Nigeria’s Foreign Exchange Earnings Will Be 70% Agriculture by 2050

Nigeria’s Foreign Exchange Earnings Will Be 70% Agriculture by 2050

China is planning to fix a deadline to end the production and sales of fossil-fuel-powered vehicles. That is a big deal because over the last few years, China has been seen as a nexus of heavy global pollution. But now, it is working hard to clean the air and drive a post-petroleum era.

China will set a deadline for automakers to end sales of fossil-fuel-powered vehicles, becoming the biggest market to do so in a move that will accelerate the push into the electric car market led by companies including BYD Co. and BAIC Motor Corp.

Xin Guobin, the vice minister of industry and information technology, said the government is working with other regulators on a timetable to end production and sales. The move will have a profound impact on the environment and growth of China’s auto industry, Xin said at an auto forum in Tianjin on Saturday.

Let us assume that China follows UK and France and puts the deadline in 2040, it means by 2050, more than 50% of global cars could be totally non fossil-fuel powered. (Both UK and France had already set a deadline of 2040 to phase out fossil-fuel-powered cars. I also expect other countries to follow through to make that 50%) Even without America acting, the trajectory is obvious that electric vehicles will be the driving element of automobile making of the future.

Volkswagen AG Chief Executive Officer Matthias Mueller announced sweeping plans to build electric versions of all 300 models in the group’s lineup as the world’s largest automaker accelerates the shift away from combustion engines and tries to draw a line under the emissions-cheating scandal.

The African Development Bank had noted that African agriculture will grow to $1 trillion by 2030. Nigeria will be a big part of that number. The present government is putting emphasis on agriculture and if subsequent ones continue to sustain the plans, we could have a $450 billion business there by 2030. Nigeria and South Africa are the two major agro-producers at the moment in Africa, but Nigeria has more room to grow than South Africa.

Our petroleum sector will still be relevant with the petrochemicals and other allied sectors required, but projects like refinery may see demand shocks. Simply, Nigeria will see massive economic dislocation over time, as oil makes way for agriculture, and the latter becomes the main source of our foreign exchange earnings. I project we can see up to 70% of that by 2050. Even if we still export crude oil, the competition from electric technologies will reduce the price per barrel. So, it will not attract as much value it has historically attracted in the international market.

While the agriculture sector sustains over 80 percent of rural households, the Nigerian economy remains heavily dependent on its oil and gas sector which accounts for 12 percent of GDP but, as noted above, over 90 percent of export earnings and over 70 percent of government revenues

Agriculture will also stabilize our foreign reserves with minimal cyclical boom and bust associated with petroleum. Nigeria has the land and the population. What we need is to modernize the agricultural process so that productivity can improve.

Today, oil dominates our foreign reserves and government plans to get the non-oil sector to be more than 50% by 2020. A key part of that will be agriculture. The roles of oil and agriculture will reverse on their contributions to Nigeria’s foreign exchange earnings,  in 30-40 years. Today, crude oil accounts for over 90% of Nigeria’s foreign exchange earnings, about 35% of gross domestic products (GDP), and  75% of government revenue. That is not good.

The Federal Government on Tuesday, unveiled plans to derive over 50 per cent of its foreign exchange earnings from agro-industrial exports by 2020. The plans are contained in a draft trade policy which was considered and reviewed during a meeting of the Enlarged National Focal Point (ENPF) on trade matters in Abuja

It will be a huge redesign in the economy as we will see agriculture, move from less than 10% of the foreign exchange earnings to more than 70% within 35 years. I do expect manufacturing, especially lower level manufacturing, to contribute even more than raw-crude export.

Electric vehicles are indeed totally awesome when you note that Tesla can automatically upgrade the batteries of vehicles fleeing the hurricane in Florida. A software update gave Irma refugees a few dozen more miles per charge, according to Quartz. Electric automobile has a great promise, and that will be a challenge to fossil-fuel addicts who believe that the future will not come.


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