Oil and Nigeria’s future

Nigeria, no doubt, is a blessed country. She is naturally endowed with not only rich and ingenious human capital but also with diverse and ample material resources signified in abundant agricultural supplies (animals and crops) as well as solid mineral deposits. Of all the natural gifts from God to Nigeria, crude oil more than other resources remains the most exploited in the past four decades. For more than forty years that crude oil served as the nation’s main source of revenue, it would sound controversial to suggest that crude oil has been a remarkable blessing to Nigeria when the gains from the commodity are put within the context of a country that is yet battling with challenges of nationhood. 

Speaking last month in Ibadan at the 2017 Founder’s Day celebration in memory of the renowned economist, Professor Ojetunji Aboyade, Governor Nasir Ahmed el-Rufai of Kaduna state prayed for Nigeria’s crude oil to dry up because, according to him, wealth accruing from it has being a major hindrance to innovation. “When the oil wells dry up’, he explained, “Government and people will become serious about developing the country”.

Addressing investors at the recently held United Nations General Assembly in New York, Africa’s richest business mogul, Alhaji Aliko Dangote, also said he was praying for the global crude oil prices to remain low for a longer period so as to enable resource-rich countries to turn to other sectors with a view to growing their respective economies. Governor el-Rufai’s wishes as well as Dangote’s prayer are, if I get them right, aimed at inspiring investors and stimulating economic activities in the non-oil sector. To be pointblank, Nigeria’s future no longer lies in oil. Without drying up, oil is actually dying as the world increasingly turns away from it as a major source of energy in favour of renewables.

Given the inexcusable underdevelopment that characterized the good days of the oil industry in addition to the collective neglect of non-oil sectors of the economy over the years, this writer considers this huge revenue-earning commodity as a resource that over pampered the nation and her citizens. Besides, the bizarre forms of corruption across successive administrations which the business of crude oil exposed Nigeria to is another factor that plausibly indicates how oil was converted from being a blessing into a “tragic curse” for the most populous black nation, Nigeria. Our over-reliance on oil as well as our collective failure (as government and as a people) to take good advantage of the God-endowed resource of crude oil is, to say the least, a national tragedy. 

At a time, the oil industry in Nigeria became the most lucrative, and therefore, the most attractive to all categories of investors (foreign and local) to the detriment of other natural resources. It became the quickest short-cut to wealth for all classes of entrepreneurs; small and medium. Even the well-off sees oil business as the easiest and effortless money-spinner. At any time there was scarcity of petrol in the country, which on most occasions was artificial, jobless youths many of whom are characteristically lazy and unskilled took undue advantage of such situations to get themselves temporarily “employed” in the fraudulent sale of the commodity at cut-throat prices.

The apparent dwindling crude oil market with little prospect for the low prices to rise is a strong signal and warning to oil producing countries including Nigeria to plan against depending exclusively on crude oil as their major source of national income. There are several reasons why the development of non-oil sectors should be a matter of urgent necessity for oil producing nations especially developing countries like Nigeria. Agriculture, alone, has the potential capacity to provide all that is needed to propel Nigeria’s economy and to also make it one of the largest in the world. Nigeria’s agricultural sector is officially said to have accounted more than any other sector for the country’s recent exit from economic recession.  

Aside of the bleak future of crude oil market, a greater threat to Nigeria’s mono-economy perhaps lies in the advent of electric cars; with a deadline already set when only electric-powered cars would be on roads in Europe. While Norway plans to completely ban petrol-powered cars by 2025, Scotland targets 2032 for the same ban. Britain and France have separately set 2040 as their deadline to ban the sale of petrol and diesel cars in their countries. China, which is the world’s largest car market, is working on a plan to ban the production and sale of vehicles powered only by fossil fuels. China is currently the world’s second largest oil consumer after the United States of America.

Unlike Dubai which is an oil exporting country that has used its oil revenues to develop her tourism sector into a strong economic base, Nigeria chose not to save her oil earnings for the uncertainties of the future that are today starring us in the face. Instead, the Excess Crude Oil Account was characterized by funds misapplication and mismanagement; ignoring the need to use the earnings to develop non-oil sectors.

Even with the Sovereign Wealth Act of 2011, which is intended to invest oil earnings during windfall periods in to the development of critical national infrastructures as well as providing stablisation funds for future generations, the story has not seriously changed as the Sovereign Wealth Fund (SWF) has rather become the “ATM” of governors who, through the national Economic Council, use it for spree spending. 

To secure Nigeria’s future without oil, deliberate policies must have to be put in place by government. Strategic measures are therefore needed to stimulate economic activities in non-oil sectors. Dependency on oil must cease with focus on creating a non-oil economy that can provide sustainable revenues for government as well as create more job opportunities. A National Development Plan that will articulate strategic policies in order to guaranttee Nigeria’s future is also imperitive. May Allah (SWT) guide our leaders to prudently use the SWF to develop the country’s non-oil sectors, amin.