NIGERIA AT 50:WHEN OIL RUNS OUT
Like most economies prior to any full-scale industrial revolution, the pre independence Nigerian economy was based on agriculture. During the 19th century when Britain was moving from an agriculturally based economy to an industrial one, Nigeria thrived on its agricultural trade and its traders were recognized for their astuteness throughout West Africa.
During the 1950s, agriculture retained its position as the biggest contributor to the Nigerian economy. As at 1957, 60% of the nation's Gross Domestic Product (GDP) was earned by peasant agriculture. Agriculture accounted for over 75% of Nigeria's export during the pre-independence era.
Also, the nation depended on her agriculture for up to 95% of local food consumption. By 1959, cocoa had become Nigeria's biggest single foreign exchange earner. Nigeria also claimed the title of being one of the three biggest producers of groundnuts in the world. There was also a high production in both cash and subsistence crops like rubber, which accounted for roughly 6% of total exports in late 1950s, coffee, cotton, millet, guinea-corn, beans, yam, maize, cassava and rice.
Agriculture started to lose its importance in the development of the nation's economy from the first few years of independence due to the discovery of crude oil in large quantity. For example, the share of agriculture in the GDP fell from 53% in 1960 to about 34% in 1974. Since then, agriculture has stagnated, partly due to government neglect and poor investments and partly due to ecological factors such as drought, disease, and other related factors. By the mid-1990s, agriculture's share of exports had declined to less than 5%.
Other economic activities that accounted for the 25% export earnings were mining, manufacturing, forestry, transportation, trading services such as tourism which formed a small part of the service economy. Today, Nigeria is almost entirely dependent on oil for her foreign exchange earnings.
The evolution of oil economy
The rapid development of the oil industry in the 1960s is probably the single most important factor in Nigeria's economic development. The 1950s was the decade of major petroleum discoveries. From modest beginnings in the 1950s, oil production accelerated rapidly in the 1960s. The increased demand for oil was a great boost to Nigeria's economy at time when it's traditional cash crop income was decreasing due to a fall in the world market prices and government neglect of the Sector. The discovery of oil in large commercial quantity at Oloibiri in Bayelsa State and Afam, Rivers State in 1956 was one major economic breakthrough for Nigeria.
In 1974, after the first world oil price increase, Nigeria was producing 2.2. million barrels per day. Later in the 1980s, prices and production levels dropped dramatically. By 1980, Nigeria's revenues from oil rose to approximately $23 billion and the upward trend continued for about two decades before the crash in the prices worldwide and the subsequent global economic meltdown.
The danger of mono-produced economy
Today, petroleum dominates the Nigerian economy. Over 95% of export earnings and about four fifth (4/5) of government revenues are derived from petroleum. The danger of running oil based mono-product economy cannot be over-emphasized. Fluctuation in world oil prices and the attendant global economic crisis is bound to have a dramatic effect on the Nigerian economy. The implication of this is budget deficit which symbolizes a great weakness in the nation's economy. This has tended to negatively affect our development plans and the implementation of capital projects as government on many occasions had to cut national expenditures owing to shortfalls in annual revenue projections from oil.
Another potential danger of our oil-based economy is that oil is an exhaustible and irreplenishable product. The more we tap into the oil wells, the drier they become. The implication of this is that every barrel of crude oil extracted from the wells brings them closer to their extinction. The reality therefore is that someday, our oil wells will run completely out. This will spell a total doom on our nation unless we immediately begin to look beyond oil and invest on other areas that have the capacity of sustaining our economy on a long term basis. This calls for urgent need for diversification as a means of freeing our economy and indeed the nation from over-dependence on oil and the imminent catastrophe a post-oil economy portends for Nigeria.
Nigeria is richly and magnificently endowed by nature. It has three distinct climatic zones namely: the Rainforest, the Savannah and the Sahel. A vast, verdant, arable landmass, Nigeria is highly hospitable to the cultivation of a wide variety of crops. No wonder therefore that before the advent of oil, Nigeria' economy was eminently sustained by agriculture which accounted for over 70% of foreign exchange earnings and 95% of local food consumption. Crops such as cocoa, palm produce, groundnut among others, were exported in commercial quantities.
In 1958 Nigeria exported 800,000 metric tones of groundnut and over 130,000 metric tones of cotton. In 1960, 157,000 metric tones of cocoa were exported. It is said that during the heydays of agriculture in Nigeria, Malaysia came to the country to understudy her processes of cultivating palm oil and exported her seedlings to that country for cultivation. Today, Malaysia is the largest producer and exporter of palm oil in the world and this product accounts for 10% of her GDP.
