According to recent reports, oil price has dropped from about $114 to just about $30 a barrel. It would be the first time in five years that such a drastic drop would take place. In fact, there are worries that the price could plummet to below $30 if the current situation remains unchecked for any reason. It looks like an ugly development which will definitely alter the budget benchmark of many countries of the organisation of oil producing countries (OPEC), inclusive of Nigeria.
However, it is important that Nigerians see this development as a challenge and not a condemnation. Therefore, they should embrace it as usual and deal with it the same way they often do when such challenges come their way.
Before Shell BP discovered crude oil in Oloibiri in Rivers State in 1958, just before Nigeria attained self rule in 1960, the country was quite comfortable with an agriculture-driven economy. There was a steady supply of electricity in the cities and in a few villages which had their caring sons and daughters in government. Clean drinking water was never a problem. Efficient train services covered practically all cities of the country. Basic infrastructure was available to the people. The roads were readily maintained if they broke down because the Public Works Department (PWD) was alert to its responsibility and any broken down road was repaired in less than 48 hours. It provided daily-paid jobs for the nation’s teeming population of young school leavers. Nigerians were a happy people.
Nigerian farmers staply cultivated cocoa in the West, groundnuts in the North and palm oil in the East. In addition, cotton, cashew and rubber were cultivated in commercial quantities and exported. There were large deposits of solid minerals in practically all the states of the federation. There was cattle rearing in the North and fishing in the Deep South, plus other forms of livestock cultivation. All these stabilised the national economy, making one Nigerian naira equivalent in exchange rate at the time to one pound sterling.
However, as soon as crude oil was discovered in commercial quantity it instantly became the country’s primary foreign exchange earner. Even as we speak, it is estimated that crude oil accounts for more than 80 % of the nation’s revenue and 90 % of its foreign exchange earnings.
Having discovered vast oil wells scattered all over the Delta region of the Deep South and in some parts of the East and the West, government inadvertently jettisoned its original policies which were agriculture-driven and allowed them to die an unnatural death. That was how government abandoned the erstwhile mainstay of the economy.
With the enormous wealth from crude oil at its disposal, government began to intensely indulge in importation. Nigerians became import-oriented. Egged on by consumption patterns which encouraged contempt for local products and a strong desire for foreign goods, agriculture was given such a hard punch that nearly six decades afterwards it is yet to recover from the coma it suffered with the discovery of crude oil.
Nigerians came to depend so much on the wealth they made from crude oil that at a time many thought oil had turned from a blessing into a curse, from boom to doom. It was so because despite the wealth that came from oil exploration, a majority of Nigerians were suffering in abject poverty, unable to afford two square meals a day and unable to afford medical care. The roads in many parts of the rural areas were so bad that cars which plied them ended up with so serious damages that they were sent into the mechanic clinic immediately.
Many rural areas had no clean drinking water and many ordinary citizens still had to go to streams and rivers miles from their homes to fetch water for domestic use. In the big cities, the Water Boards which ensured that clean and well treated water was available to city dwellers suddenly disappeared. People were encouraged to drill boreholes in their private houses in the city. Most times, the water from these boreholes was not adequately treated. The result was that most elderly Nigerian citizens began to get blind as soon as they clocked 65.
Electricity supply which was mainly in the big cities was epileptically sporadic. Government would supply electricity for two hours and for the next three or four days, the community would be left to manage themselves with the use of private generators. Generally speaking, Nigerians were denied the basic infrastructural needs which citizens of other oil rich countries often took for granted. And there was nothing anybody could do. Because, as Professor Chinua Achebe rightly pointed out in his last book he titled ‘There was a Country’:
“Once a people have been dispossessed and subjected to dictatorships for such a long time as in Nigeria’s case, the oppressive process also effectively strips away from the minds of the people the knowledge that they have rights.”
The very few Nigerian families which had access to the vast oil deposits in the country continued to amass wealth and as a matter of policy they became more determined than ever to widen, rather than bridge, the gap between the very rich and the very poor families. This they did by systematically trying to eliminate the middle class and by creating a two-class social system of the very rich and the very poor.
