Dwindling Oil Revenue Rekindles Need To Diversify Nigeria’s Economy
The fallen price of crude at the world market has orchestrated the devaluation of the Naira and increased inflation.
The manufacturing and other productive sectors are worst hit because, as the country is highly import dependent, they find it extremely difficult to bring in raw materials, especially now that the central bank has closed its auction market window. The dollar is expensive to procure at the interbank window and the black market.
More worrisome was the need for government to review its 2015 fiscal policy by slashing the benchmark of oil, in the 2015 budget from $120 to $75, and now to $53. The implication of the budget review may not manifest now.
It may result to a scale down in capital and recurrent spending. That alone can translate to a reduction in money in circulation.
Looking at what this portends for the nation should this trend continue unchecked, experts have called on the government not to fold its hands, but to explore other potential sources of revenue through the diversification of the nation’s economy.
While some urged the government to redirect its focus to the agriculture sector, others asked the government to explore the numerous mineral resources for alternative source of income. Yet, few others said Nigeria, like many other advanced countries, can rely on tax revenue for survival.
The Edo State Experience
THE exploitation of solid minerals is in the exclusive legislative list, which makes it a preserve of the Federal Government.
In Edo State, for example, it is said there are about 20 solid mineral deposits, which include; Marble, gold, granite, lime stone, kaolin, gypsum, feldspar dolomite, salena, tantalite, gemstones, quartz, bitumen, bentonite, laterite and sharp sand.
They are scattered across several villages and communities in Akoko-Edo, Etsako West and Etsako east local government councils of the state.
For instance, in Dagbala, Akoko-Edo local government area, companies who get their license from the Federal Government are reportedly mining a deposit of gold.
A public affairs analyst and director, Justice Research Centre (JRC), Donald Inwalomhe told The Guardian “Edo State has an abundant supply of one of the world’s most beautiful and durable marbles.
Although the exact size of Edo’s stone industry is unknown, there are more than 60 known deposits of marble, with 35 different types in different colours. Edo’s chessht and khogiani marbles have been favourably compared to Carrara marble, an Italian marble that is considered to be one of the finest in the world,
“Approximately 80 percent of Edo marble is exported as rough hewn blocks and is often re-imported, mostly from UK, as higher value polished marble products for Nigerian reconstruction projects. The Edo marble industry in Akoko-Edo, Etsako West, Etsako East, Owan East and Ovia South West lacks proper equipment, has little technical knowledge, and uses poor extraction methods.”
The Edo State government recently said it had identified about 200 solid minerals in different parts of the state awaiting exploitation.
The state commissioner for Solid Minerals Oil and Gas Iriogbe Isimeme said that government was ready to woo investors to harness the resources in the state.
Isimeme acknowledged that the solid mineral sector under the purview of the Federal Government, but the state government would collaborate with the private sector and the central government to exploit the mineral deposits.
He said governor Adams Oshiomhole was doing its best to provide a conducive environment for prospective investors.
The commissioner also urged the Federal Government to facilitate the process of harnessing and exploiting the vast mineral deposits in the state.
PRESIDENT, Manufacturers Association of Nigeria, Dr. Frank Jakobs said agriculture and solid minerals should be a major area of focus for alternative income in the face of the declining revenue from the oil sector.
“The falling oil price globally calls for the diversification of the economy of the nation. The fall of oil prices means revenue available to the government will be minimal to the extent that the country can no longer meet its obligation to the citizens.
But it appears that the country had prepared for this before it came, with the proposed Nigeria industrial revolution plan which will help diversify the economy. There are some areas which Nigeria has comparative advantage.
The government should look at solid minerals, emphasize on agriculture to cushion the effect of the continued fall in the price of petroleum products. The labour force should be well trained.
There is need to improve educational standard so that graduates from higher institutions are well prepared to drive the economy. Above all, we must look at the industries that derive their materials locally,” he said.
On government’s plan to also focus on taxes besides raising tariff on luxury goods, Jakob said tax collection should be done with a human face by first providing the necessary infrastructure for the comfort of Nigerians.
The president of the Manufacturers also suggested a cut by 40 per cent in salaries and emolument of public office holders.
The Minister of Mines and Steel Development, Musa Sada said government was already looking at solid minerals as alternative source of revenue.
He said government had fashioned out a roadmap for the exploration of solid minerals in order to cushion the effect of the falling oil prices.
“We initiated the National Road Map (NRM) and what makes it different from other concepts is that we added a time frame to give us guideline. What we are trying to do is to interpret government policies like the vision 20:20, the transformation agenda and the mid-term development plans of the Federal Government. We are trying to capture what all these have for the sector.
We realize that we cannot just jump on and start making immediate impact in terms of revenue. We must look all what is on the ground first; most of the people involved are at very small-scale level, especially in the rural areas, which is directly connected to issue of poverty and generating incomes.
So we look at the immediate implication that people are active in trying to make a living, create jobs in the sector, so that is the basic objective or the road map.”
He said, “You know, there are occurrences of solid minerals all over the country, so what we need to do is to get more data on the character and properties of those minerals and the quantum. This is what will entice investors.
“We have quite a few, for the first time, we have six large scale mining companies, there are Iron Ore and coal companies in Kogi State, gold company in Osun State, lead Zinc company in Bauchi and Ebonyi, another gold in Zamfara/Niger states, these companies have started building their processing plants.
We are trying to avoid resource flights where they will dig out the raw materials and ship it out of the country. So we always insist that these investors establish a processing plant in the country.”
According to the minister, over 10,000 mining licenses had been issued, from which only 3,900 of them are “active mining titles”
“When I came, we had above 3,000 licenses issued. We opened up and created the agency and the agency continued. It got to over 10,000, but you know something with licenses, it is just like land. You get your certificate of occupancy and you keep it until the area becomes more expensive and then you can just sell the land.
The president, Chattered Institute of Taxation of Nigeria (CITN) Chief Mark Anthony Dike said the only way out for Nigeria is the diversification.