Speech presented by Mansur Muhtar, vice president, Islamic Development Bank and former Nigerian minister of finance at the 7th Anniversary Lecture of Realnews on November 19, 2019.

1. Dr. Mansur Muhtar
Vice President
Islamic Development Bank

2. 3
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Outline or Presentation…
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3. The end of oil ?
Nigeria is still a big player in
the international oil market
- Largest oil producer in Africa,
ranked 12th in the world;
- 2nd largest amount of proved
crude oil reserves in Africa
- Largest natural gas reserves on
the continent
Main challenges
- Domestic: Production below
potential, due to supply
disruptions and low investment
- Global: Oil prices likely to
remain low due to large supply
and stagnating demand
Key messages:
- Oil sector will remain important
in the medium-term
- Address the security and
stability challenges to optimize
the production
- Diversify the economy to
reduce oil dependence
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0.0
5,000.0
10,000.0
15,000.0
20,000.0
25,000.0
30,000.0
35,000.0
40,000.0
45,000.0
0.0
500.0
1,000.0
1,500.0
2,000.0
2,500.0
3,000.0
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
2013
2016
2019
Nigeria's Petroleum Production
and Reserves
Petroleum production (b/d)
Petroleum reserves (barrels)

4. Oil-Fueled
Growth,
The Record…
Growth remained volatile and
subdued
A decade of acceleration : 2001-
2010;
- Nigeria’s economy grew faster than
the average middle income country
However, no significant dent on
poverty and inequality
- Extreme poverty rate above the
SSA average
- HDI index below the SSA average
- Inequality Indices among highest in
the world.
Key Messages:
- more efficient and equitable use of
hydrocarbon rents through better
governance and social policies
- Diversification of the sources of
growth
4
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-4
-2
0
2
4
6
8
10
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Per Capita GDP Growth (1991-2018)
Nigeria Sub-Saharan Africa Middle income

5. Oil
abundance
not a curse;
However…
Economic
vulnerability
Unrealised
potential
Misspent
resources
Dutch
Disease
Weak
institutions
Beyond Oil: A new economic
development path…?

6. A Strong Case for Economic
Diversification
Broadens sources of growth with greater domestic linkages
Shields economy from price and output volatility, reduces
vulnerabilities
Allows sustainability of growth against natural resources
depletion
Enhances employment prospects by providing expanded
and wider job opportunities
Facilitates a more geographically-balanced, equitable growth
Economic
Diversification
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7. Exploring Nigeria’s potential:
It’s People are it’s greatest asset…
 Most populous country on the African continent
 Estimated at about 196 million persons, 7th largest population
in the world.
 Projected to reach 263m in 2030 (5th largest) and 401m in 2050
(making it 3rd largest after India and China).
 Opportunity for reaping considerable demographic dividends.
 Human resource base characterized by vibrant, entrepreneurial,
spirited and highly educated work-force. Talented diaspora
 Large numbers of young people, presenting opportunity for
deepening human capital.
 Base for a sizeable domestic/home market – growing size and
strength of consumer class.
 Key challenge: providing basic social services and decent
employment opportunities.
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8. Counting some blessings: Natural Resources
Endowment and Geographic location
 Nigeria endowed considerable expanse of arable land and diverse
climate/topography and vast potential in solid minerals sector – coal,
iron, ore, tin, uranium, phosphates, limestone. Etc. Provide basis for
growth and diversification.
 Large reserves of oil and natural gas, if better-exploited, provides major
opportunities for revenue generation and growth acceleration.
 Advantageous geographic location in West Africa also a key asset.
Facilitates expanding trade relations with neighboring countries as well
as easy access European, North and South African markets.
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9. Proactive Support for Real Sector Growth
Good Governance and Capable Institutions
Stable, predictable economic/financial Environment
Investment in Physical and Social Infrastructure
Achieving Economic Diversification in Nigeria-
The Building Blocks…
Enabling Environment: Security, Law and Order
Mobilization and Effective Utilization of Resources.
The Primacy of Leadership
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10. Provides clear
rules of the
game for
economic
activity.
Improves
business
environment.
Legal and
regulatory
framework
Creating and Enabling Environment – Security,
law and Order…
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11. Creating an enabling environment-
governance and institutions…
Improving governance central to achieving economic development.
 Critical Challenge today - combatting corruption and establishing adherence
to rule of law.
 Need to focus on reshaping values and norms of state and governance –
Emphasis honesty, integrity and service to society, performance and results-
orientation, transparency and accountability.
Imperatives of reforming civil service
 Public sector capacity and institutional challenges would adversely impact
policy design and implementation of change.
 Civil service reforms crucial to re-professionalize the service, improve policy
formulation/execution capacity as well as enhance service delivery.
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12. Getting the Economic
Fundamentals Right
 The primacy of sound
macroeconomic policies in
creating an enabling
environment...
 Stable Prices; Competitive
Exchange Rates; Buoyant
External Reserves; Sustainable
fiscal policy;
 Effective coordination between
monetary, fiscal and exchange
rate policy
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 Improving macroeconomic
management and financial
regulation
 strengthen fiscal rule, rebuild fiscal
buffers and pursue counter-cyclical
fiscal policies.
 enhance access to financial services
for productive sectors and to meet
needs of micro-enterprises and
SMEs.