In one instance, I confronted a very highly respected Islamic scholar, Dr Farrar Idid, over the issue. What he told me still hasn’t sunk, years after the interview I had with him. He tried to assure me that a two-class system was the most peaceful political arrangement because if the down-trodden hoi poloi of the country had food in their stomach and not much money in their pockets to be able to purchase arms and ammunition, they would not be in a position to insurrect against the ruling families and so there would be peace in the land.
That could have been true years ago. But things have changed. The general attitude of members of the rich families which bordered on arrogance, flagrant display of massive wealth in the face of abject poverty and a proclivity towards impunity drove many citizens to the wall, which culminated in the Arab Awakening at the start of the decade.
Nigeria was not left out of that global trend. The power shift from the old ruling families to the newly rich and educated political class, especially in the North of the country began to play a significant role in determining which way the economic pendulum of the nation would swing.
Some Nigerian families enjoyed the nation’s much touted oil wealth while it lasted. But as always, nature has a way of proving its superiority in all circumstances. The President of the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), Comrade Francis Johnson, has already said that the current dwindling of oil price is affecting Nigeria because the nation over-depended on oil and gas exports for its foreign exchange earnings. He attributes the current situation to a number of factors which include lack of foresight and lack of strategic investment plans in petrochemical activities and local refining.
According to Mr Johnson, Nigeria is going to be hard hit by the drop in oil prices because the managers of the economy failed to plan for the rainy day. Now that the rainy day is here with Nigerians, even the Excess Crude Account established to cushion any adverse effects in case of a drop in oil prices, as is the case now, has been depleted by gluttonous state governors who vehemently insisted on more funds from the account shared out to them for spurious reasons.
Revenue from crude oil has also declined in recent times because of large-scale theft of crude oil and the vandalization of pipelines. Moreover, the new attention being paid to renewable energy, an alternative to crude oil, particularly in the United States of America which is a primary consumer of Nigerian oil has meant a significant reduction in the purchase of Nigeria’s crude oil and therefore, a sharp drop in funds accruing for the country.
Faced with all these situations, it has become obvious that Nigeria must accept and deal neatly with the current challenges the dwindling oil price has thrust upon its shoulders. The government will need to revitalise the non-oil sector by enacting deliberate policies and laws. The agriculture and other sectors need to be reactivated. I have already addressed this issue somewhere in one of my articles titled ‘Nigeria: beyond the oil revenue’. The problem is that subsequent administrations have, over the years, continued to pay only eye service to the non-oil sectors of the economy.
When Dr Yakubu Gowon launched his Second National Development Plan, it had five primary objectives. It was to build a free and democratic society. It was to evolve a just and egalitarian society. It was to create a united, strong and self-reliant economy. It was to turn the country into a great and dynamic economy and a land full of bright opportunities for all citizens.
45 years after the Plan was launched, not one of these goals has been attained. Instead of a free and democratic society, Nigerian society has become para-militarized. Ethnic militia movements of sorts have grown sporadically from all nooks and crannies of the country. Instead of the just and an egalitarian society Gowon planned, Nigerians have an unjust and insecure society characterized by child abuse, ritual killings, extra-judicial murders, cultism, kidnapping, ethnic riots and religious rivalry. Impunity is creeping into the social system, not from the back door but right there from the front door. Instead of being united, strong and self-reliant, the nation continues to be divided along ethnic and religious lines. Nationalism still remains a strange vocabulary in the lexicon of the average Nigerian.
When Chief Olusegun Obasanjo succeeded General Murtala Muhammed after he was killed in a coup, he abandoned Gowon’s “3R” vision and introduced his own “Operation Feed the Nation”. Alhaji Shehu Shagari abandoned Obasanjo’s Operation Feed the Nation and came up with the “Green Revolution”. Buhari dumped that and came up with his War against Indiscipline. General Ibrahim Babangida left that and introduced “Better Life.” Babangida had a long list of development visions and programmes. It included the National Directorate of Employment, the Directorate for Foods, Roads and Rural Infrastructure, the Better Life Programme, Peoples Bank, Community Bank and the National Economic Reconstruction Fund. General Sani Abacha abandoned all that and came up with his “Family Support” and Vision 2010.
