Nige­ria’s Non-oil Ex­ports and the Quest for Fed­er­al­ism

Ugochukwu Joseph Amasike writes that devo­lu­tion of pow­ers to the states would serve as a cat­a­lyst for the devel­op­ment of non-oil ex­ports, restart Nige­ria’s in­dus­tri­al­i­sa­tion-drive, cre­ate jobs and strengthen the econ­omy as a whole

THISDAY - - BUSINESS WORLD - - Amasike, a Lawyer, wrote from Abuja Email: ugoa­masike@ ya­hoo. com

The need to di­ver­sify Nige­ria’s rev­enue base has con­tin­ued to gain trac­tion by the day, es­pe­cially in light of re­cent eco­nomic chal­lenges that were largely oc­ca­sioned by over- de­pen­dence on oil and gas rev­enue. The dras­tic fall in oil prices in 2015 and the con­se­quen­tial for­eign ex­change cri­sis it trig­gered, re­ver­ber­ated across the entire spec­trum of the Nige­rian econ­omy, re­sult­ing in job- losses, in­fla­tion, and un­told hard­ship for Nige­ria’s al­ready be­lea­guered masses; and ul­ti­mately lead to Nige­ria’s first eco­nomic re­ces­sion in a quar­ter of a cen­tury. It is gen­er­ally known that over 70% of gov­ern­ment rev­enue comes from the oil and gas sec­tor, this fact puts Nige­ria in a pre­car­i­ous sit­u­a­tion, es­pe­cially in view of emerg­ing global trends that is char­ac­terised by a shift away from tra­di­tional forms of fos­sil­fuel based en­ergy, to alternative en­ergy sources, thus un­der- scor­ing the crit­i­cal need for Nige­ria to rapidly di­ver­sify its rev­enue base.

It is per­ti­nent to note that con­trary to the gen­eral im­pres­sion that the econ­omy re­quires di­ver­si­fi­ca­tion, what is in fact re­quired is the di­ver­si­fi­ca­tion of Nige­ria’s sources of in­come, and the strength­en­ing of the non-oil sec­tors of the econ­omy. This sub­mis­sion is high­lighted by a 2016 World Bank re­port which re­vealed that the Nige­rian oil and gas sec­tor ac­counts for only eleven per­cent (11%) of Nige­ria’s gross do­mes­tic prod­uct and em­ploys less than three per­cent (3%) of Nige­ria’s work­ing pop­u­la­tion, yet dis­pro­por­tion­ately ac­counts for more than 90% of for­eign ex­change earn­ings. In light of this fact the need for a strate­gic alternative to oil and gas rev­enue can­not be overem­pha­sised. To this end there should be a con­scious and de­lib­er­ate ef­fort on the part of the gov­ern­ment to de­velop the non-oil ex­port sec­tor of the econ­omy and to achieve this there is need to un­der­take in­sti­tu­tional and reg­u­la­tory re­forms nec­es­sary to elim­i­nate struc­tures that im­pede the devel­op­ment of the econ­omy and by ex­ten­sion the non-oil ex­port sec­tor.

It is sug­gested that in­ci­den­tal to th­ese re­forms is the amend­ment of the fis­cal pro­vi­sions of the 1999 Con­sti­tu­tion and other sub­sidiary leg­is­la­tions, with a view to de­volv­ing eco­nomic power to the states, in or­der to en­cour­age and en­able their par­tic­i­pa­tion in the goal of di­ver­si­fy­ing the na­tion’s rev­enue base. The re­al­ity of the Nige­rian sit­u­a­tion is that the pro­duc­tion ac­tiv­i­ties of ex­porters oc­curs within the busi­ness land­scape of the states, thus high­light­ing the im­por­tance of the states in the ef­fort to di­ver­sify the na­tion’s rev­enue base and for the states to mean­ing­fully con­trib­ute; they must do so as un­hin­dered eco­nomic agents, not as in­ca­pac­i­tated de­pen­dent ap­pendages of the gov­ern­ment at the cen­tre.

