per cent to the GDP.

“But the irony of it is that recent data revealed that the service sector is contributing about 55 per cent or more to the GDP, which we have to be cautious and very careful about because it is a false narrative that shows that we have arrived.”

According to him, in terms of growth trajectory, a country grows from an agriculturally dominated economy to an industrialised economy with a strong manufacturing base before growing to a point where the service sector would lead economy.

“When I hear that the economy is being diversified, I would ask if those making the claim are looking at the data because the oil sector still dominates and defines the structure of the country’s economy,” he said.

Ekpo, who was also a former vice chancellor of the University of Uyo, AkwaIbom State, said Nigeria must be honest to acknowledge that its economy is currently in disarray

He said: “I have heard that the economy’s performance in the past two years has been so good. But I ask myself: what data are they looking at?

“It is the micro that you aggregate to get the macro. The micro itself does not show that we are building a strong economy. So the numbers we are seeing do not make sense.

“What we have to do is to build a strong Nigerian economy, which we have what it takes to do so that we can resist any shock that comes from anywhere.”

Ekpo also warned that Nigeria should be wary of increasing its public debt stock simply because the rebased GDP showed that it has space to borrow more.

He said: “Nigeria’s debt profile is increasing. But this is my worry: you have rebased the GDP so the denominator of that GDP becomes large to indicate that you have space to borrow.

“But must you keep borrowing? GDP does not pay debt. Revenue pays debt. We are in trouble if you look at Nigeria’s debt-to-revenue ratio because a lot of the revenue comes from crude oil. 

“For now, we are repaying debts and think that it is sustainable. But if anything happens to the oil sector we cannot repay our debts.”  

He said that Nigeria should rethink its propensity to borrow because the country might not have the opportunity to enjoy debt forgiveness again.

Ekpo, also expressed concern over the obsession of the government to celebrate every increase in public revenue, saying that Nigeria is “increasing revenue to give to the political class to waste and perhaps to service debt.”

He also remarked that even the country’s seemingly growing foreign reserves and stable foreign exchange market could be illusory because the country would be in trouble if anything happened to the oil sector.

“We must have a productive economy where the reserves are not dependent on the export of crude oil, but on firms that are producing and exporting to earn foreign exchange.

“That is where you can be sure that the reserves are making sense. In economics, foreign exchange (FX) stability is viewed at ‘what price level’ and ‘in whose interest’ is that stability, which makes N1,500 too high because of its pass-through to inflation that affects the poor more than the rich,” Ekpo said.

He said the perceived stability of the Naira would collapse if the central bank withheld its supply of dollars to the forex market.