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A doctor’s treatment for the oil curse

By Abu Quassim
02 March 2022   |   12:33 pm
The oil curse is a complex disease. Broadly, it describes the policy and economic failures that come from an over-reliance on oil. It starts with misplaced optimism when prices are high that they will stay high forever. It translates into the failure to invest the proceeds of high prices to spur a productive economy. It…

Chairman, Peoples Democratic Party (PDP) Board of Trustees, Senator Wali Jibril (left); former Senate President, Dr. Bukola Saraki and his predecessor, Senator David Mark, briefing journalists after an emergency meeting of the board in Abuja…yesterday. PHOTO: PHILIP OJISUA

The oil curse is a complex disease. Broadly, it describes the policy and economic failures that come from an over-reliance on oil. It starts with misplaced optimism when prices are high that they will stay high forever. It translates into the failure to invest the proceeds of high prices to spur a productive economy. It ends with ruined public finances when prices fall and the economy falls further.

We have been suffering from years of low prices, compounded by the APC administration’s disastrous policies. Ordinary people are now paying the price as jobs are scarce, prices are rising, and young men are turning to crime in desperation. Tensions in Europe are raising oil prices, but unless the next president is serious about our economic development and sets us on a new path, the respite will only be temporary.

An agreement on the nuclear deal with Iran or OPEC raising production quotas could just as easily lead to prices falling again. In the words of John F Kennedy, the time to repair the roof is when the sun is shining. And now is the moment for us to choose our next John F Kennedy.

One of our nation’s great strengths is its federal system. We have numerous governors throughout the country taking different approaches to economic development. Not only do we get the opportunity to see how different policies work in practice, but we get the opportunity to see different policymakers and who rise to the top. One person and his record of achievements stands out – Dr. Abubakar Bukola Saraki.

Dr Saraki was governor of Kwara for eight years from 2003-2011 where he used the levers available to a state governor to spur the local economy, create jobs, and provide a better quality of life for the people. He then continued his track record of success in the National Assembly, becoming President of the Senate, ensuring that laws were structured to encourage economic development.

A theme that emerged during his time in different public offices was combining the weight of the public sector with the efficiency and competitiveness of the private sector. When he started his political career, Dr. Saraki instituted partnership with private industry to rejuvenate defunct commercial ventures owned by Kwara State. Whether paving the way for the Kwara state textile industrial company to partner with a private enterprise, or attracting foreign direct investment from South Africa to collaborate with the Kwara Furniture Company, Dr Saraki knew how to generate opportunities and growth. Instead of pursuing full privatization or sticking to sluggish state-owned enterprises, he delivered the best of both worlds.

Whilst in the Senate he drove through numerous acts designed to create jobs and reduce poverty, from the National Development Bank of Nigeria Act to the Investment and Securities Act. Returning to the theme of ensuring that the public and private sector worked in tandem to create the most value for Nigerians, he was instrumental in the passage of amendments to Public Procurement Act, which sought to institute a bias in procurement for Nigerian manufacturers and companies. This was a part of his wider “Made in Nigeria” campaign with local companies and manufacturers to promote Nigerian-made goods. However, he avoided the temptation of the extreme, and still allowed the government to procure from foreign suppliers but only if all local options had been exhausted. Transitioning from our state heavy economy to an efficient market economy without causing harmful disruptions to ordinary people will take the policymaking skill only gained through experience – experience that Dr Saraki has developed during his career.

The consequences of getting it wrong are there for us to see. The APC administration has made some catastrophic blunders with the economy. Extreme protectionist measures such as closing the borders to goods have hurt the people and done little to genuinely encourage local industry. Estimates for the damage caused by government interventions to ban twitter are astronomical, possibly as high as USD26 billion. The tech sector is one of our nation’s most promising engines of growth and government should be behind it, not holding it back.

We can’t afford to suffer another cycle of oil-fueled boom and bust. We need genuine economic development that properly utilizes the gift of our natural resources and channels them into productive investments. There are examples of countries, such as Malaysia, breaking free from the oil curse. However, it requires fresh leadership with real solutions, like those introduced by Dr Saraki.

Quassim writes in from Abuja