By Okechukwu Emeh, Jr
BEING solely dependent on export of crude oil as a major source of foreign earnings, Nigeria, the much-hyped Africa’s biggest economy, is currently bearing the brunt of a sharp decline in the international prices of the hydrocarbon resource since June last year. Chiefly among the adverse effects of this worrisome development in the country are the increasingly dwindling revenues of government at all levels and the attendant possible slump in financing of capital projects and social services, sluggish economic growth and the terrible fate of naira whose exchange rate has noticeably depreciated against hard currencies like American dollar and pound sterling. This is not to overlook other effects like dramatic reduction in foreign reserves, layoffs, rising inflation, bankruptcy of many states of the federation and incidence of banks facing bad debts from oil companies that bought oil fields when prices were high and are now struggling to repay their loans.
In the light of the petroleum crude prices that have reached an all-time low and the dire consequences, one is compelled to take a critical look at the relevance of oil-dominated economy in Nigeria at the present time. To say the least, this mono-product economy is a mixed blessing to the country. On the one hand, with the exploitation of crude oil in Nigeria, the revenue from this mineral resource, or the black gold, which accounts for about 70 percent of our national income, has contributed substantially towards funding the development of some of our infrastructure and social services, including roads, airports, railways, hospitals and schools. On the other hand, the curse of oil in our political economy is egregious in disheartening situations like thefts and squandering of billions of dollars of oil proceeds, mass poverty and squalor in the midst of plenty, widening inequality between the rich and the poor, continued grievances and militancy in the oil-bearing Niger Delta region over relative deprivation and environmental pollution. There is also the relegation of other vital and necessary sectors of the economy like agriculture, solid minerals, industrialisation/manufacturing, taxation, investment and tourism. Added to this is the sobering reality that too much emphasis on revenues from crude oil sales has made Nigeria to face the precarious future of oil doom owing to several principal factors.
These include the unstable nature of the international crude market; possible glut in the market due to new oil finds and exploitation in different parts of the world in the recent years, plus the likelihood of plentiful supply of barrels of oil by Iran this year after just being relieved of economic sanctions by the Western world over her controversial nuclear programme; the downward trend in the demands for oil by China, one of the major consumers of the commodity, following a lull in her industrial output in recent years; evolution of alternative energy sources (including those of hydro, solar, wind, biomass and geothermal) and efforts to explore and exploit shale oil (oil from rock) and gas by countries like the United States (US), the United Kingdom (UK), Canada, Russia, China, Czech Republic and South Africa.
No doubt, such trending developments that have marked a downward trajectory in the prospects of petroleum crude have underpinned the calls in many perspicacious quarters in Nigeria for re-balancing of our economy through a paradigm shift from the predominance of oil as a means of generating foreign exchange to diversification where fresh focus would be given to other promising sectors. Although successive regimes in the country have mouthed such a move as a panacea to our economic doldrums, not many of them have demonstrated political will and commitment to actualise it. Take, for example, the issue that has become something of a ritual like the cliché of “buy made-in-Nigeria goods”. This has often been rendered atrophy by the craze for foreign goods by many Nigerians, which has made matters worse for our embattled currency because of high demands for dollar by importers of all manner of things that would have rather been produced in the country like tooth pick, beverages, pen, pencil, matches, foot wears, wears, textile materials, tomato paste, fish and poultry.
Now, the chicken has come home to roost in Nigeria because of the crude oil prices that have continued to tumble, our economic managers should not resort to panic measures that cannot help matters like currency devaluation and raising interest rates. After all, the prevailing oil crisis is part of the dismal global economic outlook, as undergirded by elements of negative growth like recession, depression, inflation, stagflation and a drop in commodity prices. Amid such challenges, it is reassuring that the administration of President Muhammadu Buhari has voiced big commitment to wean Nigeria’s economy away from total dependence on petroleum crude. On this score, it is expected that the administration would focus attention on the real sector that would make the country to fulfill her potentials not only as Africa’s largest economy that is ahead of South Africa, her main economic and geopolitical rival, but also as an epitome of inclusive growth and sustainable development. One of such sectors is agriculture, which regrettably, has been eclipsed by the flow of petrodollars into our economy, in addition to obsession of many Nigerians with making quick money through contracts, supplies and merchandise. Nevertheless, the fact remains that the sector holds the key to economic revival in Nigeria, apart from helping in promoting food security, agro-allied industries, export trade, job creation and poverty alleviation. Interestingly, we have wide expanse of arable land, especially in the north, where varieties of crops and livestock could be grown on commercial scale.
Therefore, there is a compelling need for Nigeria to go back to her glorious years of agrarian revolution, as witnessed in the 1960s when we had the groundnut pyramids and cotton farms in the north and massive plantations like cocoa in the west, oil palm in the east/ present-day Niger Delta region and rubber in the mid-west (old Bendel State).
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