Oil and Nige­ria’s fu­ture

Weekly Trust - - Weekend Magazine - Mundagi@dai­lytrust.com

Nige­ria, no doubt, is a blessed coun­try. She is nat­u­rally en­dowed with not only rich and in­ge­nious hu­man cap­i­tal but also with di­verse and am­ple ma­te­rial re­sources sig­ni­fied in abun­dant agri­cul­tural sup­plies (an­i­mals and crops) as well as solid min­eral de­posits. Of all the nat­u­ral gifts from God to Nige­ria, crude oil more than other re­sources re­mains the most ex­ploited in the past four decades. For more than forty years that crude oil served as the na­tion’s main source of rev­enue, it would sound con­tro­ver­sial to sug­gest that crude oil has been a re­mark­able bless­ing to Nige­ria when the gains from the com­mod­ity are put within the con­text of a coun­try that is yet bat­tling with chal­lenges of na­tion­hood.

Speak­ing last month in Ibadan at the 2017 Founder’s Day cel­e­bra­tion in mem­ory of the renowned econ­o­mist, Pro­fes­sor Oje­tunji Aboy­ade, Gover­nor Nasir Ahmed el-Ru­fai of Kaduna state prayed for Nige­ria’s crude oil to dry up be­cause, ac­cord­ing to him, wealth ac­cru­ing from it has be­ing a ma­jor hin­drance to in­no­va­tion. “When the oil wells dry up’, he ex­plained, “Govern­ment and peo­ple will be­come se­ri­ous about de­vel­op­ing the coun­try”.

Ad­dress­ing in­vestors at the re­cently held United Na­tions Gen­eral As­sem­bly in New York, Africa’s rich­est busi­ness mogul, Al­haji Aliko Dan­gote, also said he was pray­ing for the global crude oil prices to re­main low for a longer pe­riod so as to en­able re­source-rich coun­tries to turn to other sec­tors with a view to grow­ing their re­spec­tive economies. Gover­nor el-Ru­fai’s wishes as well as Dan­gote’s prayer are, if I get them right, aimed at in­spir­ing in­vestors and stim­u­lat­ing eco­nomic ac­tiv­i­ties in the non-oil sec­tor. To be point­blank, Nige­ria’s fu­ture no longer lies in oil. With­out dry­ing up, oil is ac­tu­ally dy­ing as the world in­creas­ingly turns away from it as a ma­jor source of en­ergy in favour of re­new­ables.

Given the in­ex­cus­able un­der­de­vel­op­ment that char­ac­ter­ized the good days of the oil in­dus­try in ad­di­tion to the col­lec­tive ne­glect of non-oil sec­tors of the econ­omy over the years, this writer con­sid­ers this huge rev­enue-earn­ing com­mod­ity as a re­source that over pam­pered the na­tion and her ci­ti­zens. Be­sides, the bizarre forms of cor­rup­tion across suc­ces­sive ad­min­is­tra­tions which the busi­ness of crude oil ex­posed Nige­ria to is an­other fac­tor that plau­si­bly in­di­cates how oil was con­verted from be­ing a bless­ing into a “tragic curse” for the most pop­u­lous black na­tion, Nige­ria. Our over-re­liance on oil as well as our col­lec­tive fail­ure (as govern­ment and as a peo­ple) to take good ad­van­tage of the Go­den­dowed re­source of crude oil is, to say the least, a na­tional tragedy.

At a time, the oil in­dus­try in Nige­ria be­came the most lu­cra­tive, and there­fore, the most at­trac­tive to all cat­e­gories of in­vestors (for­eign and lo­cal) to the detri­ment of other nat­u­ral re­sources. It be­came the quick­est short-cut to wealth for all classes of en­trepreneurs; small and medium. Even the well-off sees oil busi­ness as the eas­i­est and ef­fort­less money-spin­ner. At any time there was scarcity of petrol in the coun­try, which on most oc­ca­sions was ar­ti­fi­cial, job­less youths many of whom are char­ac­ter­is­ti­cally lazy and un­skilled took un­due ad­van­tage of such sit­u­a­tions to get them­selves tem­po­rar­ily “em­ployed” in the fraud­u­lent sale of the com­mod­ity at cut-throat prices.

