1976-2016 Volume 1-40

( BEHIND THE SCENE J

EDITORIAL ADVISORY EDITORIAL STAFF COMMITTEE Isaac A. Okorafor - Chairman EDITOR Sam Okogbue y~att B. Uwatt - Member v n~~~ -- __ ,_--· Aanes o. Martins - Member .-:.,-;-::-::;;.; *;..;. .. ~ --=;;;.·;;-:-.-:::.;;.· _- --:.~ :~!-::-v DEPUTY EDITOR xnnoc;ent: OgfJa

EDITORIAL BOARD ASSISTANT EDITOR Kerma Mshelia Uwatt B. Uwatt -Chairman Isaac A. Okorafor - Alt. Chairman Titus 0. Fatokun - Member EDITORIAL ASSISTANT Agnes 0. Martins - Member Ify Nwankwo Mudashir A. Olaitan - Member Kevin N. Amugo - Member Chizoba V. Mojekwu -Member Alvan E. Ikoku - Member Moses K. Tule -Member Adeniyi 0. Adenuga - Member Samuel A. Okogbue - SecretaryI editor Kerma Mshelia - Associate Editor

BULLION is a quarterly publication of the Central Bank of Nigeria. Views expressed therein do not necessarily reflect the opinion and thinking of the Bank's Management. Copies are available without charge through formal request to the Editor. Articles in the journal may be reproduced only with the expressed permission of the Editor or the article's author.

BULLION I'SSN - 0331 - 7919 Volume 1-40 1976-2016

6 CONTENTS PAGE

PAGE 2 AGRICULTURE, FOOD SECURITY AND NUTRITION IN NIGERIA: WHERE WE ARE, CHALLENGES AND WAY FORWARD

PAGE 17 BANKING INDUSTRY IN NIGERIA: EVOLUTION, PERFORMANCE AND CHALLENGES

PAGE 27 BANKING SYSTEM REGULATION AND SUPERVISION IN NIGERIA, 1976-2016

PAGE 37 CENTRAL BANK OF NIGERIA'S DEVELOPMENTAL INITIATIVES, EMPLOYMENT GENERATION AND ECONOMIC GROWTH IN NIGERIA

PAGE 43 DEVELOPMENTS IN THE PAYMENTS SYSTEM: 1976-2016

PAGE 50 DIVERSIFICATION OF THE NIGERIAN ECONOMY: AGRICULTURE AND SOLID MINERALS AS PANACEA

PAGE 63 EVOLUTION OF CURRENCY MANAGEMENT: NEW DEVELOPMENTS, CHALLENGES AND PROSPECTS

PAGE 70 EXTERNAL RESERVE MANAGEMENT IN NIGERIA: ISSUES AND CHALLENGES

PAGE 77 EXTERNAL SECTOR DEVELOPMENTS: OPPORTU NITIES, GAINS AND CHALLENGES

PAGE 89 FINANCIAL INCLUSION IN NIGERIA: TRENDS, ACHIEVEMENTS, CHALLENGES AND PROSPECTS

PAGE 100 - FOREIGN EXCHANGE MANAGEMENT AND STABILITY OF THE NIGERIAN ECONOMY, 1976- 2016

PAGE 116 - INTEREST RATE ADMINISTRATION IN NIGERIA (1976-2015)

PAGE 127 - MACROECONOMIC STABILITY AND THE ROLE OF FINANCIAL INSTITUTIONS IN PROMOTING FINANCIAL INCLUSION IN NIGERIA

PAGE 138 - MONETARY AND FISCAL POLICY INTERACTIONS IN A DEPRESS ED ECONOMY

PAGE 149 - PERSPECTIVES IN THE BANKING SECTOR AND ECONOMIC DEVELOPMENT IN NIGERIA

PAGE 162 - THE ROLE OF AGRICULTURE IN THE NIGERIAN ECONOMY IN THE LAST 40 YEARS W' DIVERSIFICATION OF THE NIGERIAN ECONOMY: AGRICULTURE AND SOLID MINERALS AS PANACEA*

ABSTRACT

Diversification of the Nigerian economy with specific emphasis agricultural and solid mineral sectors is feasible in view of Nigeria's endowment. Nigeria has a large expanse of agricultural land . This 77.7 per cent of Nigeria's tota l land area which is 910.8 thousand kilometres. Of this total, 37 .3 per cent is arable land, 7.4 per cent is permanent crop and 9.0 percent is under forest. Therefore, substantial still a vailable for agricultural activities. Most importantly, Nigeria's a diverse, which include four sub-sectors, namely; crop, livestock, fishery forestry which are yet to be ful ly exploited. In the same vein, Nigeria is bl with a wide variety of solid minerals which are widely distributed in DR. (MRS} GRACE OFURE the states of the Federation. So far, about 33 solid mineral commott EVBUOMWAN occurring in about 450 locations nationwide have been identified. Senior Lecturer, include coal, cassiterite (tin ore), columbite, marble, tantalite, wolfram, Banking And Finance Department, lead, zinc, limestone, kaolin, clay, shales, and radioactive minerals Covenant University, monazite, zircon, molybdelite and barytes. Others are glass sand, Ota, Ogun State, Nigeria sand, uranium, serpentine, phosphate, cuprite, granite, talc ore, feldspar, bentonite, soda ash, iron ore, dolomite, etc. Th us, Nigeria with most of the mineral raw materials needed as inputs for 1.0 INTRODUCTION production. An effective partnership between government and the igeria is a very large country, sector in exploiting these abundant agricultural and solid mineral Nspanning an area of 910.8 which are well distributed a ll over the country, will certainly put Nigeria thousand square kilometres part of sustainable growth and development. out of which 77.7 per cent is cultivable (World Bank, 2016). It has the largest population in Sub­ KEYWORDS: Diversification, Economic Development, Saharan Africa estimated at 180.7 Minerals. million in 2014 (Central Bank of JELCLASSIFICATION CODES: L7, L72, 01,013, Q1 , 017. Nigeria (CBN), 2014) , and it is one of the ten most populated country in the world. The country is bordered by petroleum in the country shortly after Nigeria 's export earnin the Atlantic Ocean/Gulf of Guinea to independence in the late 1960s and importance in the GDP is I the South, Republic of Benin to the the attractive world crude oil prices that of the non-oil sector . West. Republic of Cameroon to the shifted empha sis away from and particularly worrisome is East andft is bordered in the North by agriculture and other sectors of the that its fortunes have been Niger and Chad. Its topography economy. Available statistics downward trend in recent ranges from mangrove swampland indicated that crude oil exports dire consequenc es for the along the coast to tropical rain forest fetched Nigeria only N8.8 million at economy. For instance and savannah to the north. This independence in 19 60 and this contribution of crude petrol topography can support various constituted just 2.7 per cent of total natural gas to the nations crops and livestock possibilities and export earnings, while non-oil exports declined from 14.95 per cent in the earths' crust is rich in so many amounted to N321 .2 millio n , to 9.6 1 per cent in 2015, minerals. Yet Nigeria remains a poor constituting 97 .3 percent of total agricultural sector contributed country, with a per capita Gross exports in the same period. But by and 23.11 per c ent to the Domestic Product (GDP) of less than 197 6, the table turned and the value in these respe ctive pen 3,000 United States of America Dollars of oil expor ts increas ed addition, oil refining has (US$) and a poverty rate of 72 per astronomically to N6,321 .6 million, contributing less than 0.5 per cent (CBN , 2014) . constituting 93.6 per c ent of total the nation's GDP as Nigeria exports, while the proportion of non­ exports crude oil, whose That Nigeria has remained a poor oil exports in Nigeria 's foreign determined exogenously (T· country after 56 years of earnings had declined substantially Unfortunately, crude oil independence is partly due to the to 6.4 per cent at N429.5 million been on the decline in the fact that a substantial proportion of (Evbuomwan, 1996) , and this trend years. From an average of the wide expanse of agricultural has remained over the years (Tables in 2012, a barrel of crude oil lands are yet to be cultivated while 1aand 1b). for less than US$50.00 (CBN, most of the minerals are yet to be 20 16) . It is also pertinent to exploited. Most importantly, the . Despite the fact that oil exports the bulk of the Nigerian discovery of substantial quantities of constitute a substantial proportion of

