Global Falling oil price: A blessing to Nigeria

Written by Ken Etete

Oil prices are dropping. August 1st, $104 per barrel; October 28th, $82 per barrel; and on December 15th, the price stood at approximately $58.65 per barrel. Are we at the bottom? Can it get worse than this? The prophets are prophesying already, “Doom awaits Nigeria”. Really?  As an econo-jurist of this great nation, I hereby dissent.

Nigeria is a nation richly endowed with a variety of valuable resources. All 36 states of the country can boast of at least three, which range from minerals to metals to stones. It is pertinent to state here that crude oil and gas are only a tip of the iceberg compared to unexploited reserve of limestone, marble, iron-ore, lead/zinc, gold, gemstone, coal, kaolin, rock salt and more which are existent in Nigeria. In addition, the country also prides itself with over 40 million active young populations that are creative and filled with untapped potentials. An interesting quote from Myles Munroe reads: “One of the greatest tragedies in life is to watch potential die untapped.” It is therefore important that we learn from this and begin to maximize the potential in the intelligent young workforce we have.

Since the discovery of oil in the 1950s, Nigeria’s economy has been dependent on one major source of revenue – oil – which has failed to function as a catalyst for growth. This is, however, not the focus of this article. You can read my article titled “Oil and gas: The stimulant for wider national development” on my blog, www.kenetete.wordpress.com.

King Odewale in Ola Rotimi’s The Gods Are Not To Blame made an interesting point when he said, “When the wood insect gathers wood it is on its own head it carries them”. Financial and economic analysts see the current drop in oil price as a predicament for the world, particularly Nigeria. This is the time for us to wake up, remove the blindfolds, realize a grave mistake we have made for far too long, learn and benefit from it. Currently, petroleum accounts for up to 80 percent of all government revenue and over 90 percent of the country’s exports. However, if we begin to think of alternative sources of creating wealth by investing, principally, in our human capacity and also the several other mineral resources, we will not only be reckoned as the giant of Africa but as the giant of the world. Yes, quote me.

One of the world’s wealthiest men, Bill Gates, had Information Technology (IT) as the source of his wealth. The world’s youngest billionaire is Dustin Moskovitz and he was Mark Zuckerberg’s Harvard roommate and Facebook’s third employee. Source of wealth is IT. According to Forbes’ list of the world’s richest people, 20 percent of the first 100 people on the list derived their wealth from IT. Do you go a week without getting e-mails from Nigerians trying to hack your credit cards/passwords or getting you to click on a link that will clone your data? There are no excuses for such fraudulent activities, albeit the brains behind these e-mails can become IT geniuses if given the right opportunities in a favourable economy. IT is driving economies worldwide and it can do same in Nigeria.

In the past few years Brazil has been a reference agricultural powerhouse and now ranks amongst the world’s five largest agricultural producers and exporters. In essence, agriculture is driving the economy of the largest South American country despite their large oil and gas reserve. There is a lot to learn from their policies. We must strive to emulate the character and spirit of model economies we intend to surpass.

Nigeria is also largely an importing country and this stiffens the market for local producers, consequently leading to loss of jobs and incomes. According to the World Bank, Dubai’s economy was also initially built on revenues from the oil industry; however, revenue from petroleum and natural gas currently accounts for less than 2 percent of the economy’s GDP. Currently, Dubai is rapidly developing its manufacturing sector by producing a wide range of competitive export products and has focused its economy on tourism, aviation, real estate, IT and finance. Nigeria can also begin to focus on its manufacturing sector as a step in diversifying its economy.

Nigeria is arguably the biggest economy in Africa with a GDP of $510 billion. Next are South Africa and Angola. Kenya is fourth, but happens to be an inspiring model as she boasts of a GDP of $53.1 billion and her economy is highly diversified. The strong performers driving the economy are agriculture, retail and transport. In mid-2012, oil was discovered in Kenya with over 300 million barrels worth of reserve.  A blessing?  We shall find out in 2016 when production commences, or perhaps they should ask their “big brother” Nigeria.

This constant decline in the price of crude is the best thing that could happen to us as a nation despite the implications on our immediate national budget and economy. It serves as a pointer to the fact that we have been travelling 1,000 miles in the wrong direction. This is an opportunity to better secure the future of our great country. My fellow Nigerians, let’s shut our ears to the prejudiced negative analysis making the rounds. We know our story and reality better. We can now see that we cannot depend on petroleum for much longer. We can build an economy with multiple sources of revenue. We have the human capacity and the resources – let’s do it.