Despite raking in N83 trillion from oil revenues in the last 37 years, Africa’s largest economy has been unable to utilise the funds to improve the lives of its citizens through provision of badly-needed infrastructure. The economy, meanwhile, hasn’t made much progress.
Nigeria realised N83 trillion from oil revenue in the last 37 years, according to the biennial Benchmarking Exercise Report (BER) of the Nigerian Natural Resource Charter (NNRC) released in February 2020.
Ironically, despite the huge resources earned from petroleum, the country has nothing concrete to show. Nigeria is still besieged with inadequate infrastructure, epileptic power situation, low foreign exchange reserves, low savings and an abysmally low standard of living, with its currency currently exchanging at about N360 to a dollar.
The NNRC report, which exposed the lax regulation and poor management of the nation’s oil earnings, showed Nigeria’s average daily crude oil production at 1.9mbpd. Despite producing more crude oil per day than Norway’s 1.84mbpd, Norway has $956 billion saved for future generation while Nigeria has less than $1.3 billion.
“It’s very ironical and laughable that despite huge revenues that have accrued from oil and gas over the years, Nigeria has one of the lowest natural resource revenue savings in the world,” Luqman Agboola, head of research at Sofidam Capital, said.
According to the NNRC’s report, the nation’s resources failed to address living standard of the citizens because gaps remain in the institutional and legal frameworks of the oil and gas sector, as none of the components of the Petroleum Industry Bills (PIB) and many other critical pieces of legislation has been signed into law.
“The development of Nigeria’s infrastructure and its positive impact on industrialisation, economic empowerment, balance of payments and strength of the naira cannot be over-emphasised, but it seems some of our political leaders are not interested,” a senior business leader who did not want to be quoted said.
The World Bank acknowledged that Nigeria faces a $100 billion annual investment gap in infrastructure, while a study conducted by McKinsey on Nigeria’s infrastructure requirement threw up the need for the investment of well over $31 billion annually over a 10-year period for the country to bridge its huge infrastructure deficit.
Other experts renewed the call for government to take advantage of a variety of financing instrument options in the capital market to finance critical infrastructure, which is identified as the most challenging factor in doing business in Nigeria.
While very few Nigerians, especially political office holders and their allies, feed fat from national resources under a cloudy system lacking in transparency and accountability, Nigeria’s unemployment rate, according to National Bureau of Statistics (NBS), stands at 23.13 percent as of the third quarter of 2018.
Nigeria arguably has one of the highest-paid federal legislators in the world with each senator earning around $597,000 per year in salaries and allowances. This amounts to a total of N20 billion ($65 million) per year and N79 billion ($260 million) at the end of each legislative tenure.
This is happening in a country that has the highest number of people living in extreme poverty and the majority of its population living on less than $2 a day.
Oxfam, a global organisation fighting inequality to beat poverty, disclosed that between 1960 and 2005, about $20 trillion was stolen from the treasury by public office holders in Nigeria, stressing that the amount was larger than the GDP of United States in 2012, which was about $18 trillion.
Despite oil fortunes and overpaid public office holders, the Nigerian education system has undoubtedly failed millions of children. Over 57 million Nigerians lack safe drinking water while over 130 million lack adequate sanitation.
Data from the United Nations Educational Scientific and Cultural Organisation (UNESCO) showed Nigeria has the highest number of out-of-school children in the world at over 10 million as rising population has put enormous pressure on already overstretched public services, with 22 million children enrolled in public primary schools alone showing the burden on under-funded state schools.
Also, Nigeria has Africa’s largest gas reserves, some 202 trillion cubic feet. Yet for all of this great oil and gas wealth, the country’s electrical grid is a charade.
According to USAID, the main US government international aid organisation, Nigeria has the potential to generate over 12,000 megawatts of electricity daily. On most days, it generates around 4,000 megawatts.
Washington-based International Monetary Fund (IMF) said public services and infrastructure in Nigeria are under considerable strain.
“Globally, Nigeria ranks first in the number of children out of school. Infant mortality is also high: 12 percent of all children who die under the age of five are Nigerian,” IMF said.
The World Economic Forum estimates that every dollar spent on capital projects such as energy, transport, waste management, flood, defence, and telecommunications generates an economic return of 5 percent to 25 percent.
There are also significant gaps in both rural and urban ecosystems across Nigeria ranging from availability of basic infrastructure such as housing, healthcare, water, and waste management, to other enablers of infrastructure like ICT, hospitality, and industrial/commercial real estate.
While Nigeria is not maximising its huge oil revenue for economic development, there are other emerging headaches. Time was when Nigeria was regarded as the most sought-after beautiful bride by many suitors as it commanded a lot of attention within the global oil market. Big names like the USA, Germany, and Russia literally couldn’t resist the allure of Nigeria’s “sweet oil”, so-called as a result of it being largely free of sulfur.
But not anymore. Today, Nigeria’s oil fortune, to say the least, is fast ebbing, albeit diminishing at such an unprecedented pace worrisome enough to threaten the country’s economic health.