The fluctuation in the price of oil and the recent divestment of the oil majors from the Nigerian oil industry has engendered the need to look beyond the lure of oil and re-energise other sectors of the Nigerian economy. The quest for clean energy and alternative energy sources in other parts of the world and vagaries in international economic system has shown the futility of relying on one primary product.
The Nigerian economy is in crisis. The observable crisis had long been foretold. In the late 80s, Chief Obafemi Awolowo had warned that Nigeria’s economy was heading straight for the rocks. As usual, this patriotic counsel was dismissed by the government in power as a mere ranting of a bad loser.
It is necessary to note that before the discovery of crude oil and its attendant exploitation Nigeria, the fledgling economy was predicated on agriculture. Primary products and cash crops were major drivers of economic change. By virtue of this, the country topped the world in groundnut production from the northern region, and rubber, palm oil and palm kernel in the East. Globally, Nigeria was second only to Ghana in cocoa export, which derived from the thriving cocoa farming in the western region. Each region was able to carve out a place for itself through policies that suited its peculiar situations.
The regions, under the 1963 Federal Constitution framework, controlled their resources, retained a good deal of 50 per cent of the income generated, contributed 30 per cent to the Federal Government, and 20 per cent to the common pool, which the existing regions shared.
This diversified economic model, however, changed with the discovery of crude oil. When oil became a revenue spinner for Nigeria as from the early seventies, there was gross negligence of other sectors of the economy. The revenue inflow from the export of crude oil was so overwhelming that government was at sea on what to do with the money realised, The Trumpet gathered
Ever since, while the discovery of oil has brought about the neglect of agriculture, the oil fortune had been seen as a national cake to be shared by all. Worse still, the economy has precariously been almost exclusively dependent on the oil and gas sector, which accounts for 95% of the export revenue and 76% of government revenue. Besides, government efforts to improve the contributions from the non oil sector to national income have not yet yielded significant result.
Nigeria has engaged in substantial oil and gas production over the years and the current oil reserve is estimated
to about 35 billion barrels while her proved recoverable natural gas reserve is put at 187 trillion cubic feet. Lamentably however, these have not translated into sustainable economic development for Nigerians, instead, Nigeria is among the top poorest and debtor nations in the world. There are conclusive studies that have shown that the performance of most nations that hinged their economic development on mere sale of oil and gas is miserable.
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Today, whether Nigeria’s oil is a blessing or curse is debateable because paradoxically, there is
a congruence of wealth and in the country. The concept of ‘resource curse’ was coined to depict the attendant negative growth and development outcomes which characterise mineral and oil-led development. Sadly, enough, Nigeria has calibrated her developmental initiatives on revenue derived from sale of crude oil.
Nigeria, has thus, put all her eggs in one basket! Drawing from extant and comparative studies, economic growth and development can only be realised in Nigeria if concerted effort is made to free the nation from resource curse by embracing the beyond oil initiative. Recent developments in the international market, has provides further illumination and justification for the urgency of diversification on the Nigerian economy.
The major traditional importers of Nigeria’s crude oil such as China and the Unites States are backing out of the deal for cheaper energy sources. They are also sourcing for other viable alternatives, a development that is not particularly healthy for the Nigerian economy. A review of the US imports of crude oil and petroleum products from Nigeria shows a steady decline in the quantity of oil sourced from Nigeria since 2011. To worsen matters for Nigeria is the global proliferation of oil discoveries including African countries such as Ghana, Liberia, Sierra Leone and Uganda.
The way out of this quagmire is not farfetched. The economy must be transformed from a mono-cultural economy to a diversified one. The reform of the oil and gas sector has become imperative, now than ever before, as seen in other countries. United Arab Emirates, Oman, Qatar, Norway, Kuwait, and Saudi Arabia for example, have used petrodollars to transform their economies and better the lot of their citizens. Although Dubai’s economy was built on petrodollars, today oil accounts for less than six per cent of the Emirate’s revenue.
The experiences of several countries that exploited the use of oil wealth to nurture, develop and boost other sectors of the economy, clearly show the possibility of Nigeria to use the oil wealth to diversify her economy. Indeed, a comprehensive study has revealed that there are almost thirty-four commercially viable types of solid minerals in Nigeria. This once vibrant economic sector had contributed substantially to the Nigerian economy prior to the mid-1970s, with the mining of tin in Jos and coal in Enugu, for instance. It is beyond comprehension that a sector that is a moneyspinner is virtually neglected by successive governments in Nigeria and this has robbed the country an estimated annual income of over N4 trillion annually.
The point must be made that in order to move away from the lure of oil, there is need to capture the nation’s economic potentials as alternative revenue source. Today, tourism which is directly linked with the cultural, economic and intellectual potential of a country, is a gold mine. It is one of the most profitable and rapidly developing industries worldwide. The nation must tap into her tourism potentials and make the sector a revenue spinner by providing jobs for the locals. Closely related to tourism is the entertainment industry. The entertainment in Nigeria has been growing in leaps and bounds and its potentials could be harnessed for common good. The harmonisation of other neglected aspects of the Nigerian economy will ultimately transform the economy and free the nation from the nefarious oozing of crude oil.