13. Creating an enabling environment-
Physical Infrastructure.
Rebuilding and expanding physical infrastructure
 Infrastructure deficit, particularly in energy sector as
major constraint to growth
◦ hampers productivity, raises cost of doing business
and undermines competitiveness and trade.
 “Big Push” critical to securing future growth and
economic diversification.
◦ Key efforts should focus on Energy, transportation,
and ICT infrastructure..
 Improved government spending key, but not sufficient.
◦ effective leveraging of private sector investment
required (Public-Private-Partnerships).
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14. Creating an enabling environment-
Human Capital.
Rebuilding/Strengthening human capital
 Investment in health and education key to unlocking
economic growth potential and supporting
diversification through
◦ developing a productive work force;
◦ pay more attention to the neglected area of technical
and vocational education, to impart relevant skills and
bridge jobs-skills mismatch;
◦ promote science, technology and innovation to
leapfrog into the fourth industrial revolution.
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15. Supporting Real Sector Growth - Agriculture
Boosting agricultural production and
exports
 Agriculture as major source of
employment and incomes
o important for poverty
reduction, job creation.
 High growth potential, hence key to
economic diversification
o only 60% of 40 million ha arable
land under cultivation,
o low yields per hectare (20-50%
below that of other developing
countries).
 Linkages to support industrialization.
 Essential for improving food security.
Sources of agricultural growth
 Technological innovation and
productivity improvement,
o improvement of infrastructure
for agricultural production and
commercialization
o Improvements in input supply
and distribution systems
o Improved access to finance.
 Strengthen value chain approach
o measures aimed at boosting
agricultural production to be
complemented with
improvements in transport,
storage and processing.
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16. Supporting Real Sector Growth - Industry
Crucial role for government in
facilitating industrial
transformation
◦ Taking advantage of emerging
industrial opportunities to fill niche
created by graduation of China,
India, Brazil, etc from low-skilled to
more capital-intensive production.
◦ Provision of soft (skilled labor
force) and hard infrastructure by
the State key to actualizing
potential.
◦ Cluster-based approach (Export
Processing Zones, Industrial Parks).
Industrialization as key component
of Nigeria’s economic diversification
and structural transformation
◦ Major source of productivity
increase and technological
innovation.
◦ Key constraints to sector growth
include inadequate power supply,
high cost of inputs, high cost of
doing business, infrastructure
deficit, and limited access to
finance.
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17. Accessing Multilateral and bilateral loans
Expanding Non-oil revenue taxes
Improving quality and efficiency of spending
Exploiting domestic capital markets
Sustainable and prudent public domestic borrowing
Sources of Finance for investments to support
economic diversification
Boosting oil and gas revenue
Enhancing Foreign Direct Investment and Portfolio
Flows.
Others: Diaspora Bonds, Securitization, Recovery
of Stolen Assets, Curbing illicit financial flows, etc17

18. Bringing it all together:
The primacy of
 Focused, credible, trustworthy and effective leadership is key to
achieving economic development.
 Leadership not one-person endeavor. A strong team needed that
shares common ideals; a critical mass of credible leaders (cabinet,
advisers, etc), men and women of integrity, ability and track record.
 Key leadership task is providing an inspiring vision and instilling in the
mindsets of Nigerians a compelling need for change, anchored on a
unity of purpose.
 Tough decisions which demand end to business as usual
 Movement out of comfort zone – from transactional to
transformational space.
 Trust-building measures needed in current trust-deficit environment
arising from legacy of past leadership and misrule.
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