Saudi Arabia’s plans, lesson for Nigeria
The plan by Saudi Arabia, to move beyond a mono-product, oil-dependent economy and diversify its base can only be a good, forward- thinking step for that country. And it is, for Nigeria, food for thought as well as a clarion call on Africa’s giant to move much more quickly in a similar direction.
The point must be made that Saudi Arabia, the world’s largest producer of oil, holds a reserve of up to 260 billion barrels such as constituting 18 per cent of the global reserve. With its small population of just under 28 million vis-a-vis a Gross National Income of US$ 1.546 trillion in 2013, a GDP of $748.4 billion, and a per capita income of $53,640, it would seem reasonable to expect that the country has enough money to suspend thinking about an uncertain future.
It is, therefore, a demonstration of visionary leadership that the Saudis would not wait until the people are thirsty before they begin to dig a well. The fall in the price of oil has brought so starkly to the awareness of oil producing nations that the party is over and hard times await those slow in thinking, slow in diversifying their economies, and slow in exploring alternative means of production and sources of income. Saudi leaders plan to create a sovereign wealth fund from the public sale of a portion of the state-owned oil company, Aramco, which is reportedly valued at about $1.5trillion.
Nigeria, with a population of over 180 million, earns a Gross National Income of $930 billion, has a GDP of $521.8 billion, and per capita income of $5,360. It is most reasonable to say that if any oil producing country has the most urgent task to, firstly save for the rainy day, and secondly, continually think beyond oil revenue, new ways to generate income, it must be this country. For years, Nigeria’s leadership has mouthed the need to diversify the economy and to wean the nation from oil dependency. But of course, the leadership, even as it acknowledges the reasonableness of such proposition, hardly walks its talk.
That a diversification of Nigeria’s economy is imperative may be gleaned from provisions of the extant constitution. Section 16 (1) (a) of the 1999 Constitution (as amended) calls for the State to ‘harness the resources of the nation and promote national prosperity and an efficient, dynamic, and self-reliant economy.’ Subsection 2 (a) stipulates ‘the promotion of a planned and balanced economic development.’ For years, political and economic thinkers, as well as all reasonable men and women, have argued that the nation’s economy must be diversified. It is even good for national security, especially in the aspect of food production. Seminars and symposia have been held, lectures given, and papers presented at numerous fora.
Since 1999, governments have said one thing or the other, even dreamed one vision or another, toward implementing the constitutional stipulations. President Obasanjo’s 1999 inaugural address identified ‘priority issues’ of his government to include ‘food supply, food security and agriculture, [and] resuscitation of the manufacturing industries.’ The late President Umaru Yar’Adua’s Vision 20:2020, tagged an economic transformation blueprint, and envisioned Nigeria among the top 20 global economies by the year 2020. And his seven-point agenda to drive this ambitious goal included ‘wealth creation through diversified production, especially in the agricultural and solid minerals sectors.’ Dr. Goodluck Jonathan said in his May 29, 2011 inaugural address that ‘the day of transformation begins today… the leadership we have pledged is decidedly transformative [and] the transformation will be achieved in all critical sectors.’
Alas, nearly two decades into democracy oil and gas still accounts for 87 per cent of Nigeria’s exports. Subsistence agriculture engages up to 70 per cent of the population but agriculture contributes less than 20 per cent to the gross national product. Even then, up to 40 per cent of Nigeria’s perishable produce is lost due to poor storage. In comparison, agriculture contributed 65.7 per cent in the pre-independence year of 1957.
It is a clear indication of an underdeveloped economy where such a large percentage of the population is engaged in subsistence agriculture. In comparison, only two per cent of the population of the United States produces the agricultural output that not only feeds more than 300 million Americans but also generates up to $115 billion revenue from export of agricultural goods. This high productivity is certainly not by merely wishing and talking, and often repeated expressions of commitment by high government officials. It is the product of thinking and political will.
The manifesto of the All Progressives Congress (APC) is wooly-worded on the matter at hand. It promises to ‘embark on export and production diversification.’ President Muhammadu Buhari, in his inaugural speech last May, promised to revive agriculture, solid minerals, mining, the major industries, and general infrastructure. More recently, at a meeting with a delegation of French investors, he is quoted to promise that the 2016 budget will include measures to boost manufacturing as well as attract more investment to agriculture and mining sectors. These lines were repeated by some of his ministers at a town hall meeting in Kaduna yesterday.
Political leadership is key to a successful achievement of this goal. For example, former President of Brazil, Inacio Lula da Silva whose country came into oil production relatively recently, said that his country would rather be an exporter of oil by-products than just oil. And he made sure this happened. To save Nigeria, Buhari must back his words with the requisite vision and firm political will.
If Saudi Arabia feels the need to wean itself from a mono-product economy, it is a strong signal to Nigeria’s leaders to muster the will and the discipline to move in similar direction, and the Nigerian people, also to imbibe an attitude appropriate to, and supportive of, that move.