Before the ‘oil festival’ ends

There have been warnings of approaching end of Nigeria’s 57-year old ‘festival of oil. In a recent report, a group of experts declared that Nigeria’s oil reserves may dry up in 35 years time. This was an echo of the position of President Goodluck Jonathan in 2011 during the commissioning ceremony of a new cement plant in Ewekoro, Ogun State. More specifically, the Managing Director of Nigerian Petroleum Development Company, Victor Briggs, while serving as General Manager (Planning), National Petroleum Investment Management Services (NAPIMS) in 2010, warned that Nigeria might run out of oil soon and thus ceased to be a member of OPEC.

However, from my vintage point, the imminent end of our ‘festival of oil’ does not have to be the literal drying up of the nation’s ‘black gold’ that currently accounts for over 90 percent of our exports and over 70 percent of the consolidated government revenue, but the resultant insufficiency of the proceeds of oil to meet the needs of the nation’s constantly growing population in the near future.

The alleged insufficiency is predicted on three grounds. Firstly, with the current population of the country roughly put at around 160 million, the nation is importing 2.5 million tonnes of milled rice annually and expends about N1.3 trillion on food imports annually. With the projected population of Nigeria in 20 years, 35 million tonnes of rice will then be imported annually. I frankly hold that even with the current value of our “petro-naira”, we are not poised to foot the bill for such huge food imports.

Secondly, the United States of America, which hitherto has been the biggest buyer of Nigeria’s crude oil, has recently reduced the volume of its patronage for the obvious reason. She now holds the world’s largest deposits of oil shale. The oil shale deposits found on federal lands in Colorado, Utah and Wyoming, all in the USA, contain an estimated 4.285 trillion barrels of oil in place according to the U.S. Geological Survey — enough to sustain America’s fuel needs for over a century.

In the words of Roger Day, Vice President for operations, American Shale Oil (AMSO): “In the past 100 years — in all of human history — we have consumed 1 trillion barrels of oil. There are several times that much here”. This practically accounts for the reason why America’s imports from Nigeria slid to 194,000 barrels per day in February 2013 from average of found a replacement for United States in China and India, it is not certain, how far the substitute may be sustained.

Lastly, there is now a stiff competition for Nigeria, as Angola, with 1.87 million barrels per day as at last May, is now poised to overtake Nigeria as the continent’s largest producer of crude oil. It is also noteworthy that Ghana, Kenya, Uganda, Cameroun, Chad, etc, have also found oil thereby making the competition stiffer. It therefore, requires no soothsayer to predict an inevitable end to the nation’s hitherto celebrated ‘festival of oil’.

With this scary prognosis, what then should we do? The only answer is economic diversification! The following tips constitute the fulcrum upon which Nigeria’s quest for a successful economic diversification should rest. A successful diversification plan requires firm political commitment, consistent public policies and substantial financial resources. Of course, many challenges arise when pursuing a diversification scheme. It is often necessary to make significant investments in human resources and infrastructure to support economic sectors and activities such as value-addition in commodities. These are long-term endeavours that need government’s commitment and political will, not to mention major capital investments.

If an economic diversification scheme is vigorously and sincerely pursued, benefits accruing to it include less exposure to external shocks, increase in trade, higher productivity of capital and labour, better regional economic integration, appreciable reduction of poverty and promotion of human and social development. Success stories of economic diversification from resource-dependency include those of Malaysia, Chile, Indonesia, Kenyan, South Africa and Tunisia.

To appreciate huge bounties that await us if we give diversification a chance, we should consider the following facts:

UNESCO recently declared that Nollywood has the largest production of films in the world; no doubt, this industry is often regarded as one of Nigeria’s largest exports. But so pathetically, the movie industry is largely underfunded, as the entire Nigeria’s movie industry is valued at $250 million, whilst the total budget of “Avatar” a recent American movie, was $280 Million. Avatar reportedly made a huge figure of $2,782,275,172 at the box office, while all the Nigerian movies since 1992 could not boast of the figure attributed to Avatar. You may contest the worth of this industry but one thing no one can contest is the economic promises of Nollywood if properly funded.

The Computer Village in Ikeja, Lagos State, according to the Minister of Communication and Technology, Mrs Omobola Johnson, generates about $2 billion to the nation’s economy every year and today constitutes an ICT hub for the West African states, yet, this hub is yet to be fully developed.

Okedara, solomonokedara@gmail. com, presented this paper at the 2013 Nigerian Diaspora Youth Leadership Summit held in London September 4 and 5, 2013

Author: Solomon Okedara

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