Plummeting oil prices: What options for Nigeria?
It’s no mere coincidence that the Nigerian Bonny Light, an equivalent of the London Brent Sweet Crude is the highest grade which attracts premium prices in the world market. The revenue accrued faster than Nigeria’s immediate needs, and for a long period, was sufficient to meet all government’s financial requirements.
In this kind of scenario, great leaders and thinkers would have known that these are periods of abundance which often precede famine. Many oil producing countries took advantage of similar booms in their economy to save for the rainy day and invest in other sectors. Others went a step further and divested their excess resources outside their immediate constituencies. The Etisalat we have today is a product of such foresight. The Brazilian government also launched her economy into massive industrialization through this vehicle.
What did Nigeria do with her opportunities? Our leaders looted our treasury and moved the huge proceeds to tax havens in the advanced countries. We dismantled our groundnut pyramids and started importing peanuts and peanut butters; we cut down all our oil palms and enjoyed the sweet sap called palm wine; we shut down our factories and started importing the lower grade Italian leather and cooked the non-nutritious skin for meat known as “kpomo”; we burnt down all our cocoa plantations in search of bush rats and other exotic games; we shut down our hospitals, drove out our medical doctors and began medical tourism into every conceivable “babalawo clinic” worldwide; we degraded our institutions of learning and began exporting our children and leaders of tomorrow to learn foreign cultures and ideas currently causing serious policy confusion in our economic, political and social lives today.
So, in place of the boom that God bestowed on us, we earned ourselves the gloom we face today in the form of massive youth unemployment, abject poverty among the majority, brain-drain across the professional cadre, kidnappings, robberies, political brinkmanship, massive looting and corruption, poor IGR among majority of the states and a host of other socio-economic vices.
Today, a nation that was debt-free a few years ago has suddenly become debt – laden, with the economy comatose. The naira is now in complete obedience to gravity, although, this result is not unexpected, especially in a virtually mono-product economy whose key export is plummeting in prices in the global market.
It’s a big shame to Nigeria’s economic and political leadership that there is absolutely no value-added to crude. Rather, we have spent the last 50 years wasting huge oil resources, sharing the booties and depriving majority of Nigerians the full economic benefits of a thriving oil industry, with no clear – cut vision to diversify its revenue for sustainable development. Yet, we all know that one day, the oil that has brought Nigeria so much gains and pains will not be there anymore. At that time, I guess, Nigeria will resort to refining mud into crude, a demonstration of our rare ingenuity. That, perhaps, would also be the 8th wonder of the world, but there will be no market for such a wonderful discovery.
Nigeria could have leveraged on the multiple streams of income derivable from a full fledged oil industry to develop other sectors such as power, transportation, Agro-Allied, etc, if only our leaders had ventured to move beyond dealing in just the crude form of the product.
Now, what must we do if we are ever to stand a chance of reviving this accident victim of reckless driving called Nigeria? We have to stop the bleeding and apply first aid to stabilize the victim. Next, we need to seek urgent expert intervention. As soon as the patient becomes acceptably stable, we need to adopt a regime of good life-style and safety practices.
Having applied the first aid through the TSA, the government social stimulus packages as encapsulated in the 2016 budget will serve as a complement to revive the productive sector if only the measures are implemented with sincerity and diligence. But we must not stop at this. The government should as well be thinking of how to further improve local utilization of our crude through refining and other value added processes.
It’s strange that the oil producing states cannot jointly finance a few refinery projects through their 13% derivative funds, thereby improving employment generation and value added to their citizens. Government should also think of establishing a national mining infrastructure such as regional beneficiation plants, testing and analysis laboratories for developing globally acceptable Nigerian standards and brands as well as national online trading platforms that will enhance international market access for our products. Additionally, Nigeria must deliberately encourage the establishment of import substituting brands for our most demanding products.
Nigeria does not really require new laws, systems and policies. What we need is a new spirit of patriotism and national cohesion which can only evolve through a deliberate and consistent set of efforts at rekindling nationality instincts in the Nigerian people. Thereafter, we can begin the rebuilding process. The rebuilding should focus on deliberate creation of alternative foreign exchange earning production and value added. Nigeria must engage the international market in a manner that would provide opportunities for some levels of price determination. For instance, we must refrain from the error of rushing to export our natural resources such as solid minerals without first carrying out extensive world market research and partnerships that will optimize the returns in terms of revenue and employment.
• Dan Aibange is a Media and Energy Relations Consultant in Lagos.
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