States self-discovery and oil price slide

It is said that challenging times fire up thinking and innovations. Are Nigerians going to see this among the 36 states as oil price drop sharply below  $30 per barrel from about $60 a year ago and about $103 in 2013. What this simply means is that the Abuja feeding bottle is gradually drying up and the nation and especially states need alternative sources of milk to survive.

Sole reliance on Federal monthly allocation will therefore not achieve the necessary development in states as they need to create their niche income stream sources to meet up demand. Otherwise, agitations, industrial strikes will begin to rise which will further frustrate the relative peace in any state and impede any plans for development.

Already, some states may clash with labour groups over inability to pay minimum wage of N18, 000 which is about $90 per month or $3 a day.

True to this, recently, the Nigeria Governors’ Forum expressed  worry that more states may not be able to pay workers’ salaries if the revenue of the country continues to be on the decline, its Chairman, Governor Abdul’aziz Yari of Zamfara was quoted as saying. But if the states had created extra income stream in anticipation of the hard economy like this, payment of  such minimum wage would not be so difficult.

“The situation is no longer the same when we are used to pay N18, 000 minimum wage when oil was $126 ; now oil price is below $30 dollars.We are coming together in a roundtable with President Muhammadu Buhari and his team of ministers, technocrats, economic experts to see how we can tackle our situation,’’ he said.

However, it was gratifying that the governors have realized the dangers ahead and have resolved to  diversify their economy from petroleum to agriculture and mining to enhance states internally generated revenues as well as cut overhead cost, especially  the salaries of political office holders.

Each state has its forte but hitherto blinded by the boom in oil revenue. With the slide in oil price, the speck in their eyes is expected to be pulled out so that they can see clearly for innovation and niche branding for extra income. This is the time.

Some states out of the 36 states of the federation who seriously want to make economic impact are living no stone unturned in their efforts to create a distinction.

While some states are thinking outside the box in this global competitive environment, it is regrettable that many other states still heavily rely on the monthly federal allocation to fund plethora of development projects in their states, including meeting recurrent expenditure.

For instance, some states  are embracing destination branding, a process adopted in developing a unique identity that is different from all competitive destinations. Their understanding is anchored on the belief that branding is the most powerful marketing weapon available to contemporary marketers. Cross River  State is leading in this drive.

It is also expected that with destination branding, they could attract domestic and foreign investments which will further boost the economy of their states and create employment.

A new thinking by some states in creating wealth is collaboration between themselves especially on comparative advantages. For instance, Lagos State government, aware of  its shortage of land for agricultural purposes, recently purchased land in Osogbo, Osun State for agriculture in order to tackle the challenge of food shortage in Lagos state. The former state governor, Babatunde Fashola  said the state was making moves then to acquire land in other states where it would commence the planting of cash and food crops such as pineapple and citrus.

Ogun State had recently announced a discount of 80 per cent on the cost of land for investment in agriculture in any part of the state. It also slashed the amount payable on land projects such as manufacturing, estates and schools by 40 per cent. Some states also have some comparative advantages which other states can tap into for return on investment.

It is believed that for economic growth purposes it is important for states to focus on identifying niche opportunities that will create extra income for  meeting various obligations to their people which include security, food, education, health, and accommodation, urban and rural development. These challenges are enormous that require greater initiatives.

Daniel Obi