Published: Friday, 22 Nov 2013 | 2:56 AM ET
By: Holly Ellyatt | Assistant Producer, CNBC.com
Nigeria must work faster to reduce its dependence on oil for its economic growth, the country's finance minister told CNBC.
Nigeria's oil reserves, production and exports generate around 70 percent of the government's revenues but Ngozi Okonjo-Iweala said the country had many untapped growth opportunities it needed to explore in order to maintain a high growth rate.
"Nigeria is one of the fastest growing countries in the world, we just saw third quarter GDP growth of 6.8 percent and we expect to end the year at 6.75 percent -- and the IMF is forecasting higher growth rate, but we think we need to grow faster," Okonjo-Iweala told CNBC on Thursday.
"We are making progress [moving away from oil] but we want to do it faster," she added. " At one point 90 percent of our revenues came from oil so we're making progress."
Agriculture, which accounts for 40 percent of Nigeria's economic output, and the housing and manufacturing sectors were "still largely untapped" sources of growth, she said.
"We have a demand for 70 million [housing] units that are unfilled so there's certainly a possibility there and of course that creates jobs for carpenters and plumbers and all the linked sectors," Okonjo-Iweala said. Manufacturing, meanwhile, could thrive given Nigeria's "huge domestic market" and population of 170 million.
Seen as the jewel of Africa, Nigeria is expecting to achieve a growth rate of 6.75 percent in 2013, just below an average growth rate of 7 percent over the last decade, according to a 2013 report by Nigeria's National Bureau of Statistics.
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In the report released earlier this year, the government stated that the agricultural sector was the highest contributor to growth, followed by wholesale and retail trade and the oil and natural gas sector.
Indeed, much of Nigeria's wealth has come from the country's vast oil reserves and its dependence on exports, although oil extraction has not been without controversy.
Companies operating in oil-rich regions such as the Niger Delta have been accused of environmental damage and not contributing more to the region's development. Oil operations have been sabotaged by local groups like the Niger Delta Rebels who say they have been denied a share of the spoils.
(Read more: Nigeria won't join BRICS club anytime soon)
Despite Nigeria's high growth rates, the World Bank estimated that in 2010, 64 percent of Nigerians still lived below the poverty line. The country also faces increasing socio-economic problems and unemployment. The World Bank estimates the unemployment rate in Nigeria at 22 percent while the youth unemployment rate is 38 percent.
Okonjo-Iweala said that the government was aware of the need to create more jobs for young people and wanted to make the labor market "inclusive."
She added that the government was implementing reforms to the energy and agricultural sectors which would help Nigeria maintain its high growth rate. "I think with that progress you will see improvement in the power sector and that will allow small and medium-sized enterprises and households to benefit and the economy to move much better."
Nigeria will be impacted by Fed policy change: Central bank
Lamido Sanusi, governor of the Central Bank of Nigeria, says the country will see an impact from a change in US monetary policy.
Unlike other emerging markets, Nigeria has managed to escape relatively unscathed form the financial crisis. It has also mostly avoided the fallout from concerns that the U.S. Federal Reserve's would begin tapering its bond buying program that caused an emerging market rout in Asia's emerging markets this year.
Global markets are still watching U.S. economic data for clues on when the Fed could begin tapering. The governor of Nigeria's central bank, Lamido Sanusi, said although emerging markets like Nigeria might have won a reprieve for now, he was not complacent.
(Read more: Nigeria diverts oil savings to state budget)
"Financial markets remain very vulnerable and fragile, if there is a change in monetary policy- as will happen in 2014 in Europe and America – and you have a reversal of capital flows there will be an impact," he told CNBC on Thursday.
"So we have to be sensitive, we've bought some time and we have a very short window within which to fix structural, fiscal issues and diversification and build up fiscal buffers so that when capital flows actually begin to reverse we don't have the same impact we had in 2008 and 2009."
- By CNBC's Holly Ellyatt, follow her on Twitter,
@HollyEllyatt. Follow us on Twitter:
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