Nigerian leaders seem to be gradually waking up to the rude reality that the preponderance of oil in the nation’s economy truly portends danger for the country’s future if proactive measures are not taken to diversify the economy. The activities of non-members of the Organisation of Petroleum Exporting Countries (OPEC) on global energy supply will no doubt impact negatively on the influence of the oil cartel of which Nigeria is a strong member.
One country whose oil production output is bound to shock OPEC members and shake volatile economies like Nigeria is the United States. The US Energy Information Administration (EIA) chief, Adam Sieminski, lately painted an intriguing picture which should send clear signals to oil-dependent nations that the petro-dollar luxury will soon be over. In a recent detailed analysis of the global oil supply trend, the American energy analyst acknowledged that “there is a fairly significant long-standing relationship between production capacity in OPEC and the pricing environment for oil. So the two million barrel-per-day increase in US oil production that surprisingly took place over the last five years has resulted in higher OPEC spare capacity, and has been a logical explanation of why Brent oil prices plummeted to between $103 and $104/bbl instead of between $125 and $130/bbl.
The implication of this ominous trend, as was confirmed by Sieminski, is that OPEC members no longer have a controlling lever on world oil pricing, a situation that exposes their economies to the vagaries of falling oil prices. Clearly, therefore, falling oil prices and the shrinking of the oil market translate to diminishing revenue for countries whose economy depend mostly on oil. Nigeria whose major revenue earner is oil (which accounts for roughly 90 per cent of her national income) will most probably suffer greater peril as the country benchmarks public finance and budget on petro-dollars.
Against the backdrop of the emerging realities and trend in the global oil market, it is salutary that the Nigerian Guild Editors (NGE) which is holding its 9th All Nigerian Editors Conference in Asaba, the Delta State capital between August 21 and 25, 2013, chose ‘Nigeria Beyond Oil: The Role of the Editor’, as the theme of the conference. The theme is, without any grain of doubt, very germane and critical to the sustainability of the Nigerian nation. Three papers are slated for presentation by relevant stakeholders in the financial, agricultural and tourism sectors of the economy. The Managing Director/Chief Executive Officer of Access Bank, Mr. Aigboje Imoukhuede, would examine the role of financial institutions in a non-oil economy, while the Minister of Agriculture, Dr. Akinwumi Adesina, would x-ray the value chain roadmap for agriculture. The topic assigned to the Tourism Minister, Chief Edem Duke, is on the exhaustible nature of oil, on the one hand, and the inexhaustible prospects of tourism, on the other. President Goodluck Jonathan had acknowledged the imperative of diversifying the Nigerian economy from oil during a recent visit to China, when he expressed how worrisome to Nigeria the increasing utilisation of shale gas and other alternative sources of energy by the US and other advanced oil importing nations of the world had become. “That is why we have to increase the pace of diversifying our economy and move our country away from dependence on the oil and gas industry… We must work towards greater industrialisation, add more value to our agricultural products, develop our solid minerals potentials and other sectors of our economy before the time comes when crude oil may no longer be dominant as a global source of energy”, the president said.
Distressing to the public, however, is the fact that in spite of such flattering official acknowledgement, nothing on ground portrays the Nigerian government and those driving it as committed to economic diversification. The United Nations Economic Commission for Africa (UNECA) in a recent report blamed the government for failing to take concrete steps that could lead to progress in efforts to diversify the country’s economy. For too long, successive governments have been implementing economic policies that are in conflict with vital national interest and making Nigeria self-sustaining. Now that it is very apparent that the nation cannot afford to mortgage its future on oil dependence, we urge the managers of the Nigerian economy to adopt a multi-stakeholder approach to driving the diversification programme. Local industries also need protection and promotion to enhance the competitiveness of their products. Nigeria has a lot of comparative advantages in many sectors which have not been harnessed because the nation has been caught by the petro-dollar bug and the attendant ‘oil curse’ that hinder development.