*A commis sioned paper for the 40th Anniversary Bullion, with the Theme: Macroeconomic Polic y Management in Nigeria: 1976- 2016. The Bullion Magazine is a quarterly publication of the Central Bank of Nigeria (C BNI. 'WI 1976- 2016 earn their living from the non-oil the needs of a rapidly growing modern/improved farm inputs sector with the agricultural sector population, resulting in a progressive (seeds, fertilizer, pesticid es, etc.). alone providing employment for rise in import bills for food and Consequently, yields are still very low. o~e~ 70.0 per cent of the populace, industrial raw materials. For instance, To buttress this point is the fact that while agricultural produce and semi­ import of food and live animals grew cereal yield in Nigeria is still as low as processed agricultural commodities from N 1.8 billion constituting 14 .1 per 1,537 kilograms per hectare ho~e constituted the bulk of non-oil cent of total imports in 1981 , to compared with 7,340kg/ha in the export earnings (Table 3). N2,885 .4 in 2011, and it's proportion of USA; 5,058kg/ha in Indonesia and total imports also increased to 20.2 3,725kg/ha in South Africa. This is not Hisa gainst this backdrop that there per cent (Table 4a). Similarly, import unconnected with the fact that been call from every quarter for of animal and vegetabt.-, oil and fat, fertilizer consumption in Nigeria is fication of the Nigerian a major raw material tn the food only 4.8 kg/ha compared with from oil to other sectors. In industry, grew from NO.1 billion in 1981 131 .1kg/ha in the USA 194.8kg/ha in of the abundant agricultural to N 144.7 billion in 2015, constituting Indonesia and 62.0kg/ha in South mineral resources available in 0.8 and 1.3 per cent of total imports in Africa (World Bank, 20 15) . country, it is obvious that these the respective periods (Tables 4b) . sectors would deliver the quick The potentials of the agri-business In the same vein, agricultural in the quest to diversify the sector as a major employer of the machinery such as tra c tors, n economy, and this is the growing labour force and earner of harvesters, planters and harrows are of this paper. In the rest of this foreign exchange have also been limited to the very few large scale attempt will be made to undermined. As a result, a large farms which contribute just about 5 situate the agricultural and majority of the population, many of 1 per cent of total agricultural minerals sectors of the Nigerian whom live in the rural areas remain production in Nigeria, hence the my, and highlight the poor; whil e Nigeria is far from being sector is plagued w ith drudgery and that have been militating food secure. In order to diversify the low productivity as the small holders their effec tive performance ecpnomy through the agricultural who own over 80 per cent of farms adequate steps can be taken sector, it is pertinent to first examine still apply traditional technologies of eradicate them in order to make the constraint militating against the hoe and cutlass on their small two very important sectors effective performance of the sector fragmented holdings of less than 6 viable and thus, enable Nigeria so as to avoid the old pitfalls. ha all put together. According to stop being a mono-economy some estimates, there are only about dependent on c rude oil 2.1 Major Constraints Militating 40,000 tmctors in Nigeria, o u t o f Against the Effectiveness of the which half are operational. Irrigated Nigerian Agricultural Sector agric ulture which would h e lp Constraints fac ing the Nigerian inc rease agricultural output in many agricultural sector like most other folds is also not a common feature in to earlier, the agricultural countries in Sub-Saharan Africa can Nigeria. Furthermore, inadequate remains the mainstay of the be divided in to domestic extension services has not helped economy in spite of the (endogenous) and external matters. role of the petroleum (exogenous) constraints. The as the m a jor fore ign domestic constraints include a low Like crops production, livestock earner for the country. Th e resource base and little use of production in Nigeria is based on I sector has been mod e rn farm inputs, poor traditional m e thods including the largest share of the infrastructure, environmental pastoralism. Overgrazing of pastoral GOP; it is the largest non-oil problems, unfavourable climate, civil lands is increasingly a problem and earner. Between 1985 and strife/terrorist attack and poor the pastoral system does not lend Agricultural produce and management of the economy itself to improved grazing methods ufa c t ured a nd se mi ­ (governance). Th e major external nor the introduction of new grass factured agricu l tura l constraints on the other hand, species or other fodder c rops. In were reported to have include adverse movement in the addition, the hot and humid climate, 86.6 per cent of total terms of trade and declines in foreign and resource constraints for e x port earnings trade and foreign investment (Ojo veterinary services has encouraged 1996). As recent as and Evbuomwan, 1997). a number of livestock diseases, such agricultural sector still as foot and mouth disease of cattle, over 70 per cent to non- 2.1.1 Domestic Constraints peste des p etits ruminants and earnings (Table 3). It is the infectious bursal disease. - ·~m. .... ln•,,<>rof labour and a key {i) Resource Constraints and Low to wealth creation and Rate of Technological Adoption {ii) Problems Asso c iate d with Nigerian agriculture is mainly rain fed marketing of Agricultural Produce and has continued to be dominated Agricultural produce marketing is not by small holders wit h limited well coordinated yet, particularly for resources, using traditional rotational food c rops. There are no grades and fallow farming methods, low level of s tan dards , so qua lit y is over the years, the rate of use of suitable inputs and little new co mpromi se d. In adequate nt of the agri c ultural t ec hnol o gy adopti on . It i s transportation, processing and has failed to keep pace with c haract e ri zed by low u se of storage facilities further compound VVIV11 1V I

marketing problems and this has price and volume. For instance, the contract and high cost of been resulting in huge post-harvest indices of average world price of business. Concerted efforts by loses. Development .of silos and Nigeria's traditional exports like government to remove warehouses by government has cocoa and palm oil has been on the constraints will help grow been seriously stalled by inadequate decline (Evbuomwan, 1996 (2)). Even agricultural sector. revenue allocation to the sector. most recently, with 2010 as the base Agricultural processing industries year, index of cocoa prise in US 3. THE SOLID MINERALS SECTOR have had to contend w ith rising cost dollars declined to 76.3 in 2012, w hile Nigeria is blessed with a wide of operations in respect of utilities like that of palm oil declined to 88.9 in of solid minerals which are e nergy,- and water as well as 2013 (CBN , 2014) . In addition, distributed in almost all the machines and tools. Unfortunately, Nigeria's world market share of tt1ese the Federation. So far, about 33 high cost of credit and stringent commodities have been falling with mineral commodities occurring requirements has limited farming expansion in output of these about 450 locations enterprises access to funds from the commodities by Asians (Indonesia, have been identified (0 banks which would have helped Malaysia and China) at lower cost. 2003). These include c oal, cass1 them address so me of their (tin ore) , columbite, ma marketing problems and boost On the other hand, the import tantalite, wolfram, gold, lead, agricultural productivity. policies of Western industrialized limestone, kaolin, clay, shales. countries have also played a major radioactive minerals such (iii) Problems of Environmental and negative role in Nigeria's export monazite, zircon, molybdelite Hazards performance. Pro tectionism and barytes. Others are glass Th e twin problem of draught/ restrictive agricultural practices, bitumen sand, uranium, desertification as well as flooding especially in t he European phospha te, cuprite, granite, talc and soil erosion have remained very Community and the USA, have gypsum, feldspar, bentonite, serious for Nigerian agriculture. These resulted in an over-supply of some ash, iron ore, dolomite, etc. (Chart are usually manifested sometimes in agricultural commodities, and thus Some of these minerals are sharp declines in rainfall, loss of dampened worldwide demand and vegetation, soil degradation, and weakened world price. Support for deforestation. At other times too agriculture as per cent of GOP in 2013 much rainfa ll has caused flooding was 0.5 per cent for the USA 0.8 per and washing away of farmlands and cent for the European Union, 0.9 per Prior to the emergenc e of drowning of animals and man. cent for Switzerland, 1.3 per cent for as a major foreign exchange Though some of these problems are Japan and 2.1 per cent for Korea. in Nigeria, the solid minerals caused by natural forces, they are Similarl y, tariff on agricultural ranked second on ly t o also sometimes caused by direct products in 2012 were as high as 37.7 agricultural sector as a source result of human activities such as per cent in Korea, 31.3 per cent in export earnings for the country. over-grazing, over cultivation, bush Norway, 12.0 per cent in Switzerland, solid minerals sector also contrih11il burning and deforestation and poor 9.9 per cent in Japan and 9.1 per substantially to the GOP then. conservation practices. cent in the European Union (World 10 per cent of GOP in 1970 Bank,2014). 2001). The sector p rovi Although agric ultural output has employment for a lot of N. been increasing over the years, Unfortunately, intra-regional trade in employing on a verage, eliminating the c hallenges facing Africa is low , as most African 49,000 workers per annum the sector will help boost agricultural countries produce similar produc ts 1958and 1970 (0nah, 200 1). output a nd enable the sector p lay a for export, generally primary leading role in Nigeria's quest for agricultural products, while most of However, in the wake of economic development. The small the value added is c arried out in lndigenization Decree in 1 size of farms, the low levels of Western industrialized countries. In fore ig n multinational mi mechanization a nd input use, poor addition, their transport infrastruc ture companies and their infrastructure and high level of post­ is geared for export to Western professionals exited the country, harvest losses due to pests, animals, Europe, Japan, etc., rather than to t he performance of the and poor transport and storage nearby countries. There is therefore, minerals sector started d conditions must be addressed. the need to explore more markets for Unfortunately, the vacuum Nigeria's agric ultural commodities. In by their exit was left yawning 2.1.2 External Constraints addition, more value addition has to government was more focused The major external factors include be focused on so as to increase the oil sector then. adverse movement in the terms of Ni geria' s market share of the production of c oal for trade and declines in foreign trade, manufac tur es and se mi ­ dropped from 341 ,217 tonnes in 1 and investments. manufactures. Th e agricultural value to 53,57 6 tonnes in 1983 li chain must be strengthened . decline of 84.3 per c ent (I) Trade dec ade). Similarly, columbite One of the most serious of these (ii) Foreign Investment recorded an output of 1,616 external fac tors is Nigeria's worsening The level of foreign investment has in 1970 was only 79 tonnes in .ler/77S of /ro d e, like t77ost o ther A fric a n been d eae osing o vef Jhe y e ofs an d w hjJe the p roduction of marble counfrres, Wl"ffl cfeclfnrng fraclff1o nar rri r~ rias- o een e xac emaled oy d ec ifne di"fom 8:72ofon nesrn export both in price and quantities, political instability, the uncertainty of 640 tonnes in 1980 (CBN/ and inc reasing inputs, also in both obtaining the,.) enfor cem e nt o f 1999 ) . Thu s, solid miner 1976-2016

