Adedipe links struggling economy to real sector’s performance

Founder of BAA Consult Limited, Dr Biodun Adedipe, has noted that a major reason the economy is struggling is because its growth is largely driven by the services sector rather than the real sector.

Speaking on economic projections for the year recently, he said even though the real sector can create more jobs and generate more foreign exchange (FX) than the services sector, the former is struggling with too many issues and has been left to decay, severely limiting its potential to perform optimally.

“The service sector is about 54 per cent of the country’s gross domestic product (GDP) and this speaks to why we are having the challenge of stagnant growth. Until we address and revamp manufacturing and improve productivity in the agriculture sector, we will never get the kind of growth we desire,” he said.
He said food deficit and insecurity mean different things, with the former meaning Nigeria not having enough food or the kind of food that people can eat. He said the country is battling more with the latter and the only way to deal with it is to produce in large volumes like other countries have done.

“We have been asking ourselves how to deepen Nigeria’s productivity and improve cultivation and the answer is simple. We must ramp up production and significantly reduce our 60 per cent post-harvest losses, meaning Nigeria must invest in infrastructure for storage and processing. If we can do these, we will increase food availability, which is the first and key element of the four legs of food security. If we can increase the volume of food produced in the country, it will take care of affordability and reduce inflation.”

He said it is clear from available data that food inflation remains a major challenge in Nigeria and to tackle this problem, the government must work on overall security, which will in turn positively affect food security and ultimately, stem food and headline inflation.

“Energy cost for production is another major problem and there is little we can do without energy. Hopefully, if a significant volume is made available for distribution, it will reduce the cost per unit.

“When it comes to manufacturing, we must go back to the basics. To encourage local production, there must be incentives in place to encourage local manufacturers. They are already dealing with so many issues and if we intend to revamp the sector, the government must do things differently this year. Duties on imported finished goods should be increased while duties on raw materials and inputs for domestic manufacturing should be reduced with affordable FX and credit made available to them,” he said.