Nigeria: Crashing Oil Wealth and the Urgent Call for Diversification By Olawale Rotimi Opeyemi
Currently, Nigeria’s economy is faced with venomous challenges- 27 of the 36 states in Nigeria are unable to pay workers’ salaries, the existing infrastructures are swiftly becoming poor while new ones are not in place, power generation has degenerated significantly, the financial system is crumbling, foreign investors are shunning Nigeria’s bonds and stocks, companies are laying off workers in hundreds due to inability to pay salaries, a surge has hit the prices of commodities and the cost of living has doubled, regional security challenges and incessant protests from- Niger Delta Avengers, kidnappers, religious extremists, Biafran Movement, Fulani herdsmen among others threaten Nigeria’s economy.
The economic woes befalling Nigeria has been attributed to the crashing oil price in the global market, over the years, Nigeria’s oil revenue keep experiencing significant setback on monthly basis. In December 2014, gross oil revenue recorded was N480bn, in January 2015- N460bn, in February 2015- N401bn, in March 2015- N315bn while in April 2015- N282bn. According to the Central Bank of Nigeria’s Statistical Bulletin for 2015 quarters, at N1.859 trillion, Nigeria’s crude oil revenue for the 2015 fiscal year dipped by 37.47% from N2.973trillion recorded in 2014. In 2016, the fall continued to the lowest level in more than five years.
Nigeria’s economy has been degenerating over the years- despite bogus revenue recorded from crude oil by Africa’s largest oil producer, infrastructural and human development in Nigeria have been thoroughly poor over the years, and major roads have remained in bad condition, power supply unstable, unemployment escalated annually. Nigeria’s failure over the years cannot be disconnected from massive corruption, mismanagement, tax evasion, oil theft, contract breach e.t.c. among the political and economic elites.
Nigeria is running a very expensive political system, 58% of the nation’s allocation is spent at federal level, while 32% goes to the 36 states and 10% for the 774 Local Government Areas; a larger percentage of this revenue goes to governance and jumbo pay for politicians such high estacode, N9bn as legislators’ annual ward-robe allowance, N500m security vote monthly to state governors, pension for life for governors/deputy governors after serving four or eight years among others. It’s also on record that Nigeria loses at least 400,000 barrel of crude oil to oil theft daily.
With Nigeria’s current economic plight, it is evident that the Federal Government can no longer continue to bailout states, and capital intensive projects are not feasible. Due to incessant attacks on oil facilities and workers in Niger-Delta, many oil companies are shutting down operations, if this persists, it implies Nigeria’s source of revenue might be blocked. One of the most important things in Nigeria today is for unpaid workers to be paid, create jobs for the people so that they can afford shelter, feeding and schooling for their households. Nigeria’s economy has to return on track for this to happen.
Reducing poverty has been a major challenge to Nigeria- even though mismanagement has been prevalent in Nigeria for many years, there’s equally an urgent need for economic diversification in Nigeria. It has become more apparent that Nigeria’s economy can no longer be sustained by the crashing oil revenue. Like other African nations, 70 to 80 percent of the population lives in rural areas and earn a living through agriculture, increasing their capacities through agricultural development is major commitment the Nigerian Government has to make to reinvent the nation’s economy.
Agriculture as a means of sustaining the economy is not alien to Nigeria. Prior to the discovery of oil, Nigeria’s economy flourished through agriculture. During the pre-crude oil era when Nigeria’s economy totally depended on agriculture; the sector offered vast opportunities and employed over seventy percent (70%) of the Nigerian labour force. Agricultural sector provided food requirements for the country and raw materials for local industries, as well revenue from exportation of cash crops. Agriculture can not only be a major source of revenue for Nigeria’s economy, it is also the bedrock of Africa’s economy as a continent.
Agriculture has proven itself to be potent, if deliberate and meticulous investments are made into agricultural infrastructures such as irrigation facilities, rural roads, farm security, and storage facilities to improve production and value-chain, Nigerian local farmers in their millions will be moved from subsistence farming to commercial agriculture. This will not only help Nigeria to feed her population, but huge revenue will be generated from exportation of commodities. Agriculture can be a big business for Nigeria if made efficient, policies that allow credit channel to the system must be encouraged. There will be a boost in Agriculture if more viable market is created. Cameroon, Ivory Coast among other African countries are strengthening agriculture in their country with significant results; Ivory Coast emerged the largest cashew nut exporter, taking over from India.
Agriculture provides a way out of the on-going economic challenges confronting Nigeria. Agriculture is life, with vast land and resources, favourable weather and good soil minerals, Nigeria as a nation should diversify her economy into agriculture to transform the nation at the shortest delay.
Olawale Rotimi Opeyemi is a writer/journalist. He can be reached via firstname.lastname@example.org or +2348105508224