WINNING WITHOUT CRUDE OIL
When the 2014 FIFA WORLD CUP ended over three months ago. Followers of the 4-Year football mundial were thrilled from the kickoff on June 12th till the estatic moment as the Germany's Captain Philip Lahm raised up the cup in celebration of their win over Argentina in that Final match.
Many will not quickly forget the 7-1 thrashing of Brazil by the German Machines in a semi-final match. That loss was regarded as a disgrace to Brazil; the host nation, as the hopes of over 198.7 million Brazilian fans both in the stadium and all over the country were dashed. It was compared to a national football disaster of 1950 called the “Maracanazo". As questions were asked, it became all too glaring that the Brazilian Team had over-depended on an only Key player "Neymar"; who had scored 4 critical goals en route to that semi-final match. After an injury suffered in a previous match against Columbia, Neymar had been sidelined for the rest of the tournament. Head Coach, Felipe Scholari had put off questions, claiming they would put on a good performance irrespective of Neymar's absence. Results from that march depicted just one thing; the Brazillian team had no HOPE without Neymar. Even the 3rd place match against Holland didn't fare better, the Brazilian team was a goal down in the first 5 minutes, eventually losing by 3 goals.
A view at the Nigeria's Economy is not contrasting to that of the Brazilian team. Ever since the Oil boom of 1970, the economic survival of Nigeria has slowly titled towards fluctuations in the proceeds from crude oil foreign exchange. A peep into the federation account reveals that oil revenue accounts for about 80% of revenues. So, it will be safe to conclude that the "CRUDE OIL" is Nigeria's Economy's "NEYMAR". Exciting, isn't it?
A perusal into historical facts reveals that, before the reliance on crude oil, Nigeria like most of its African counterparts depended solely on Agriculture. Agriculture was said to account for more than 80% of foreign exchange earnings; this in no small measure is an offshoot of a structure created by colonial masters; who only wanted the cash crops for export, as food crops were not in demand overseas, they left the economies of their colonies unattended to with no effort geared towards industrialization. This was evident in the structure of all sectors of the economy then from Transport, Education to Health Sector just to mention a few.
In 2013, statistics from the National Bureau of Statistics puts Agricultural production in Nigeria at a low ebb, although Nigeria at various point in the past had created various policies to revamp agricultural production, popular policies includes "Operation Feed the Nation" by the Muritala/Obasanjo administration and also the "Green Revolution" of the Shagari Administration in 1978. The results of these policies weren't amazing as forecasted.
Today, despite the fact that Nigeria is ranked the largest economy in Africa and the 26th largest in Africa based on its 2014 rebased GDP, about 70% (2010) of its citizens live on less than a dollar per day. Nigeria in 2014 was even ranked 3rd in the ratio of the poorest people in the world. Also about 54% of its youths are unemployed.
An analysis into the geographical composition of Nigeria reveals how blessed Nigeria in terms of Natural resources. From Bauchi to Rivers State, and from Lagos to Enugu. Nigeria is blessed with varying amount of resources that includes Gold, Marble, Rubber, Cocoa, Ignite, Bitumen, Limestone, Coal, and Iron Ore just to mention a few. The weather in Benue State, Nigeria was recently compared to that of Brazil by Meteorologists.
The rhetorical question is how come such a country like Nigeria will solely depend on crude oil alone to drive its economy? Maybe it because Nigeria has a nation finds the prospects with oil too relaxing and finds a deviation from the status quo far too perplexing. Some have blamed this anomaly on leadership but it must be noted that various successive governments have had a number of policies aimed at re-diversifying the economy. The only results gotten so far is only that the entertainment industry (both Nollywood and the music industry) now adds to Nigeria's GDP as shown by the recent rebased GDP by the National Bureau of Statistics.
However, the problem with the entertainment industry is that only a few people makes the big monies in the industry and therefore it cannot be said that it would provide a feasible way forward for equitable distribution of wealth in the economy.
A way significant way forward is the development of the local economy through massive industrialization as suggested by the “Big Push Theory” of Rodam Rosenstein. If government has consistently proven that it is inadequate, it is then best that it allows the private sector drive its economy just as the USA economy is. Remember, our Economy is regarded as a transitory economy, that is, it is slowly titling towards capitalism. The theory of big push suggests, that for a country in the vicious cycle of poverty to develop, it must engage in massive capital influx into the economy.
It is important to note that exploration of these natural resources however may be hindered by a myriad of factors and one of such is the huge capital outlay required to kick start the process. A feasible solution is a Public-Private Sector Partnership, which is an arrangement whereby the government which owns the capital allows the private sector to utilize such capital. The private sector on the other hand, which is solely motivated by the rationalist idea of profit making utilizes such capital and by implication meticulously gears its activities towards the exploration such mineral resources for profits which it pays an agreed proportion to the government. The government also taxes such organizations and also it gets royalties from them.
Another way forward is the government boosting its Foreign Direct Investment in these other sectors. Nigeria at the moment has the highest FDI in Africa behind South Africa, which is a good omen but its time such investment are geared towards other resources than crude oil.
One constant problem faced by investors however is the dilapidating state of the Nigeria's infrastructural setting. For example, the epileptic power supply kills business initiatives and drives out potential investors. This poses the biggest hindrance to investment. However, it is expected that the recent privatization effort of the Power Holding Company of Nigeria (PHCH) would yield positive results in the nearest future.
In conclusion, it should be visible to the blind and audible to the deaf that true winning in the world economy does not come from solely depending on one source of income for a country. Industrialization must take effect for the future of the next generation to be adequately secured.
Abiola Ayodeji Gbemisola, is a student of Economics at the Obafemi Awolowo University, Ife, Osun state. He is an Editor with Economic Insight Press Agency OAU and also the PRO of the Nigerian Economics Student Association, OAU [NESA-OAU]. He tweets from @bilex_g. Contact him via [email protected]