n to GOP has declined More investment is needed in this non-oil export value now. For to an average of 0. 15 per area to boost output. instance, sesame seeds alone between 1981 and 2015 (Table contributed an average of 9.3 per The contribution of minerals to (iv) In-conducive Policy Environment cent to total value of non-o il exports i exports has also been on the Investors look for stable policies, between 2010 and 2014. Meanwhile averaging 3.4 per cent transparency and accountability in substantial land is still available in 2004 and 2014 (Table 3) . government before committing their Nigeria for agricultural production import of mineral products resources in the long term whic h is and the manpower is also available. 3.8 per cent of total value what is required in the solid minerals between 2009 and 20 15, sector. The policy environment has Agriculture remains a c ritical sector import of base metals and not been conducive nor consistent in that can be targeted to create jobs of base metals was as high as Nigeria over the years. It is high time far our teeming youths. The National per cent of total imports in this our policies are well focused. Bureau of Statistics 20 12 baseline period (Table 4b) . survey revealed that currently, 37.0 (v) Legal and Regulatory Framework percent of youths are engaged in just like the agricultural The problem of enforcement of agriculture, spread through the , a number of problems have contract and ownership laws various sub-sectors, crops, livestock, militating against the effective regarding resource control is another fishing and forestry. Distribution of nee of the solid minerals critical factor militating against the youth's a nnual turnover from It is pertinent to point them out development of the solid minerals agri cultural business by type of they can be well addressed in sector in Nigeria. It is imperative that activity revealed that; crop farming to diversify the economy. the legal and regulatory framework is activity contributed the sum of four such that promotes private sector trillion Naira, livestock contributed Constraints Militating Against the participation in this very c ru c ial two trillion Naira , poultry contributed Performance of the Solid sector of the Nigerian economy. In twenty billion Naira, fishing also Sector addition. the share in the ownership contributed twenty billion Naira , and Control by state governments of while forestry contributed one billion of Information mineral resources located in their Naira. From the foregoing, it is clear is the chronic unavailability of lands will help the sector grow faster. that if adequate strategies are put in t geological data and place, more youths c an earn their lion required by investors 4. PROSPECTS living from the agricultural sector and to enter the solid minerals Despite the suboptimal performance contribute to the growth in Nigeria's . Government has the of the agricultural and solid minerals gross domestic produc t, a nd assure bility for provid ing these sectors in Nigeria due to their neglect food security in the country. lion which will eventually since the discovery of oil in the 1970s, both domestic and foreign these sectors still possess t he Similarly, most of about 33 solid investors to invest in the capacity to put the country on a mineral commodities occurring in and processing of these sustainable path o f growth and about 450 locations nationw ide are for industrial uses. In view of development in view of the yet to b e exploited. And it is fact that it is capital intensive, abundance of enormous resources gratifying to note that the industrial ern ment would have t o yet to be tapped. Nigeria has a large uses of processed forms of some of nt public sector funds with expanse of agricultural la nd. This the minerals found in Nigeria are I from foreign sources such as constitutes 77.7 per cent of Nigeria's enormous, thus, as the pace of aids from development total land area which is 910.8 industrialization inc reases, the thousand square kilometres. Of this demand for these mineral produc ts total, 37.3 per cent is arable land, 7.4 will certainly grow (Chart 2) . per cent is under permanent c rop and 9.0 percent is under forest (World As regards export potentia ls, in the Ban k, 20 16). Therefore, substantial solid minerals sector as well, semi­ land is still available for agric ultural m a nufactures like a luminium, activities. A c ritical examination of copper, lead, steel/iron, tin and zinc available statistics reveal that in have also been featuring in the non­ recent years agricultural sector oil export list since 20 10, averaging contribution to GOP has improved 6.7 per cent of total non-oil export (from 15.5 per cent of total GOP in value between 2010 and 2014 (Table 1981 to 23 .1 per cent in 20 15) (Table 3). 2b), while more agri c u ltu ral commodities have entered the non­ The forgoing are a ll evidences that oil export list. Non-traditional diversification into agric ulture and agricultural export commodities such soli d minerals by Nigeria will as cashew nuts, fish & c rustaceans, strengthen the economy if the business which is a great ginger, gum Arabic and sesame constraints militating against these to the private sector. seeds are contributing sig nificantly to two sect ors are adequately

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Chart 1: Geographical Distribution of Solid Mineral Resources in Nigeria

Mineral Location Iron Ore Itakkpe, Chakochoko, Ajabonoko, Obajana, Ebija, and Okudu in Kogi State; Muro in Plateau State; Bingi and Maraba in Maru District of Niger State; Ajase in Osun State: Bimi Kebbi and Gusaka in Sokoto State. Ironstone Dakingari in Sokoto State; Tajimi in Kaduna State; Rishi in Bauchi State; Karfa in Bomo State; Ejieja in Benue State; Nsude in Enugu State; Lokoja and Akpanya in Kogi State; Batati and Sakpe in Niger State. Cassiterite Jos in Plateau State as well as in Bauchi State Columbite Plateau, Kaduna, Kano, Bauchi, Ondo and Kwara States and Abuja(FCT) Tantalite Plateau, Bauchi, Kaduna and Ondo Manganese Mallam Ayuba in Kaduna State, and Zaria. Vanadium Ahuja Nickel Ife and Ilesha in Osun State Chromite Sokoto and Katsina States Molybdenum Plateau State Wolfram Bauchi, Kano and Kaduna States Ilmenite Plateau, Kaduna, Niger, Osun and Kwara States Tourmaline Plateau, Kaduna and Kwara States Zircon Kaduna Limestone Nkalagu in Enugu State; Odumoke in Ebonyi State; Mfamoshi and Odukpau in Cross River State; Ewekoro in Ogun State;Igumale, Ogbolokuta and Yandev in Benue State; Ashaka, Bauchi, Kanawa, Kambiena in Sokoto State; Umu-Obom and Ohafia in Abia State. Marble Jakura, Ubo, and Ajaokuta in Kogi State; Ukpilla in Edo State; ltobe in Benue State and Kankara in Katsina State. Dolomite Osara and Elebu in Kogi State; Burum and Taka Lafia in the Federal Capital Territory (FCT); and Igbetti in Oyo State. Clay J Ozubulu, Ihiala and Nnewi in Anambra State; Enugu, Kankara in Katsina State; Maraba-Rido in Kaduna State, Onibode, Lisabi and Miroko in Ogun State, Jos and Ropp in Plateau State; Biu and Maiduguri in Bomo State; Ukwunzu in Delta State; Bende and Ohaozara in Abia State; Nsu in Imo State; Umuahia in Abia State; Garkidda and Taraba/ Adamawa; Dawakin, Minjibar and Tsanyawa in Kano State, Illo and Kaoje in Sokoto State; Ifon and Igbotako in Ondo State. Emerald Keffi in Plateau State Aquamarine Keffi in Plateau and Jamaa in Kaduna State Ruby Kaduna Sappire Kaduna Amethyst Zaria Dala Panama Ilemga Hill in Kaduna State and Tafawa Balewa in Bauchi State Rock Crystal Jos Plateau Garnet Various locations Topaz Jos Plateau Fluorspar Jos Plateau Coal Enugu, Benue, Kogi, Obi-Lafia in Nassarawa State Lignite Enugu and Anambra States

Source: Adapted from Onah, 2001. 'WJ 1976- 1976-2016

Chart 2: Principal Uses of Some of Nigeria's Processed Minerals Minerals Principal Uses Kaolin Paper, rubber, pottery, ceramics, and pharmaceuticals Talc Ceramics, paint and cosmetics Phosphate Fertilizers Limestone F erti Iizers Lime Water treatment and steel making Gypsum Cement Feldspar Glass, pottery and ceramics Barytes Oil well drilling and white paint pigment Bentonite Water and oil well drilling Soda Ash Detergent and glass Source: Adapted from Onah, 2001.

1 Adesina (20 12): Investing in Nigeria's Agricultural Value Chains. Paper presented at the Bank of Industry's Nigerian Investment Forum, London, July, 2012.

Bank of Nigeria (20 14): Annual Report a nd Statement of Accounts for 2014, Abuja

Bank of Nigeria (20 13) : Statistical Bulletin, December, 2013, Abuja

Bank of Nigeria (201 5): Statistical Bulletin, December, 2015, Abuja

M (1999): A Diagnostic Study of Nigeria 's Non-oil Exports Sector (FINDINGS AND RECOMMENDATIONS). Central Bank of Nigeria and Nigeria Export-Import Bank, 1999.

G. 0. (1996) : Strategies for Revitalizing the Export Crop Sub-sector of the Nigerian Agricultural Economy. Selected Papers of the 199 6 Annual Conference. The Nigerian Economic Society, lbadan.

G. 0. ( 1996) (2) : An Empirical Analysis of the Prices of Nigeria's Agricultural Export Commodities. Central Bank of Nigeria Economic and Financial Review, Vol. 34, No.1 , March 1996, pp. 501-521 .

