The African Development Bank (AfDB) on Monday in Abuja commended the President Tinubu administration for unifying the naira exchange rate saying it would breath air of transparency into forex.
The bank's president, Dr Akinwumi Adesina, said this on Monday in Abuja at the second edition of Nigeria Employers' Summit.
The theme of the summit is, "Trade and Non-Oil: Changing the Narratives for Rapid National Development." Adesina, was represented by Lamin Barrow, Director-General, Nigeria Country Department of AfDB.
"The unification of the exchange rate management system is an important reform by the new administration that will enhance transparency in the allocation," he said.
Adesina said a vibrant and competitive private sector has the potential to accelerate diversification of Nigeria's economy and boost exports. He said the private sector development in Nigeria was however hamstrung by policy inconsistencies and implicit taxation.
The AfDB president said it was unfortunate many private sector firms in Nigeria were overburdened by implicit taxes. Adesina said the companies provide their own electricity, sink boreholes to get access to water, and repair roads around their places of operation.
"It is therefore not surprising that foreign direct investment (FDI) inflows have decreased from 8.8 billion dollars in 2011 to only about $469 million in 2022, the lowest in a decade," he said.
He said closer collaboration and dialogue between the Federal Government and the private sector was necessary to chisel out strategies that would position Nigeria as an ideal investment destination.
He further said Nigeria could also benefit from the experience of countries that have been successful in attracting FDI into their manufacturing sectors.
"Nigeria can become a manufacturing hub in Africa if the Federal Government implements a bold strategy to take advantage of investment and market access opportunities.
"Rising labour costs and technological upgrading in countries such as China, India, and Brazil offer an excellent opportunity to developing economies, including Nigeria, to attract FDI and diversify their exports.
"Promoting trade and regional integration trade offers a great opportunity to further diversify the Nigerian economy.
"With the coming into force of the African Continental Free Trade Area, Africa is becoming more integrated, with a larger market for exports from Nigeria," he said.
Adesina said Nigeria faced major infrastructure deficits that inhibit its ability to diversify production in the non-oil sectors.
Citing the World Bank's 2022 Public Expenditure Review report, Adesina said that meeting Nigeria's huge infrastructure needs required $3 trillion by 2050.
He said at the current rate, it would take Nigeria 300 years to provide a minimum level of infrastructure needed for development. Adesina, however said to change this narrative, Nigeria should mobilise the private sector for infrastructure development and service delivery.
He said this would also reduce the fiscal burden on the Federal and State governments. According to the president, energy sector investments remain one of the most critical and urgent needs in Nigeria.
He said providing reliable and affordable energy services would make Nigeria's industries more competitive and accelerate the country's integration into regional and global supply chains.
"To remove the barriers to non-oil trade and exports, Nigeria must decisively fix its power sector, once and for all. While tapping its abundant gas resources as a transition fuel, Nigeria should invest massively in renewable energy generation, especially solar.
"Nigeria should start leveraging the platform of the $25 billion Desert-to-Power initiative aimed at providing electricity for 250 million people across the Sahel, including the northern parts of Nigeria," Adesina said,
The AfDB boss said developing regional infrastructure and putting in place the requisite trade policies were necessary conditions for tapping into opportunities in regional and international markets.
"A good starting point is the effective utilisation of Trade Agreements to which Nigeria is currently a signatory. Nigeria's trade policies should prioritise the promotion of value-added exports," he said.