Nigeria's economy needs policies that will attract foreign direct investment (FDI) in labour intensive industries.
Managing Director/Chief Executive, Financial Derivative Company Limited, Mr. Bismarck Rewane made this observation while speaking at the 19th seminar for finance correspondents and business editors, organized by the Central Bank of Nigeria (CBN) in Kaduna.
The rebasing of the nation's GDP showed that the service sector accounts for half of the N82 trillion goods and services produced in the country. In a presentation titled, 'Gross Domestic Product Rebasing and Implications for Nigeria's Investment Environmen' Rewane noted that the outcome of the rebasing exercise showed that Nigeria is becoming a service oriented economy.
He however noted that given the fact that investment in services don't generate much job, the country needs policies that would enhance the performance of job creating sectors like construction and manufacturing.
Represented by Dr. Afolabi Olowookere, Head of Research, FDC, Rewane noted that while the experiences of other countries show that rebasing can lead to increase in investment, there are factors withinNigeria's investment climate that may militate against such scenario in the country. He said, "The investment environment in Nigeria is shaped by some macroeconomic, governance, infrastructure and other micro factors. While some successes have been recorded in the macroeconomic environment, much still have to be done to other factors as they grossly limit the competitiveness of the country. Theoretically, rebasing may boost investment in Nigeria; especially foreign investment. Evidence from countries that have rebased and the trends of investment data in Nigeria however suggest that rebasing will have higher impact on foreign portfolio investment than foreign direct investment and domestic investment. "Even though there are countries that have rebased and experienced higher foreign inflow, Nigeria has to work on improving its competitiveness and removing the identified problems to investment. It has to exploit the new opportunity presented in the service sector; but this has to be done without jettisoning its industrialization goal. This is because in the end, industrialisation is necessary for sustainable growth. More importantly is the growth in the manufacturing sector.
"In addition to probable increase in investment in these sub-sectors, investments in labour-intensive industries will be high-yielding for the country and help solve its paradox of high growth and high unemployment."