IOseni (2013): Agricultural Development: Optimising the Value Chain. Bank of Industry, Lagos, Nigeria.

I Bureau of Statistics (2016): Nigeria's Gross Domestic Product. First Quarter, 2016, May, 2016 . Abuja.

Planning Commission (2004): Nigeria: National Economic Empowerment and Development Strategy (NEEDS) . Federal Secretariat, Abuja.

M. 0. and Evbuomwan, G. 0 . ( 1997): Management of the Agricultural Economy in Sub-Saharan Africa after the Structural Adjustment Programme. Proceedings of the 11th International Farm Management Congress. July 14-1 9, 1997, Calgary, Alberta, Canada. Volume 1, pp. 151-179.

0. E. (2003): Foreign Private Investment in Nigeria's Solid Mineral Sector. Proceedings of the Twelfth Annual Conference of the Re gional Research Units. Research Department, Central Bank of Nigeria, Abuja, 1st to 5th September, 2003, Ka duna, Kaduna State, Nigeria.

F. E. (2001 ): Promotion of Economic Activities through Development of Solid Minerals Potentials in the States. Proceedings of the Ten th Annual Conference of the Zonal Research Units, Research Department, Central Bank of Nigeria, Abuja, June, 4th to 8th 2001, Owerri, lmo State, Nigeria. 1 II v

Table1 a: NIGERIA'S EXPORTS 1960- 1980 (N' Million)

YEAR Total Oil Oil as% Non-Oil Non-oil as Exports Export of Total Exports %of Total 1960] 330 8.8 2.7 321.2 97.3 1961 346.9 23.1 6.7 323.8 93.3 I 1962 334.2 33.5 10.0 300.7 90.0 1963 371.5 40.4 10.9 331.11 89.1 1964 429.2 64.1 14.9 365.1 85.1 1965 536.8 136.2 25.4 400.6 74.6 1966 568.2 183.9 32.4 384.3 67.6 19671 483.6 144.8 29.9 338.8 70.1 1968 422.2 74 17.5 348.2 82.5 1969 636.3 261.9 41.2 374.4 58.8 1970 885.4 510 57.6 375.4 42.4 1971 1290.3 950 73.6 340.3 26.4 1972 1435.2 1176.2 82.0 258 18.0 I 1973 2277.4 1893.5 83.1 383.9 16.9 1974 5794.8 5365.71 92.6 429.1 7.4 ' 1975 4925.5 4563.1 92.6 3 62. ~ 7.4 1976 6751.1 6321.6 93.6 429.51 6.4 1--· 1977 7976.6 7453.6 93.4 523 6.6 1978 6064.4 5401T 89.1 662.8 10.9 1979 10836.8 10166.8 93.8 670 6.2 1980] 14077.6 13523 96.1 554.6 3.9

Averages 3179.7141 2775.99 54.2 403.67621 45.8 Source: Adapted from Evbuomwan, 19.96

\WfJ 1976-2016

Table 1 b:NIGERIA'S EXPORTS 1981-2015 (N' Billion)

YEAR Total Oil Oil as% Non-Oil Non-oil as Exports Export of Total Exports %of Total! 19811 111 10.;1 1982 8.2 19831 7.51 ] .21 1984 9.1 8.8 1985 11.7 11.2 95.7 0.5 4.3 1986 8.9 8.4 94.4 0.6 6.7 1987 30.4 28.2 92.8 2.2 7.2 1988 31.2 28.4 91.0 2.8 9.0 1989 58 55 94.8 3 5.2 1990 109.9 106.6 97.0 3.3 3.0 1991 121.5 116.9 96.2 4.7 3.9 1992 205.6 201.4 98.0 4.2 2.0 1993 218.8 213.8 97.7 5 2.3 1994 206.1 200.7 97.4 5.3 2.6 1995 950.7 927.6 97.6 23.1 2.4 1996 1309.5 1286.2 98.2 23.3 1.8 1997 1241.7 1212.5 97.6 29.2 2.4 1998 751.9 717.8 95.5 34.1 4.5 1999 1189 1169.5 98.4 19.5 1.6 2000 1945.7 1920.9 98.7 24.8 1.3 2001 1868 1839.9 98.5 28 1.5 2002 1744.2 1649.4 94.6 94.7 5.4 2003 3087.9 2993.1 96.9 94.8 3.1 2004 4602.8 4489.5 97.5 113.3 2.5 2005 7246.5 7140.6 98.5 106 1.5 2006 7324.7 7191.1 98.2 133.6 1.8 2007 8309.8 8110.5 97.6 199.3 2.4 2008 10387.7 9861.8 94.9 525.9 5.1 2009 8606.3 8105.5 94.2 500.9 5.8 2010 12011.1: 11300.5 94.1 711 5.9 2011 15236.7 14323.2 94.0 913.5 6.0 2012 15139.3 14260 94.2 879.3 5.8 2013 1526L 14131.E 92.6 1130.2 7.4 2014 12960.1; 12007 92.6 953.5 7.4 2015 8845.2 8184.5 92.5 660.7 7.5 !Averages I 40 30 .~ 3823.71 9G.ol 206. ~ 4.01

Source: Central Bank of Nigeria Statistical Bulletin, December 2015

\&.Y»J Volume 1-40 I' IV

Table 2a:NIGERIA'S GROSS DOMESTIC PRODUCT (GOP) AT 1990 CONSTANT BASIC PRICES (N' Billion)

YEAR Total GDP Agic. 1 as %of Crude Pet 2 as %of Solid ~[Ms% of Oil 4 as% of GDP (1) Total &Ngas ( ~!otal Minerals Total Refining Total IGDP (3) GDP (4) 1981 251.1 84.4 33.6 73 29.1 2.3 0.9 0.2 0.08 ~ 1982 246.7 86.5 35.1 65.3 26.5 - 2.4 - 1.0 - 0.2 0.08 1983 230.4 85.3 37.0 59.5 25.8 1.8 0.8 0.1 0.04 1984 227.3 81 35.6 66.9 29.4 1.6 0.7 0.1 0.04 1985 253 96.8 38.3 72.2 28.5 1 0.4 0.2 0.08 1986 257.8 106.7 41.4 70.8 27.5 0.5 0.2 0.1 ~ 1987 256 102.8 40.2 69 27.0 0.6 0. 2, 0.1 0.04 1988 275.4 113.5 41.2 70.8 25.7 0.6 0.2 0.1 0.04 1989 295.1 119.5 40.5 72.3 24.5 0.7 0.2 0.2 O.Ot 1990 328.6 122.2 37.2 83.9 25.5 0.9 0.3 0.2 O.OE 1991 328.6 129.6 39.4 91.3 27.8 0.7 0.2 0.2 O.OE - - 1992 337.3 132.7 39.3 93.6 27.7 0.8 --0.2 0.2 __O.O E 1993 342.5 135.2 39.5 93.8 27.4 0.8 0. 2 - 0.2 O.OE 1994 345.2 138.8 40.2 91.4 26.5 0.8 0.2 0.2 O. OE 1995 352.6 143.7 40.8 93.5 26.5 0.8 0.2 0.2 O.OE 1996 367.2 149.5 40.7 100.2 27.3 0.8 0.2 0.2 o. o~ 1997 377.8 155.9 41.3 101.7 26.9 0.9 0.2 0.2 o. o~ 1998 388.5 162.2 41.8 103.9 26.7 1 0.3 0.2 o . o~ 1999 393.1 170.8 43.4 96.1 24.4 1 0.3 0.2 o.os 2000 412.3 175.9 42.7 106.8 25.9 1 0.2 0.2 0 . 0~ 2001 421.8 182. 7 43.3 112.4 26.6 1.1 0.3 0.6 0.14 2002 451.8 190.4 42.1 106 23.5 1.2- 0.3 0.5 0.1 2003 495 203 41.0 131.3 26.5 1.3 0.3 0.6 O.ll 2004 527.6 216.2 41.0 135.7 25.7 1.4 0.3 0.6 0.11 2005 561.9 231.5 41.2 136.3 24.3 1.5 0.3 0.7 O.ll 2006 595.8 248.6 41.7 130.2 21.9 1.7 0.3 0.8 O.b 2007 634.3 266.5 42.0 124.3 19.6 1.9 0.3 0.8 0.1 2008 672.2 283.2 42.1 116.6 17.3 2.1 0.3 0.9 0.1 2009 719 299.8 41.7 117.1 16.3 2.4 0.3 1 0.14 2010 776.3 317.3 40.9 123.3 15.9 2.7 0.3 1 O.b 2011 834 335.2 40.2 123.4 14.8 3 0.4 1.1 0.1 2012 888.9 348.5 . 39.2 122. 3 13.8 3.4 0.4 1.2 0.1 2013 950.1 365.3 38.4 121.8 12.8 3.8 0.4 1.3 0.14 Averages 448.3 181.2 40.1 99.3 24.1 1.5 0.3 0.4 0.08

Source: Central Bank of Nigeria Statistical Bulletin, Vol. 24, December 2013 . • 1976-2016