The ap­par­ent dwin­dling crude oil mar­ket with lit­tle prospect for the low prices to rise is a strong sig­nal and warn­ing to oil pro­duc­ing coun­tries in­clud­ing Nige­ria to plan against depend­ing ex­clu­sively on crude oil as their ma­jor source of na­tional in­come. There are sev­eral rea­sons why the de­vel­op­ment of non-oil sec­tors should be a mat­ter of ur­gent ne­ces­sity for oil pro­duc­ing na­tions es­pe­cially de­vel­op­ing coun­tries like Nige­ria. Agri­cul­ture, alone, has the po­ten­tial ca­pac­ity to pro­vide all that is needed to pro­pel Nige­ria’s econ­omy and to also make it one of the largest in the world. Nige­ria’s agri­cul­tural sec­tor is of­fi­cially said to have ac­counted more than any other sec­tor for the coun­try’s re­cent exit from eco­nomic re­ces­sion.

Aside of the bleak fu­ture of crude oil mar­ket, a greater threat to Nige­ria’s mono-econ­omy per­haps lies in the ad­vent of elec­tric cars; with a dead­line al­ready set when only elec­tric-pow­ered cars would be on roads in Europe. While Nor­way plans to com­pletely ban petrol-pow­ered cars by 2025, Scot­land tar­gets 2032 for the same ban. Bri­tain and France have sep­a­rately set 2040 as their dead­line to ban the sale of petrol and diesel cars in their coun­tries. China, which is the world’s largest car mar­ket, is work­ing on a plan to ban the pro­duc­tion and sale of ve­hi­cles pow­ered only by fos­sil fu­els. China is cur­rently the world’s sec­ond largest oil con­sumer af­ter the United States of Amer­ica.

Un­like Dubai which is an oil ex­port­ing coun­try that has used its oil rev­enues to de­velop her tourism sec­tor into a strong eco­nomic base, Nige­ria chose not to save her oil earn­ings for the un­cer­tain­ties of the fu­ture that are to­day star­ring us in the face. In­stead, the Ex­cess Crude Oil Ac­count was char­ac­ter­ized by funds mis­ap­pli­ca­tion and mis­man­age­ment; ig­nor­ing the need to use the earn­ings to de­velop non-oil sec­tors.

Even with the Sov­er­eign Wealth Act of 2011, which is in­tended to in­vest oil earn­ings dur­ing wind­fall pe­ri­ods in to the de­vel­op­ment of crit­i­cal na­tional in­fra­struc­tures as well as pro­vid­ing sta­b­li­sa­tion funds for fu­ture gen­er­a­tions, the story has not se­ri­ously changed as the Sov­er­eign Wealth Fund (SWF) has rather be­come the “ATM” of gov­er­nors who, through the na­tional Eco­nomic Coun­cil, use it for spree spend­ing.

To se­cure Nige­ria’s fu­ture with­out oil, de­lib­er­ate poli­cies must have to be put in place by govern­ment. Strate­gic mea­sures are there­fore needed to stim­u­late eco­nomic ac­tiv­i­ties in nonoil sec­tors. De­pen­dency on oil must cease with fo­cus on cre­at­ing a non-oil econ­omy that can pro­vide sus­tain­able rev­enues for govern­ment as well as cre­ate more job op­por­tu­ni­ties. A Na­tional De­vel­op­ment Plan that will ar­tic­u­late strate­gic poli­cies in or­der to guar­ant­tee Nige­ria’s fu­ture is also im­per­i­tive. May Al­lah (SWT) guide our lead­ers to pru­dently use the SWF to de­velop the coun­try’s nonoil sec­tors, amin.

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