When Obasanjo was democratically elected, he came up with the National Poverty Eradication Programme, National Economic Empowerment and Development Strategy (NEEDS). Alhaji Musa Yar ‘Adua dropped all that and came up with his 7-point agenda. It included power and energy, agriculture and food security, wealth creation and employment generation, qualitative and functional education, the Niger Delta, mass transportation and land reforms. But within the first two years, the vision was whittled down and modified to electoral reform, rule of law, the Niger Delta, power and energy sector, rebuilding human capital, accelerating economic reforms and security.
Last year, President Goodluck Jonathan said that despite pressures on the Nigerian economy as a result of the continued fall in global oil prices, government had adopted measures to ensure that the country’s development plans and national economy were not adversely affected. Apart from adjusting the country’s financial processes to safeguard the economy, Jonathan said steps were taken to shield the poor, and the low and medium income earners, from the negative impact of declining oil prices on the economy. Despite experiencing “the most trying circumstances” in the past four years, the president said his administration was determined to lay the foundation for a vibrant economy in 2015. Conscious of the inherent disadvantages as a result of over-dependence on incomes from crude oil exports for national development, the president said government would focus on policies to accelerate the diversification of the country’s economic base.
The president said those policies would be aimed at promoting the expansion of the non-oil sector, which, he noted, had become a major driver of growth in the economy. While the Youth Employment in Agriculture Programme (YEAP) would target 750,000 market-oriented young agricultural producers, the provision of government and donor-funded $100 million (about N16.8 billion) for Fund for Agricultural Finance In Nigeria (FAFIN) would help fast-track the transformation of the agricultural sector.
Despite all these lofty plans, nothing seems to be happening. Youth restiveness is very much a part of the nightmare of many Nigerian families. Sufficient jobs have not been created and many university graduates are yet to get settled in jobs and earn decent wages years after they left university.
As former Central Bank Governor and now Emir of Kano, Alhaji Sanusi Lamido, pointed out recently, Nigeria is one country which produces crude oil and at the same time imports petroleum products. It is one country which has a large cotton belt and still imports textiles from China. Nigeria is the world’s number one producer of cassava and yet feels comfortable importing cassava starch from Europe. Nigeria is one country which has a huge tomato belt in Kadawa, Jigawa and Chad Basin and yet it is the world’s largest importer of tomato paste from China and Italy. It is one country that can produce rice but prefers to import it from Thailand and India, most of it from grain reserves that have been in stock for over five years.
It is time for change.
The APC government of General Buhari should do more to encourage agriculture at local government levels. That is where to start. This would mean creating the conducive environment for prospective stakeholders to appreciate the fact that farming is a lucrative career and not something meant for school dropouts.
Like Okonjo-Iweala rightly pointed out last year, the expectation is that oil prices will continue to go down and may actually become a permanent shock. But, Nigeria should be ready to manage it. The country has the capacity, the economic base, the scenario and additional measures to tackle the problem if the price falls even below the current benchmark.
Oil will continue to be important as a source of revenue, but the Nigerian government needs to drive the economy away from where it has 70% of the revenue coming from oil and 30% from other sources. The government has to drive it to where a third of the nation’s revenue comes from oil and two-thirds from the non-oil sector. That should be the vision for the economy and the change that Nigerians now desire.
Who knows: what many now see as the curse of oil rich countries like Nigeria could become the way nature is directing its leaders to put more efforts in developing the non-oil sectors of the economy which have suffered massive neglect in the last half a century. It may be a way nature is revealing to the political leaders the futility of totally depending on oil revenue which has ostensibly denied the poorer families even jobs that they should have ordinarily been entitled to as Nigerian citizens. It may be the way nature is about to bridge the very wide and scary gap between the very rich and very poor Nigerian families. It may look like a curse. But in fact it, for most struggling Nigerian families it could be a blessing in disguise.
Mr Asinugo is a London-based journalist