Table 2b:NIGERIA'S GROSS DOMESTIC PRODUCT (GOP) AT 2010 CONSTANT BASIC PRICES (N'Billion) - YEAR Total GOP Agic. 1 as% of Crude Pet 2 as% of Solid 3 as % of Oil 4 as% of -~ GOP (1) Total &Ngas (2) Total M inerals Total Refining Total - GOP (3) GOP (4) 1981 15,258 2364.37 15.5 4977.42 32.6 67.14 0.44 36.58 0.24 -~ 1982 14985.08 2425.96 16.2 4453.09 29.7 54.84 0.37 38.49 0.26 - 1983 13849.73 2409.08 17.4 4052.98 29.3 44.01 0.32 27.86 0.2C -· 1984 13779.2E 2303.51 16.7 4559.2 33.1 43.08 0.31 27.43 0.2C -· - 1985 14953.91 2731.06 18.3 4918.27 32.9 44.54 0.30 39.08 0.26 1986 15237.9C 2986.84 19.6 4825.5 31.7 35.25 0.231 19.66 0.13 -~ 1987 15263.9 2891.67 18.9 4704.42 30.8 32.81 0.21 28.92 0.19 - --t- - 1988 16215.31 3174.57 19.6 4828.68 29.8 28.05 0.17 33.061 0.20 1 - 1989 17294.68 3325.95 19.2 5407.01 31.3 28.66 0.17 43.03 0.25 - 1990 19305.6" 3464.72 17.9 6831.77 35.4 29.09 0.15 42.52 0.22 1991 19199.0E 3590.84 18.7 6224.45 32.4 40.84 0.211 45.33 0.24 - 1 - - 199L 19620.1S 3674.79 18.7 6381.26 32.5 30.6 0.16 44.43 0.23 1993 19927.9~ 3743.67 18.8 6394.6 32.1 20.78 0.10 44 0.22 - 1994 19979 . 1~ 3839.68 19.2 6229.46 31.2 17.211 0.09 43.34 0.22 - I - 1995 20353.t: 3977.38 19.5 6375.97 31.3 17.08 0.08 46.07 0.23 1996 21177.9£ 4133.55 19.5 6832.84 32.3 17.54 0.08 51.35 0.24 1-- 1997 21789.1 4305.68 19.8 6933.58 31.8 18.5 0.081 50.53 0.23 1998 22332K 4475.24 20.0 7083.99 31.7 19.4 0.09 45.35 0.20 f--· 1999 22449.4 4703.64 21.0 6552.69 29.2 20. 21 0.09 47.44 0.21 r-~ 2000 23688 . 2~ 4840.97 20.4 7281.94 30.7 21.04 0.09 46.98 0.20 2001 25267.54 5024.54 19.9 7662.98 30.3 22.39 0.091 136.78 0.54 r- 2002 28957.71 7817.08 27.0 7225.68 25.0 22.18 0.081 126 0.44 1-- 2003 31709.4~ 8364.83 26.4 8952.62 28.2 23.21 0.07 137.96 0.44 2004 35020.5[ 8888.57 25.4 9248.051 26.4 27.09 0.08 151.76 0.43 1- 2005 37474.9[ 9516.9S 25.4 9294.05 24.8 29.7 0.08 166.93 0.45 f- - 2006 39995.5 10222.41 25.6 8874.7 22.2 32.77 0.08 183.66 0.46 2007 42922.41 10958.4/ 25.5 8471.95 19.7 36.87 0.09 202.17 0.47 ~ 2008 46012.52 11645.31 25.3 7947.72 17.3 41.47 0.09 222.39 0.48 i- - · 2009 49856. 12330.33 24.7 7983.63 16.0 46.38 0.09 237.85 0.48 - 2010 54612.2E 13048 . 8~ 23.9 8402.68 15.4 51.88 0.09 255.16 0.47 2011 57511.0£ 13429.38 23.4 8598.64 15.0 59.42 0.10 271 0.47 - ~. 2012 59929.8C 14329.71 23.9 8173.26 13.6 71.13 0.12 223.52 0.37 - 2013 63218.7 14750.52 23.3 7105.28 11.2 82.87 0.13 344.71 0.55 - - 2014 67152.7S 15380 . 3~ 22.9 7011.8 10.4 95.2 0.14 311.4 0.46 2015 69023.9 15952.22 23.1 6629.9E 9.6 102.54 0.15 200.88 0.29 -Averages 30,724 6886.37 21.2 6783.7S 26.2 39.31 0.15 113.53 0.3.! Source: Central Bank of Nigeria Statistic a l Bu lletin, December, 20 15

\W:C.Wl Volume 1 -40

Table: 4aVALUE OF MAJOR IMPORTS GROUPS BY S. I. T. C. SECTIONS (N' Billion)

Source: Central Bank of Nigeri a Statistical Bull etin, December, 2013

• ' ~

Table 4b: IMPORTS BY H. S. SECTION (N' Billion) ·-,.-- - .-- -,--- 2009 201C 201 201~ 2013 2014 2015-- Averages % of Total Section I I I 01. Live animals; animal products 276.9 446.6 615.8 471 533.9 2 649.4 427.9 4.7 794.3 727.6 8.1 02. Vegetable products I - I-- 415.5 616.6 885.3 973.8 658.2 749.7 03. Animal or vegetable fats and oils and their cleavage products; prepared edible _ 26.8 73.8 92:..§ 141.7 144.7 85.4] • ?~1- ~ ~ 04. Prepared foodstuffs; beverages, spirits and vinegar; tobacco and manufactured 265.6 413.5 582.8 487.6 591.8 638.4 630.3 515.7 5.7 r 05. Mineral products I I 249.2 396.2 500.3 288.2 398.4 330.2 271.8r 347.8 3.8 l ... . -----t 06. Products of the chemical or allied r 447.8 705.1 822.6 706.3 933.2 972.7 1119.4 815.3 ----g1 1 t ---1 - -!- 1 1 f!!_:Plastics and articles thereof; rubber and articles thereof I 325.3 479.1 691.1 486.81 653.6 74 6.9 742.9 589.4 ______,6.5 _j_ ... ------r-·- ·----r 08. Raw hides and skins, leather, furskins and articles thereof; saddlery and 4.7 7.2 8.8 6.1 6.4-!- 10 15.4 8.4 0.1 09. Wood and articles of wood; wood charcoal; cork and articles of cork; l 10.71 21 22.1 24.5 30.4 27.3 0.3 -- t ~ r-- 23.3 - 10. Pulp of wood or of other fibrous cellulosic materials; waste and scrap of paper or -- - 142.9 237.7 290.5 206.5 234.5 273.2 300.1 240.8 2.7 11. Textiles and textiles articles ~ 68.9 108.4 107.7 133.3 182.8· 187.5 120.5 1.3 12. Footwear, headgear, umbrellas, sunumbrellas, walking sticks, seat sticks, whips 9.3 24.1 30.8 19.5 28.1 44.8 68.4 32.1 0.4 I-.;::: 13. Articles of stone, plaster, cement, asbestors, mica, or similar materials; ceramic 54.1 93.3 120.4 133.5 171.1 191.8 193 136.7 1.5 14. Natural or cultural pearls, precious or semi-precious stones, precious metals 0.4 0.8 1.3 0.9 1.6 1.7 1.7 1.2 0.01 15. Base meta Ia and articles of base metal 610 886.5 9581 1746.L 975.3 1133.4 1149.8 1065.E 11.8

16. Machinery and mechanical appliances; electrical equipment; parts thereof; sound 1556.~ 2196.4 2778.S 2857.3 2386.L 2854.2 3289.3 2559.8 28.3 17. Vehicles, aircraft, vessels and associated transport equipment 576.3 800 1587 1058.L 1410.4 1482.4 1193.6 1158.3 12.8 18. Optical, photographic, cinematographic, measuring, checking, precision,medical 50.4 87.7 96.9 85.9 109.2 116.5 191.2 105.4 1.2 19. Arms and ammunition; parts and accessories thereof 0 0.1 0.1 0 0.3 0.1 1.5 0.3 0 20. Miscella neous manufactured articles 39.3 38.2 59.7 54.5 94.2 93.1 100.9 68.6 0.8 21. Works of art, collectors pieces and antiques 0 0 0.1 0 0.1 0.1 0.2 0.1 0

5116.<; 10235.~ 11076.~ 9034.1 Total l 1 1 1 7614./ 9766.6 9439.4 99901 ..

Source: Central Bank of Nigeria Statistica l Bulletin, Decembe r. 2015.

-o '-.1 ()-.