It is unarguable that the total neglect of commercial agriculture is one of the banes of our economy. While past governments realized the centrality of agriculture to the development of our economy and evolved policies like Operation Feed the Nation and the Green Revolution Programme to reinvent the economy through agriculture, the implementation of such policies and programmes left little to be desired. It is my submission that one of the diversification strategies for Nigeria is the return to commercial agriculture of the pre-independence era. We have the natural resources and the human capacity to adequately sustain large scale agriculture in Nigeria.
Another viable sector that can sustain Nigeria's economy is the processing and manufacturing Industry. Many of the agricultural products in Nigeria are perishable goods. To encourage large scale agricultural production therefore, an elaborate plan needs to be put in place for the processing of such goods for local consumption and also for export. Nigeria has the capacity of sustaining large scale processing industries such as food, beverages and textile Industries, leather works and so on.
Nigeria is also rich in solid mineral deposits. Limestone, Iron Ore, Coal, Bauxite abound in Nigeria on a large scale. These resources need to be fully harnessed for the development of our economy. This sector offers enormous potential for diversifying our economy. Above all, the serene natural environment of Nigeria and her overwhelming tourism resources offers the best option in our quest for diversification. It is in the light of this that I would now specifically focus on the Nigerian tourism Industry with a view to highlighting its capacity for taking the place of oil as the major pillar and catalyst of our economy.
Tourism as the best option in the drive towards economic diversification
It is unfortunate to note that rather than placing Nigeria among the comity of advanced nations of the world, the reliance on oil has brought untold hardship, high poverty level, rural-urban migration, lack of infrastructure, inequitable distribution of income, high unemployment rate, insecurity in the Nigeria Delta, and total neglect of the rural communities who form about 70% of Nigeria's population. In many countries, particularly in developed economies, tourism has been found to be an appropriate industry for economic diversification, poverty alleviation, job and wealth creation.
According to the United Nations World Tourism Organisation (UNWTO), International tourism receipts grew to US $944 billion in 2008. In 2009, the United States of America earned $94.2 billion from tourism, Spain $53.2 billion, France $48.7 billion and Italy $40.2 billion respectively. In Africa, countries like South Africa, Kenya, Tanzania derive the bulk of their foreign exchange earnings from tourism.
?Tourism has the potential to be a susbstantial engine of growth of the Nigerian economy. Socially, one of the most immediate benefits of the tourism industry is its ability to create employment for both the skilled and unskilled, the highly educated, less educated and even illiterate members of the society. As a labour intensive industry, tourism has the potential for creating more jobs per unit of investment than any other industry and it can be a useful source of employment for women and ethnic minority groups.
Environmentally, Nigeria tourism, when properly developed and managed can serve as a mechanism for protecting natural environment, perserving historical, archaeological and religious monuments and stimulating the practice of local cultures, folklore, traditions, arts, crafts and cuisine, hence its sustainability. Unlike oil exploration which has enormous side effects such as environmental pollution and descretion of land and the waters, tourism is environment friendlywhen properly managed. Economically, tourism brings benefit to the central government, local authorities as well as the private sector through the generation of foreign exchange/revenue, financial returns on investment, taxation on tourists and tourist's products and linkages to other industries such as manufacturing, agriculture and fisheries.
A critical look at the Nigeria environment shows that the sector has the required resources to stimulate rapid socio-economic development. Its beauty, richness, cultural diversity and the hospitality of the over 140 million people make Nigeria the centre of cultural renaissance and truly the Heart of Africa. Our nemerous wildlife zones created and protected as National Parks, Games Reserves, and Wetland offer opportunities for rich ecotourism industry. Nigeria is also blessed with over 700 km of coastline (the longest coastline in Africa) covered with unpolluted sandy beaches ready for investors to develop.
Our cultural festivals are about the most fascinating and most popular in the whole world. Apart from Osun Osogbo, Argungu International Fishing and Cultural Festival, Igbo Ukwu Yam Festival that have gained international recognition, our cultural diversity provides boundless opporltunity for the development of cultural tourism. There are at least a cultural festival celebrated in each of the country's 774 Local Government Areas.
Similarly our museums and monuments, historical sites like the Slave Trade routes, Mary Slessor Tomb, Ancient walls, Palaces of traditional rulers are unique attraction sites which hold a lot of potentials for tourism development. The same opportunities abound for Conference, Sports and Religious Tourism. In the light of these natural endowments, it is clear that tourism offers the greatest potential in our quest for diversification.
For the country to successfully harness her rich tourism potentials for accelerated development, all hands must be on deck. In most parts of the world where tourism is a serious economic activity, the industry is essentially private sector driven. The private sector involvement in Nigerian tourism industry today is far from being satisfactory. The Federal Government has already liberalized the economy, put in place appropriate policy framework aimed at boosting the sector. For example, there is currently a revolution in the telecommunication sector. The power sector is being critically overhauled with a view to finding lasting solution to the problems of power generation.
