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Nigeria Wants To Emulate Iran’s Booming Economy By Diversifying

Nigeria Wants To Emulate Iran’s Booming Economy By Diversifying

From Financial Watch Nigeria. Story by Ezekiel Enejeta

Nigerian President Muhammadu Buhari said his government should study the experience of Iran, which thrives in adversity, to diversify Nigeria’s economy.

Iran has a mixed and transition economy with a large public sector. It is dominated by oil and gas production, although over 40 industries are directly involved in the Tehran Stock Exchange, one of the best-performing exchanges in the world over the past decade. With 10 percent of the world’s proven oil reserves and 15 percent of its gas reserves, Iran is considered an “energy superpower”.

The image of Iran’s economy as oil, carpets, and pistachios was always flawed, but has now become badly dated. The Islamic Republic is in the midst of a non-oil export boom — it has the potential to remain a middle-income country even with no oil exports, and the reserves to finance the transition in the meantime.

For years, Iran’s leaders called for reduced reliance on oil but did little to meet that goal. Western sanctions have seemingly spurred them to action. In his annual Nowruz address on March 21, Supreme Leader Ali Khamenei acknowledged for the first time that restrictions on the country’s oil exports had made a serious impact.

While still important, oil is becoming a smaller part of Iran’s trade. In 2012, the country imported $57 billion in goods and exported $34 billion in non-oil products, meaning that non-oil exports covered 60 percent of the import bill, compared to 24 percent in 2002 and 14 percent in 1992. It produced this shift in part by converting more of its oil into industrial products for export.

But other products are also being exported at high rates, including $8.2 billion in minerals, stone, cement, and related products, $5.3 billion in agricultural products, and $800 million in carpets. The country’s largest market is Iraq, which took $5.6 billion in goods over the same period, including much of Iran’s manufactured exports (more than $300 million in automobiles). The next-largest customers were China ($4.8 billion), the United Arab Emirates ($3.9 billion), Afghanistan ($2.5 billion), India ($2.4 billion), and Turkey ($1.3 billion).

Is Nigeria ready to take after Iran?

The economic direction of Iran in their recovery saw a shift from oil revenue to the non-oil export, massive consumption of local goods and a sharp increase in export trades.

Nigeria is on a “buy Nigeria” crusade and boosting non-oil exports. If the government is sincere on taking after the Iranian model of economy, it must go straight to work in building other sectors of the economy such as cocoa production, palm oil production, garri production, manufacturing, ICT, fishery and human capital development.

Read more at Financial Watch Nigeria.