1'.) 0~ ()-. Table 3: NON-OIL EXPORTS BY PRODUCT (Million Naira)

PRODUCT! 2004 %ofTo tal 2005 %o fTotal 2006 %o fTotal 2007 %ofTo tal 2008 %ofTo tal 2009 %of Total 2010 %ofTotal 2011 %ofTotal 20 12 %ofTotal 2013 %ofTo tal 2014/1 %ofTotal

AGRICULTURALPR ODUCE 37,532.59 33 44183.5841.7 50498.9 37.8 85680.9 39.7 107214.143.3 135612.646 .9 392586.455.4 485748.553.2 406997.446.3 448725.2 39.7 369534.9938.7

MINERALS 2219.4 1.9 4238.234 11355.6 8.5 14944.3 6.3 18700.17.5 19373.2 6.7 1203.390 .2 5128.33 0.6 5126.04 0.6 3533.31 0.3 4840 0.5

SEMI-MANUFACTURED 55,609.43 48.89 43018.0640.6 50632.5 37.9 67947 39.4 85023.2 34.3 84432.629 .2 203122.528.7 276183.330 .2 287328.2 32.7 327233 29 298863.7831.3

Aluminium n.a. n.a. n.a. n.a. n.a n.a. n.a. n.a. n.a. n.a. n.a. n.a. 14534.81 2.1 24780.442.7 27398.86 3.1 33018.97 2.9 26047.89 2.7

CocoaPr oducts 6,952.01 6.11 5297.79 5 6546.2 4.9 7173.3 3.6 8976.1 3.6 n.a. n.a. 2780.143.9 38752.724.2 28356.28 3.2 40066.01 3.5 41979 4.4

Copper I n.a. n.a. n.a. n.a. n.a n.a. n.a. n.a. n.a. n.a. n.a. n.a. 4295.3 0.6 10135.931.1 6966.670 .8 23583.382.1 18852.6 2

CottonPro ducts n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 1577.46 0.2 1304.140 .1 2132.980 .2 2038.68 0.2 1730.3 0.2 Furniture/ProcessedWoo d 2291.93 2.02 2225.072.1 1870.3 1.4 5579.2 2.8 6981.4 2.8 3759 1.3 6152.990 .9 1532.730 .2 1123.870 .1 925.79 0.1 1203.4 0.1 Lead I n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 1473.560.2 5146.9 0.6 13584.521.5 13292.21 1.2 14386.68 1.5 Leather& ProcessedS kins 41902.71 36.84 21720.94 20.5 35536.3 26.6 49017.5 24.6 61336.424.7 68818.323.8 117132 16.5 169777.917 .6 174478.6 19.8 176233.215 .6 150319.1315.7

PalmP roduce n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 594.12 0.1 817.61 0.1 1428.870 .2 1982.85 0.2 702.78 0.1 4 PolyPr oducts n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 17385.98 2.5 13027.91 1.4 3576.78 0.4 5190.820.5 2985.86 0.3 Steel/Iron n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n n.a..a. 300.84 0 2090.18 0.2 1268.26 0.1 5174.57 0.5 1118.05 0.1

TexturedYarn/ Polyester 3409.72 3 7734.777.3 1068.8 0.8 1992.6 1 2493.4 1 4048.1 1.4 2568.990.4 3362.150.4 2629.530.3 2514.170.2 13060060.1 Tin 1 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a.n .a. n.a. n.a. n.a. 2617.790.4 4181.08 0.5 10935.611.2 15421.41.4 32375.683.4 WheatB ranP ellets n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 4494.06 0.6 3636.24 0.4 1404.68 0.2 704.13 0.1 683.42 0.1 Zinc I n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 633.95 0.1 559.92 0.1 817.85 0.1 362.55 0 448.36 0 Other Semi-Manufactures 1053.05 0.93 6039.48 5.7 5611 4.2 4184.4 2.1 5236 2.1 7807.1 2.7 1580.51 0.2 6077.450.7 11224.831.3 6724.2 0.6 4724.55 0.5 MANUFACTURED 5633.3 4.95 10383.67 9.8 14829 11.1 23313.21 0.3 27676.2 11.2 26312.9 9.1 82275.17 11.6 99965.83 10.9 128317.714 .6 144803.212 .8 145741.7815 .3

OTHERE XPORTS 12740.57 11.2 4132.28 3.9 6279 4.7 7372.5 3.7 9225.4 3.7 23421.48 .1 29675.45 4.2 46682.555 .1 51895.215 .9 205931.718 .2 135772.51 14.2

TOTAL I 113,735.33 100 105955.8 100 133595 100 199257.9 100 247839 100 289152.6 100 708862.910 0 913708.4 100 879664.5 100 1130226 100 954753.05 100

! / Provisional Source: Cent ral Bank of Nigeria An nu al Repo rt and St at ement of Accounts (various years) 1976-2016

EVOLUTION OF CURRENCY MANAGEMENT: NEW DEVELOPMENTS, CHALLENGES AND PROSPECTS

Africa (Oshilim 2000) . Thus, the N20 note was issued in 1977, the introduction of money, the N50 note in 1991, the N 100 in of exchange was by The units of c oins w hich were issued December 1999, N200 in November The use of different objects as and managed by Bank of England 2000, N500 in April 2001, while the of exchange differed from were one shilling w hich was the N1000 was in October 2005 . On country to a nother. Th e highest, 1/l 0 penny, V2 penny and 1 February 28th 2007, the N50, N20, N1 0 of the barter sys tem penny. Until 1912, the coins were and N5 as well as N1 and 50k coins cowries, manilas, grains, distributed by a Pri vate Bank, the were redesigned and issued into inplements and brass, among Bank for British West Africa (BBWA) , circulation while N2 coin was A major drawback of this which w as the forerunner of the introduced. The N20 was however was that it was cumbersome present First Bank of Nigeria Pic . From printed on polymer for the first time consumi ng as it required 1912 to 1959, the West African and launched into circulation as a coincidence of wants before Currency Board (WACB) took over pilot project; the essence was to elicit nge could take place. the responsibility of issuing banknotes its merits and demerits, and confirm , the system did not and coins in Nigeria, Ghana, Sierra public acceptance of polymer sp ecialization , rather Leone and the Gambia. The one relative to paper substrate. Other measure of value, store shilling was the highest coin w hile the objectives included reduction in the economies of scales and one poun d was the highest cost of currency production, making associated benefits. Th e banknote denomination. the notes more secured to deter of money overcame the counterfeiters and enhanced faced under the barter The Central Bank of Nigeria (CBN) durability to sustain the clean note For money to serve as a c ommenced full operations on July policy of the Bank. r of exchange, it must be 1st, 1959, and since then has acceptable, portable, remained the sole iss uer of the legal On 30th September, 2009, the divisible into small units, etc. tender c urrency in Nigeria. Following redesigned N50, N10 and N5 were the Bank's assumption of sole issuer of converted into polymer substrate I , money was on precious legal tender currency, all the following the successful performance Is: However th e fir st banknotes a nd coins issued by the of the N20 denomination. Thus , all nt of banknote was WACB were replaced with Nigeria n lower denomination banknotes were to the Tang Dynasty in Pound in Ju ly 1959. Consequently, printed on polymer substrates. during the 7th century when the CBN is sued Nigerian notes in the Furthermore, the Central Bank of were used as fl yin g currency. denominations of 5 Shillings, 10 Nigeria, as part of its contribution to , the first successful Shillings and 1 pound in 1959. The mark Nigeria's 50th Independence ban knote was issued by the issuance of legal tender currency is and 100 years of existence as a of Eng lan d w hi c h was the one of the core mandates of the nation , issued the N50 in 1694. The commercial Bank as enunciated in section 2 (b) , commemorative polymer on 29th at that time issued their own CBN Act 2007. This mandate vests the September, 2010 and N100 until the mid-19th century responsibility of managing the commemorative notes on 19th the Bank Charter Act of 1844 quantity, quality, denominational December, 2014. the m and vested the mix of the currency in circulation. 1 I of issuing banknotes in The activity of the Currenc y of England . Thus, the Bank of Over the years, the Nigerian currency Operations Department of CBN land pioneered th e has evolved with the introduction of which is charged w ith the ,...nnmont of modern banknotes Nigerian pounds, shillings and pence re sp onsibility of c urrenc y since 19 59 . However, in 1973, Nigeria management includes policy and decimalized its currency and operational issues; research/design replaced the pounds, shillings and of new notes ; procurement; pence with Naira and Kobo. The four­ distribution; processing and disposal denomination banknotes iss ued of banknotes. Other activities include were 50k, Nl, N5 and N10, while the determining the currency needs of coins series were 25k, 1Ok , 5k, 1k , and the economy, estimation of currency Nigeria has used various forms 1/2kob o . Over the years, the Naira in circulation and annual currency from pre-independence notes have undergone several indent, among others. lt is germane to . Prior to 1880, Nigeria had redesigns aimed at enhancing mention that, although CBN is various objects as the medium currency management, reducing statutorily responsible for the printing excha nge including cowries, the cost of currency printing and of currency, it executes this role beads and bottles . The first fostering improvements in the through Nigerian Security Printing and currency issue in Nigeria was payment system. It is pertinent to Minting (NSPM Pic). ken following the Colonial point out that over the years; some of of 1880, which introduced the denominations have been 2.0 ELEMENTS OF CURRENCY shilling and pence as the sole demonetized and withdrawn from MANAGEMENT tender currency in British West circulation. Essentially, currency management refers to all activities and processes covering technical and aesthetics o utsour cing cu rre n involved in the life c ycle of currency aspects, including choice of the processing/sorting. Cash such as research/development, substrate, size , colour, theme etc. The i n Nigeria en compas ses d e s i g n , p r o d u· c t i o n , design is usually undertaken as a following a c tivities: storage/stocking , distribution , collaborative effort betwee n the Central Bank of Nigeri a processing and disposal. It relates to CBN , Nigerian Security and Minting primary respo nsib ility for the issuance of notes and coins and Pic (NSPM Pic), and the overseas process ing of ba nknotes removal of unfit notes from suppliers, where applicable. The, ensure that they are circulation. The major aim of CBN , however, obtains the final and fit for recirculation. c urrency management in any approval from the Presid e nt and by banks o f un1 economy is to build and preserve Commander-In- Chief of the Fed eral banknotes are charged public trust and confidence in the Republic of Nigeria. fees of N l 2, 000 per box. domestic c urrency. The broad deposits are exa mined objectives include: 2.2 Production & Procurement authenticating a nd i) Ensure availability and adequate The production order is based 011 the them on high-speed supply of clean banknotes to the currency needs of the economy in systems into fit and economy; the coming year, the estimated categories. The fi t notes are ii) To maintain a balanced currency volume of unfit currency to be back into c irc ulation, while structure that is appropriate, disposed by the Central Ba nk of unfit ones are destroyed. efficient and cost effective; Nigeria and other factors, such as process helps to ensure iii) To d evelop appropriate inv entory management o r the fit notes are in c irculation . framework for maintaining, issuance of a new design as well as supervising and regulating the annual indent. Partial outso urc ing of curr e ncy management Procurement is carried out through processing to the private functio ns; the NSPM Pic which has the p ri mary The CBN granted iv) To enhance efficiency and responsibility for printing banknotes in Bankers Warehouse Pic reduce the cost of c urrency Nigeria . However, t he Bank which complements the management and occasionally orders banknotes from of the Bank w hile o v) To maintain public confidence in foreign printers (t hrou gh a principle was g ranted the c urrency by ensuring the c ompetitive tendering system). Integrated Cash M integrity of banknotes in Services Ltd (IC MS) to circulation. 2.3 Issuance & Distribution. banknotes. CBN sets Currency notes are issued by the Currenc y management also Currency Operations Department of promotes the development of an the Central Bank of Nigeria . The efficient payments system that Department manage s c urrency meets the users' needs, operates with related issues and sustains the minimum risk and at a reasonable initiative of the Central Ba nk of Replaceme nt o f Mut1 cost. Currency management is a Nigeria to ensure regular supply of Currency Notes: M critical and visible aspect of Central clean banknotes, speedy disposal of notes are regularly Banks' functio ns. The integrity of the unfit banknotes and mechanization from circulation and currency and_, effic ient supply of of cash processing a c tivi ties. ThE; se banknotes are indicators of a involve the following a c tivities: functional central bank, especially in As the issuing authority, C BN circulation as well as predominantly cash-based injects into the econo my the counterfeiting. Deposit economies like Nigeria. It entails the printed banknotes produced at banks are e x p ec ted CBN being proactive and responsive the NSPM Pic as lega l tender. The complement CB N's to the changing needs of the CBN Branches issu es the providing w ind ows for economy, and keeping pace with banknotes to the p ubli c through exchange of mutilated evolving trends in contemporary the deposit m o n e y b anks currency technology-world. The CBN (DMBs) . is responsible for the entire life-c ycle CBN maintains vaults in the of the currency which includes the Branches and moves currency following: by air and road. Oracle Vault Management System (VMS) is 2.1 Research, Design & Forecasting deployed for managing all items In currency management. in the vaults. banknotes designs present a series of or dest r o ye d interlocking c hallenges. Therefore, 2.4 Currency Processing recognition. new designs must win public Cash processing operatio ns in acceptance, incorporate requisite Nigeria is one of the important 2.5 security features to deter functions of the Centra l Ba nk of To counterfeiters and meet durability Nigeria. The globa l tre n d in circulation, unfit ones are and machine-read able standards. technological ch ang e and withdraw n and destroyed. The The stages involve and include: efficiency in currency management maintains a stock of Currency Design: Currency has compelled many central banks Disintegrating Sys tems in begins with the design process, to respond to this growing tre nd by locations bankwide for the WJ 1976 - 2016

