With oil discovery by more countries coupled with increased production in terms of quota and barrel per day, bpd, the fall in oil price has left Nigeria which has relied heavily on oil with insufficient earnings to finance its projects and governance. Unless the economy is diversified, Nigeria is at a risk of not being able to meet her financial obligations, writes CLEMENT NWABUKO
The continuous crash being witnessed in the price of oil in the International marketing is no longer a rumour; it has now dawned on us that this situation will linger for a long time to come. Some observers even fear that the ugly development has come to stay.
With the increase in US shale oil production which stood at about four million barrel per day, mbpd, US (the largest importer of Nigeria’s brent crude) has stopped importation of crude from Nigeria. The quick resolution of the internal strife in Libya which has led to triple fold production of barrels of oil has not helped the oil price either, even as the OPEC infighting has not helped matters in salvaging the oil price from nose-diving.
No thanks to Saudi Arabia and Kuwait currently on oil price war thereby repeatedly lowering their prices in order to maintain their market shares in Asia. With all of these emerging developments, the oil price is not likely to recover anytime soonest.
Imperatively, it is time for Nigeria to look inwards and see how its economy can be diversified with alacrity to enable it salvage its economy from total collapse. Nigeria is blessed with fertile land, tropical rain forest, good climatic weather condition, abundant natural and human resources to be able to turn our fortune around for the better.
Agricultural sector plays a central role in the economic diversification process. It was the main stay of the country’s economy prior to oil discovery in Oloibiri in 1956 and accounted for about 95% of the country’s Gross Domestic Product, GDP. It provides both backward and forward integration-raw material and outputs are put into proper use without wastages. Agriculture has the capacity to generate employment to the teeming youths; provide food for man, feed for animals, raw materials for our industries, processing and marketing of crops for export which will in turn generate income for the country.
Obviously, Nigeria has what it takes to feed her populace and generate income if all sections of the country are encouraged to produce according to their natural endowment and comparative advantage. The eastern part of the country is endowed with palm oil and coal. While the former is the main product sustaining the economy of Malaysia today which they took from us years back, the same can be replicated in the country with greater result if revisited with required vigor.
The Western part of the country is endowed with cocoa and can be exported. Cocoa is a vital product in the production of beverages and its employment ability cannot be over-emphasized, let alone the income-generating capacity. Northern region is blessed with groundnut, hide and skin- these are key in terms of manufacturing. If these areas should be focused on and addressed properly, the problem of dwindling oil prices will not be an issue with Nigerian economy.
Other areas where the country should focus its search-light for economic survival and recovery are such areas as entertainment industry, tourism, sports and solid minerals. The education curriculum should also be redesigned to equip our youths in such a way that immediately after graduation, they will be self-employed instead of crowding in the already saturated labour market.
The downward in the oil price of brent crude is an eye opener and a lunch-pad for the long-talked about diversification from oil to a less volatile economic base. The effort in the recent past in rebasing the economy and investment in the agricultural sector is welcome development and a right step in the right direction. The expectation is that greater attention should be given to these sectors in the years ahead if the economy must return to its glorious era.
What is important is for the in-coming administration of General Muhammadu Buhari to recognise that the volatility characterising the oil price today is an indication that oil is no longer a determinant factor in measuring the wealth importance or power of a nation. The time to look inward and make maximum use of available resources and other endowments (other than oil) is now. The country’s intellectual resources are highly needed and this cannot be divorced from human resources scattered all over the world who have helped foreign countries in their quest for scientific and technological advancement. If the enabling environment is provided through reliable economic policies and legislations, Diaspora Nigerians will see the country as a safe haven for them to come and make meaningful contributions to its growth and development.