The 1999 Con­sti­tu­tion which was be­queathed to Nige­ria by its erst­while mil­i­tary dic­ta­tors im­posed on Nige­ria a uni­tary sys­tem, which is to­day, dis­hon­estly passed off as a fed­eral sys­tem by some, in their des­per­ate bid to main­tain a sta­tus quo that feath­ers their nests. The fis­cal pro­vi­sions of the Con­sti­tu­tion which con­cen­trates all eco­nomic power in the gov­ern­ment at the cen­tre is the chief ob­sta­cle to the sen­si­ble de­sire and drive to di­ver­sify Nige­ria’s rev­enue base, be­cause rather than lever­age on the com­bined ca­pac­ity of Nige­ria’s 36 states, it shack­les them and trans­forms them into dead- weight that hin­ders the na­tion’s quest for eco­nomic devel­op­ment.

It is noteworthy that Nige­ria’s golden eco­nomic era in the 50’ s and 60’ s was largely non- oil ex­port driven, with agro- in­dus­trial com­plexes across the then three nay four fed­er­at­ing re­gions. The then re­gions, un­re­strained by a suf­fo­cat­ing uni­tary struc­ture har­nessed their re­spec­tive com­par­a­tive ad­van­tages, to fi­nance and de­velop in­fra­struc­ture, pro­vide so­cial ser­vices and aid the rapid growth of the na­tional econ­omy and con­cur­rently fa­cil­i­tated the cre­ation of a di­ver­si­fied rev­enue base for the na­tion. This state of af­fairs was made pos­si­ble only as a re­sult of the eq­ui­table and broad dis­tri­bu­tion of eco­nomic power to the re­gions by the Repub­li­can Con­sti­tu­tion of 1963, which per­mit­ted the re­gions to ex­ploit their re­sources, re­mit­ting fifty per­cent of all rev­enue gen­er­ated from their re­spec­tive re­gion to the cen­tral gov­ern­ment and re­tain­ing the re­main­ing per­cent­age for their up­keep.

How­ever, to­day, Nige­ria’s fed­er­at­ing units are glo­ri­fied ap­pendages and out­posts of the fed­eral gov­ern­ment, and are constantly locked in a des­per­ate, never- end­ing strug­gle for the dwin­dling rev­enue gen­er­ated from the oil and gas sec­tor. If this un­healthy state of af­fairs is to change, then Nige­ria must grow its non- oil ex­ports, and if that is to be ac­com­plished, then the cur­rent ad­min­is­tra­tion will have to im­ple­ment its man­i­festo and as promised, “ini­ti­ate ac­tion to amend our con­sti­tu­tion with a view to de­volv­ing pow­ers, du­ties and re­spon­si­bil­i­ties to state and lo­cal gov­ern­ments in or­der to en­trench true fed­er­al­ism and the fed­eral spirit.” The devo­lu­tion of power to states would serve as a cat­a­lyst for the devel­op­ment of non- oil ex­ports, restart Nige­ria’s in­dus­tri­al­i­sa­tion- drive, cre­ate jobs, strengthen the econ­omy, and ex­pand the na­tion’s in­come streams, whilst en­gen­der­ing sus­tain­able eco­nomic growth through greater ex­ports and im­port- sub­sti­tu­tion, and si­mul­ta­ne­ously trans­form­ing Nige­ria from a seem­ingly mono- prod­uct econ­omy, to a full- fledged in­dus­trial econ­omy.

It is prayed that Nige­ria’s lead­er­ship will see the ur­gent need to take the os­ten­si­bly hard de­ci­sion of de­volv­ing eco­nomic power to the states in or­der to de­liver Nige­ria from poverty and un­der­de­vel­op­ment and to usher in a new era of eco­nomic growth and pros­per­ity for Nige­ria and Nige­ri­ans.

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