banknotes. The Bank is also 4.0 NEW DEVELOPMENTS IN management models include: the possibility of destroying CU RRENCY MANAGEMENT notes online using the 4.1 .1 Completely outsourced models systems. 4.1 Outsourcing This is an outsourcing model where In recent time, operations in currency the central bank has completely mana gement have delineated outsourced its retail functions to a traditional roles from contemporary service provider and focuses only on functions. As a strategy to reduce the its core functions. Countries that inc re asing cost of currency have completely outsourced the management, Central banks have retail end include Norway, Australia categorized their functions into core and United Kingdom etc. & non-core. Many have averred that centra l banks should only exercise 4.1.2 Joint venture models overa ll responsibility for the integrity, In this model, the central bank is security and availability of cash, partially involved in the retail destruction of unfit notes and functions along with the service Currency management is a reduction of societal cost of cash providers. Examples of countri es endeavor between management as the core functions. practicing this model include currency suppliers, deposit Conversely, the non-core functions Belgium, Spain etc. banks, manufacturers of consist of fitness sorting, CIT activities processing and disposal and custody of surplus cash 4.1.3 Partially outsourced models security agents, private bala nces for the commercial banks. Thi s model involves the outsourcing and indeed, the general of the distribution of cash to CIT In addition, studies on best practice companies, while the central banks in c urrency management had retain regulatory oversight functions. OF CURRENCY identified operational efficiency or Typical countries using this model process improvements as strategic to include South Afric,9 . Brazil. of cost reduc tion. In Nigeria, the CBN has embarked on Consequently, the paradigm shift in a number of outsourcing initiatives. the role of central banks has evolved Th ey include: through a redefinition of the Outsourcing of processing and involvement and participation of distribution services by the central banks, and other players in registrati on of fi ve cosh-in-transit the va lue c hain. This entails central (CIT) companies and two banks outsourcing the retail end to sorting companies( approval in third party service providers, and principle for one sorting conc entrating on the wholesale company) fu nctions of issuance of new notes Outsourcing of cash processing and disposal of unfit notes. Cash and disposal equipment proc essing and distribution will , maintenance to equipment however, become the core activities manufacturers. for CITs/ cash service companies. Nigerian Cash Management Scheme (NCMS): The objective Th ere are varied models for and they of the Scheme is basically to dif fe r sig nificantly from one modernize cash holding in ju ri sdiction to another depending on Nigeria and pave a w ay for CBN the c urrency services offered by the gradual exit from the retail to central bank and the level of wholesale end of the cash technological development of the management value chain. country and development of the Thu s, the approval adopted the cash payment system. In more advanced re-ordering of the value chain ju ri sdictio n s, the currency with c lear separation of management models reflected their wholesale cash services (CBN) p e c uliaritie s, the le ve l of and retail cash services d e velopment of the payments (banking industry ) supported by system and the volume of currency in a single shared platform. c irc ula ti on. However, the central banks se t fitness standards, monitor 4.2 Dem;and forecasting for and regulate ·the activities of service bankrrotes p roviders through guidelines, Th e central bank's liquidity forecast is incentives/sanction schemes, essential in ensuring that it supplies r e g ulato ry and supervisory the economy's cash need. Currency · framewo rk and service level in c irculation is the largest, and for agreements. some central banks, the most variable. component of the liquidity Clas sical examples of currency forecast. Hence, an accurate Volume 1-40

