• Wednesday, December 06, 2023
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BusinessDay

Rethinking Nigeria’s over dependence on oil

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Recently, Ngozi Okonjo-Iweala, Finance minister and coordinating minister said that the country’s dependence on crude oil as major export has reduced significantly. According to her, crude exports now accounts for 70 percent of Nigeria’s exports with the rest being agricultural produce, manufactured goods, among others. This, indeed, is reassuring!

However, the chest-beating claim has been pooh-poohed by some pundits who said that government was being economical with the truth.

For decades, Nigeria has depended on oil in total neglect of other sectors that boosted its economy in the pre-independence era. Over the years, experts have had to raise the alarm on the danger of this over-dependence. Calls had been made for a return to the groundnut pyramids of the North, the abundance palm oil and coal in the South East, and cocoa in South West.

In many states across the country, there are abundant natural resources which could be tapped to boost the economy. Despite expressions of intents, leaderships of the country have not really matched their words with actions.

The curse of Crude oil

Over the years, the abundant crude oil in the country has been termed a curse owing to the fact that the huge earnings accruing from the natural endowments have not positively impacted the lives of most citizens. The region that bears the oil has continued to lament years of neglect and environmental degradation as a result of exploration and exploitation activities. They have continued to lose their lives to diverse diseases and infirmities arising from polluted environment. Agitation for a better deal has continued to claim the lives of many people in the Niger Delta. The Amnesty Programme for militants which was midwife by the late Umaru Yar’Adua in 2009, has not completely quelled the rebellion. Threats of renewed hostilities have continued to issue out from the region. Sometimes, production is disrupted even in the midst of the amnesty. But the greatest threat to Nigeria’s dependence on oil is the shift of attention by former international buyers of its (Nigeria) crude oil.

A call to explore other avenues

A few days ago, report quoted Musa Mohammed Sada, mines minister, as saying that Nigeria aimed at increasing mining’s contribution to the economy to 5percent by 2015. According to him, “we are hoping it will be even better than 5percent.” The minister reportedly added that mining will help government diversify the economy and could also help resolve some structural issues, including the problematic power sector.

Akinwunmi Adesina, minister of Agriculture, recently observed that as a result of dependence on oil, successive administrations in the country abandoned non-oil products such as cocoa, cassava, palm oil, among others that made Nigeria great in the First Republic.

“Nigeria’s dependence on oil has been a disaster. If Nigeria had developed palm oil, cocoa, cassava and other non-oil products, the country would have fared better,” he said.

Adesina insisted that Agriculture industry remains the key to economic recovery.

Nigeria in problem

Added to the problems of decline in oil production in the country, rising cases of piracy, absence of no new investments in the industry, Nigeria is also contending with low demand for its oil.

Moreover, Nigeria is said to be increasingly depleting its oil reserves. It is feared that within the next three decades, the country may not have enough crude oil to export. Moreover, more and more countries are successfully exploring oil within Nigeria’s borders, thus depleting the pool of Nigeria’s customers.

A recent report has it that according to International Energy Agency forecast this month, U.S. shale oil supply will help meet most of the world’s new demand in the next five years, leaving little space for OPEC to lift output without risking lower prices.

“We’re heading for a problem in 2014 and we’ll probably have to make a supply cut,” said a senior OPEC source. “And if OPEC were proactive, we’d start to look seriously at individual production allocations.”

By the end of last year, the United States had recorded the biggest annual increase – 850,000 bpd – in oil output since it first pumped oil in the early 1860s.

Report said that UK shale gas reserves may be bigger than first thought, and may threaten gas supply to UK. For instance, UK firm, IGas, claimed that there may be up to 170trillion cubic feet (4,810 cubic km) of gas in the areas it is licensed to explore in Northern England. Analysts believe that this development puts Nigeria’s gas supply to the UK in jeopardy.

Toeing the America’s path

It was gathered that 25 years from now, the world’s independence on petroleum will be a thing of the past. “Researches into alternative sources of power for vehicles have advanced immensely since the 9/11 terrorist attack in US. Automobiles will soon run exclusively on battery cells and solar energy. Other machinery will run on various other alternative sources of energy in the near future. With the expected increasing reliance on alternative sources of energy, the relevance of crude oil will increasingly diminish,” report said.

A pundit said that US is reviewing its oil imports from countries it has listed as dangerous, a group to which Nigeria falls.

“In 2008 the United States imported oil from 10 countries currently on the State Department’s Travel Warning List which lists countries that have ‘long-term, protracted conditions that make a country dangerous or unstable.’ These nations include Algeria, Chad, Colombia, the Democratic Republic of the Congo Iraq, Mauritania, Nigeria, Pakistan, Saudi Arabia, and Syria.

“Our reliance on oil from these countries could have serious implications for our national security, economy, and environment,” the pundit said.

A few years ago, the CNA Corporation’s Military Advisory Board report, “Powering America’s Defence: Energy and the Risks to National Security” reiterates the finding that fossil fuel dependence is unequivocally compromising America’s national security. The board concludes, “Overdependence on imported oil- by the U.S. and other nations- tethers America to unstable and hostile regimes, subverts foreign policy goals, and requires the U.S. to stretch its military presence across the globe.”

CNA advises, “Given the national security threats of America’s current energy posture, a major shift in energy policy and practice is required.”

American researchers were quoted as saying: “With a struggling economy and record unemployment, we need that money invested here (foreign oil) to enhance our economic competitiveness. Instead of sending money abroad for oil, investing in clean-energy technology innovation would boost growth and create jobs.”

As the saying goes, “he who fails to plan, plans to fail.” With signs starring Nigeria in the face on the danger of continued dependence on oil, it behooves the authorities to take practical steps at avoiding the doomsday. America’s decision to reduce dependence on oil from “enemy” countries did not come overnight; it was a product of careful and systematic planning.