There is improved transportation system with better road network to the hinterland where most of the tourist centres are located. The National security issue is being addressed as one of the key components of the seven point agenda of this administration. The restiveness in the Niger-Delta has been put to rest with the amnesty and rehabilitation agenda for the militants. There is stability in the polity with assured consistency in government policies.
The Nigerian Tourism Development Corporation (NTDC) has continued to create the enabling environment for the development of the sector through effective regulatory framework, strategic engagement with stakeholders, aggressive publicity and marketing campaign programmes, logistic and technical support for tourism events and tourism infrastructural development. Arising from our regulatory activities and active partnership with relevant institutions such as the Security Agencies, we have been able to greatly reduce the incidences of fraudsters and miscreants in the industry.
The negative image of Nigeria that had been orchesrated by the Western Media in the past has remained central in our effort at repackaging and positively projecting our country at the international arena. In all our international tourism fairs, we seek to showcase Nigeria as the ultimate destination in Africa and debunk the erroneous impression that our country is not safe. At home, we encourge the development of domestic tourism, support and project our cultural festivals as vehicles for fast- tracking the sector. In the past four years, under my leadership the Corporation has supported over thirty cultural festivals and events such as Argungu International Fishing and Cultural Festival, Osun Osogbo Cultural Festival, Igbo-Ukwu New Yam Festival, Nwonyo Fishsing Festival, Igue Festival, Olojo Festival, Ojude-Oba Festival, Calabar Carnival, to mention but a few.
As a practical demonstration of our commitment to the development of facilities that promote indigenous cultural festivals in Nigeria, the Corporation has built and donated a Fish House and a Yam House to Argungu Inernational Fishing Festival and Igbo Ukwu New Yam Festival respectively. It is clear that we cannot meaningfully develop tourism without paying adequate attention to tourism infrastructure. Consequently, we are working assiduously with the various stakeholders for the development of key destinations in Nigeria as well as the upgrading of facilities and services in the hospitality industry generally.
It is the determination of the NTDC to develop tourism villages in all the states of the federation. Accordingly, the Corporation has established a tourism village model at its headquarters with such facilities as Local Resturants, Commercial Toilets, Village Hall, a Multi-Purpose Studio, among others. Presently, the NTDC tourism village experiment offers employment to over 100 Nigerians under the public, private partnership arrangement. It is our conviction that the replication of this model in a larger scale in each of the states of the federation would greatly reduce unemployment and curb youth restiveness and other social vices.
Let me also add that the introduction of GPSR Navigator, Telephone Maps, Street Maps of the 36 states and FCT, and the mounting of directional signages are all efforts at opening up the Nigerian Tourism market and making it readily accessible to tourists in line with international practice.Similarly, Nigerian Tourism Development Corporation through dialogue with the States is facilitating the provision of land at concessional rates and conditions favourable to investors.
Other incentives being explored include tax holiday, tax rebate and soft loan with long period of moratorium to potential investors. The private sector should therefore take advantage of the enabling environment created by government to invest hugely in the sector.
The tourism industry is the highest employer of labour in the whole world. It is my conviction that the State Governments need to pay greater attention to the sector with a view to confronting unemployment, rural urban migration and mass poverty ravaging our nation today. Tourism cannot flourish where we have Tour Operators without vehicles to facilitate tours.
Nigeria is blessed with appealing art and craft. Our crafts are symbols of our material and spiritual heritage. Essentially, the Nigerian crafts are grouped into textiles, potery, iron works, woodworks, calabash decorations, leather works, ivory works and jewelry. The States and Local Governments should create Craft Villages and encourge women and youths to form cooperatives for the purpose of producing souvenirs for our tourist market. This will not only go a long way in reducing unemployment and empowering our people in line with the seven point agenda, it will also greatly foster the spirit of self reliance and entrepreneurship among the youth.
Now that Nigeria is serious with the issue of diversification, the task before this administration should be to breathe life into all aspect of national life in order to achieve the goal of joining the league of 20 largest economies by the year 2020. The current strong political will to fix the energy sector as a precursor to growing the economy is highly commendable. The projected 10,000mw by 2011 should be pursued with all vigour and if possible improved upon. The effort to rehabilitate infrastructure and provide a favourable environment for doing business should be sustained.
Nigeria, with her rich potentials in all facets of economic activity such as tourism, agriculture, solid minerals, forestry etc stands to benefit enormously from economic diversification.
With the democratization status of Nigeria, investment in all economic sectors should be encouraged. This would surely lead to the process of economic diversification which if properly packaged would catapult Nigeria to an enviable position among the comity of nations.
Finally, let me emphasize that while oil is exhaustible, tourism is sustainable and environment-friendly. One day, our oil wells will dry up. Like Dubai, we must begin now to seriously consider tourism as a viable alternative to the oil industry. I share totally in the axiom that tomorrow belongs to those who prepare for it today.