banknotes demand forecast is consider the substra te, security the general public on essential in ensuring an accurate features, acceptability, economic a cceptab le cri t eria liquidity forecast, and by implication, situation and longevity when d e t ermine the quality effecti v e monetary polic y designing the currency cannot be banknotes in circulation. implementation. over emphasized. Other factors to be Introduction of the considered in order to extend the In the past, central banks made use lifespan of banknotes include the of trusted "rules of thumb" to forecast mechanical properties of varnishing the currency demand of the a nd printing techniques. economy. These included: the time­ 5.0 seri es models , e x ponential 4 .4. Contemporary Curr en cy smoothing and behavioural Management Initiatives app roaches. How ever, recent The Bank has introduced various de v elopments in effecti v e initiatives in recent years as measures f o r e casting of demand for of improv ing the currency banknotes involve the c ombination management. They include: of sophisticated models like the Auto Stakeholders' collaboration in Regre ssi ve Empirical Forecasting the de v el opment an d model w hich is used by the Central implementation of the Nigerian Bank of Nigeria. Cash Management Scheme platformSf or eleCtroniC r>nv mPnKJ (NCMS) . De t e rmining the demand for Introduc tion of Accelerated The predominance of cash c urrency is not a straight forward Curre n cy Processing to necessita ted the Bank to science b ecause various variables decongest the vaults and clear modern approaches in need to be ta ken into c og niza nce. the bac klog of long-dated bank management. Despite the The y include the le v el of deposits. developments, the following 1 dev elopment/struct ure of the Abolition of the time-expired a nd c hallenges were economy; political events, religious policy over the years; festivities, lifespan of currency notes, Introduc tio n of six months c urrency processing c apac ity, timeline for processing of DMBs i. availability of a lternative payment c ash deposits with the plan to ii. instruments, presence of a large grad ually improve to sa me retail cash processing informal sector; buffe r st ock w eek processing. distribution activities adequacy etc. Constitution of a Currency iii. Low level of issuable notes Redesign Committee to review iv. Poor public handling of Thu s, the formula for banknote and redesign the banknotes banknotes replacement can be aggregated as series (Project CURE) . v. Disposal of banknotes follows: R= ~ EA + RB +BS Installation of Optical Banknote environmentally Increase in demand due to c hange Inspection System (OBIS) , BPS manner in economic activity + Replacement 2000 in the Nigerian Security vi. Inability of NSPM banknotes+ Buffer stock. Printing and Minting (NSPM) Pic. Currency Indent * RB = Repla c ement banknotes (Abuja and Lagos factories) for vii. Apathy towards usage of denotes the stock of banknotes quality assurance and control. viii . Predominance of destroyed in the preceding p eriod Noticeable improvements in the transactions that need to be replenished q u a lity of ba n knotes in *BS = Buffer stock is a cautionary c irc ulation following this 5.1 Illegal sale of new Naira element to ensure that shocks from development. The illegal sale of new Naira a ny e m e rg e nt situa tions are Pu b lic sensitization on clean entails the hawking, selling or cushioned. notes policy, the dangers of of the Naira notes/coins i *~ EA = Change in ec onomic activity illegal sale of new notes and the Central Bank of Nigeria. It refers to the factors responsible for poor handling habits. a c t punishable under the c hange in c urrency in circula tion. Pil o t introduction of According to section 21. e nviro nmentally sustainable 4 of the C BN Act 2007, "it shall 4.3 Currency Redesign I Choice b a n kn o t e wast e disposal, a n offence punishable under of Substrate especia lly recycling to other section 1 of this section for Central Banks world over redesig n useful produc ts. person to hawk, sell or their c urrencies after 5-8 years in line trade in the Naira notes, c w ith international best practice, and Modernization and automation other notes issued by the Ba introduce new techno logicall y of cash management in C BN Act further provides that "Any advanced security features to Branc hes on pilot basis through found g uilty of the offence prot ect the ban kn o t es fro m the insta lla tion of conveyor belt c onviction be liable to imori counterfeiters. The c hoice for the system , e lectronic sc anning, for a term not less than six idea l subs tra t e is th erefore barcoding of c urrency boxes fine not less than N50, 000.00 imperative given that the longer the etc . suc h fine and imprisonment". lifesp a n of a banknote, the more Development of Banknote s value a central bank will derive from Fitness Guid elines to g uide it. As suc h, the need to adequately DMBs, so,,.rting c ompanie s a nd 1976-2016

continued participation in banknote wastes instead of burning the purchasing power of available cas h processing and them. coins and resulted in rounding-up of activities prices to the nearest banknote value n Cash Management 5.6 Inability of NSPM Pic to meet as well as its size, weight. and the (NCMS) was approved on C urrency Indent absence of the necessary 2013. The cash service The Bank orders its indent from NSPM infrastructure to encourage the use model was aimed at Pic. For over ten consecutive years, of coins. cash management in the currency indent has never been to pave way for CBN's fully met despite the commissioning 5.8 Slow Adoption of Alternative exit from the retail to of a new production line at the Abuja Payment Channels le end of the ca sh factory in 20 15, and the early Cash has remained the most value chain. The communication of the indent. Over prevalent and w idely acceptable Inter Bank Settlement the years, the Bank had been means of payment and settlement (NIBSS) was appointed as an compelled to import banknotes from of financial transactions in Nigeria. Coordinator on 15th May, foreign suppliers to augment their Despite improvements in the deploy and manage the shortfall w hich increases the cost of payments system, the number of cash management c urrency management. This delivery banknotes in circulation continues to for the industry. In spite of all shortfall is also a catalyst for the increase yearly and this increase the CBN has not fu ll y prevalence of low level of issuable leads to a rise in the cost of currency its retail cash processing notes. management. The implementation phase and three work 5. 7 Apathy towards usage of coins 6.0 FUTURE PROSPECTS namely - c lean note The very limited use of coins is a major The high cost of cash management, & cash management dimension to the problem of environmen t al concerns , processing & shared c urre n cy management . Th e technological advancement in the and centralized cash average lifespan of coins in entire currency management value are currently engaged circulation is about 25 years which chain and the need for'" central banks mea n s c o ining of low e r to refoc us their efforts in wholesale denomination will increase their cash management activities and of issuable notes lifespan, and reduce the cost of devolve the retail activities on the has been a growing concern currency management. The apathy private sector have necessitated the the observed low level or towards coins could be attributable emergent new approaches to issuable banknotes in partly to inflation w hich had reduced reduce the cost. while maintaining a vault nationwide . This has high level of efficiency. attributed mainly to supply it from NSPM Pi c . Th e of low level of issuable if unchecked could impede CICValue Percentage of the Bank to meet the (N'Billion) Change of the economy with the reputational risk. 2011 1,565.68 2012 1,631.72 4.22 of the 2013 1,776.81 8.89 2014 1,797.97 1.19 2015 1,857.94 3.34 SEPT, 2016 1,794.29 -3.43

FIGURE 1 CIC Value (N'Billion)

1,900.00 1,850.00 1,800.00 1,750.00 1,700.00 1,650.00 • CIC Value (N'Billion) 1,600.00 1,550.00 1,500.00 1,450.00 1,400.00 -f<'-_.;;;;:;;:;_,-=:...,...---==-..---==-.-----.:=:...,.....-==-r- 2011 2012 2013 2014 2015 SE PT, 2016

\W4Wl Volume 1-40

The following new approaches will 6.2 Integrated Cash Management of motorized carriage and fork-lifts. define the future prospects in Platform among others. These technological currency management. Under the Nigerian Cash devices have been introduced in Management Scheme (N CMS) CBN vaults with installed conveyor 6.1 Outsourcing currently under implementation, the belt system on a pilot basis in three To ensure that adequate attention is retail cash management space will branches prior to bankwide rollout. paid to monetary policy formulation be coordinated by the Nigerian and financial system stability issues in Inter-bank Settlement Scheme 6.4 Recycling of Banknote waste a turbulent and highly volatile global (NIBSS) through an integrated cash Concerns about environmental economic environment, central management platform that will sustainability factors and the need banks have re-defined their roles to enhance efficiency, engender for central banks to lead the way focu s on wholesale cash visibility and foster cohesion and reducing their carbon foot-prints management activ ities. These inter-operability in the cash the environment, the recycling include the production and issuance management value chain coupled banknote wastes into useful of the legal tender, withdrawal and with the introduc tion of bank-neutral products to enhance ""'" disposal of unfit banknotes, as well as cash hubs. social responsibility is the monitoring, and enforcement of option to the current open industry standard, while devolving 6.3 Modernization and Automation of burning of banknotes wastes retail ca sh processing and Cash Handling in the Branches w ith environmental poll distribution to the private sector. Technological advancements in the consequences. Th~ Operational models vary from cash management value chain offer vigorously pursued. complete outsourcing to partial a tremendous opportunity for the outsourcing and joint ventures with modernization and automation of 6.5 Full Implementation of the the original c ash processing cash handling to derive greater less Policy equipment manufacturers, deposit efficiency, and minimize direct Full implementation of the money banks (DMBs), sorting human contact/intervention . Policy across the entire country companies, CITs and other critical A vailable technology include the re-introduction of penalties stakeholders. The regulatory and modern stacking options; use of large cash deposits will supervisory powers in the value c hain water-proof; trauma-proof; fire­ phenomenal adoption and use are however still retained by the proof; transparent and barcoded POS terminals, and ultima central banks through fitness cash boxes; installation of conveyor moderate the demand for standards and Clean Note Policy belt equipped with e lectro nic payments as well as signi Guidelines. scanners; barcode readers; weight­ reduction in the cost of detection devices and the adoption management chain .

• 1976- 2016

lkuseedun,(2011) Deputy Director, Currency Operations Department, Outsourcing of Currency Processing and Distribution: Prospects and Challenges Workshop on Managing Operational Risks in Central Banking

(201 O)Cash Handling, Sec urity And Management By Deputy Director Currency Operations Department At The Workshop On Security Management In A Banking Environment

Heinonen,(2015) , New developments in Banknote and Currency Management By Chairman Of Banknote Ethics Initiative And Former Director, Banknotes, European Central Bank

Nwodo Jnr (2007) , Presentation on Best Practices In Outsourcing of Currency Processing & Distribution by MD/CEO, XL Cash Management Services Limited Presented At CBN Branch Controllers Conference, Katsina

Orsel, Ronan Chlupat ( 1980) , Evolution of money

CObaigbona, presentation on migration to electronic payments in Nigeria by Chairman, community of practice on payments system

Cash- Eyo ( 1979) , Nigeria & the Evolution of Money

mmad Nda (20 11) , Currency Management in Nigeria By Director Currency Operations Department, Central Bank Of Nigeria At The Re§ional Workshop On Banknote And Currency Managemerft And Forecasting In Central Banks, Banjul, Gambia.

M. Fakiyesi (2011 ): Forecasting the Demand for Banknotes: Currency Operations Department, Central Bank of Nigeria at the regional workshop on banknote and currency management and forecasting in central banks, Banjul, Gambia.

Uzoaga W. (1981 ), Money & Ba nking in Nigeria

h c:<>nt,tirm (2013) on identification of the best substrate for the Nigerian lower banknote denominations by Policy & Development office of Planning & Development Division, CBN