Recession: Nigeria’s Economy Beyond Crude Oil

Posted on January 11, 2017

BY IGHOYIVWI OGHENEFEJIRO

It’s widely agreed that the deep economic recession that Nigerians now face, is because of the abysmal failure of public administration, economic policy and execution. It is, in effect, the triumph of corruption – one of the cheapest commodities with which the Fourth Republic is commonly associated.

The recession has weakened the confidence of workers, tax-payers and voters in both government and politics. It is a recession that is of unique character, in that there has been a dearth of sorely-needed funds, such that twenty-seven out of the thirty-six states in the country have been declared almost insolvent – unable to pay the salaries of their workers. It is a development that has enfeebled the morale of workers in general. It has raised question – on the part of would-be local and foreign investors – about the wisdom of investing in the country’s economy. But that is almost forgetting the fact that the Nigerian economy is well known for its resilience; for which it is sure to bounce back.

It has often been the argument of development economists, since the past four decades, that Nigeria should not have predicated her economy and national development solely on the fortunes of oil, because it was fraught with the sometimes calamitous danger that comes with a steep dip in the global market price of the product. It does seem that, probably, because of the boom years of the post-civil war era, public policy-makers have tended to think, with a laid-back, if reprehensible, attitude that “for Nigeria, oil is the panacea to any economic challenge.” Since the Biafra war, it would seem that Nigerians have been living in self-denial that the age of agricultural boom was over; that the country needed to rely, quite comfortably, too, on crude oil. The openly hostile reality of today’s recession is one that deflates whatever confidence that the relentless advocates of crude oil as the anodyne to any economic challenges that Nigeria may be confronted with do have.

“For development economists, to see crude oil as having the Midas touch that could neutralize the unfriendly effects of today’s deep recession would be unrealistic. It would be courting a catastrophe of a gargantuan proportion for Nigeria to lean still, openly, heavily on crude oil, in maintenance of her preference to be seen as a mono-product economy. Nigeria does not, whichever way you look at it, compare favourably, with any of the conservative, oil-rich, sheikhdoms of the Middle East, which make up the Gulf Co-operation Council (GCC) – including Saudi Arabia; all of which are, primarily, dependent on crude oil.

“With fat times fast receding into history, Nigeria would do well by heeding the advice of development economists, who argue that it was high time she diversified her economic base; that it was time that she launched, beyond policy pronouncement, what could be akin to a renaissance in expanding – and very firmly, too – her economic base to non-oil products to cushion the unkind effects of today’s deep recession. Thus, the Buhari era is an auspicious period for Nigeria to retrace her former giant economic steps to the era of cocoa in what was then the Western Region; ground-nut, hides and skins, Northern Region; palm oil and coal, Eastern Region; rubber and timber, Mid-west Region, and other untapped minerals and cash crops – zinc, gold, iron-ore, kaolin, copper, yam, cassava, rice, beans, sorghum, beniseed, corn, banana, plantain, citrus fruits of diverse kind – including oranges, amongst others.” There is, therefore, a pressing need to revive the textile industries that were forced to fold up during the structural adjustment years of the late ’80s and early ’90s. There is, also, a need to construct a network of all season roads that could withstand the huge traffic of trucks and industrial vehicles that would ferry cash crops and food stuffs from rural areas to the urban centres and the ports. The Nigerian Railway Corporation would have to be empowered to fit well into the new economic diversification programme. It will also be necessary to rejuvenate the river basin authorities created during the era of Directorate for Food, Roads and Rural Infrastructure (DFRRI) and the National Agricultural Land Development Authority (NALDA).

Still, with her vast endowment in mineral and cash crops; her ballooning demography of highly-skilled individuals and rich agricultural lands, Nigeria has all that she needs to ease her out of recession. “She needs to exploit the pre-oil resources – cocoa that was used in building the Cocoa House in Ibadan, provide free education for children in the late ’50, set up radio station and the first television station in Africa, during the tenure of the late Chief Obafemi Awolowo as Premier of the Western Region; the funds from groundnut that was used in setting up the Ahmadu Bello University, Zaria; palm oil, coal, rubber, timber etc. that were put to good use, in other parts of the country, in the promotion of good governance. All that was to cement the bond of an enduring affinity between the government and the governed; between the palace and the village square; between the tax-payer and the exchequer, who ensured that public funds was put to use in the interest of the majority – not that of a selfish, if parasitic, few, whose disservice are conspicuously manifest in today’s deep recession.” In looking beyond crude oil, Nigeria should strive hard to regain her comparative palm oil advantage from Malaysia.

Should there be, anytime, hence, a cocoa renaissance, a groundnut revolution, a boom in the production of palm oil, rubber, timber and other cash crops, one thing is certain: the Nigerian economy will be a lot better for it. “The country’s ports would witness a healthy armada of local and foreign ships – from far and near – that would berth here to ferry such non-oil products to consumer destinations, within Africa and beyond. Within the distance, there might be a compelling need for the Nigerian government to revive the Produce Marketing Boards of the days of regionalism, and sculpt out a veritable tourism attraction programme from the groundnut pyramids and other sites – armed with a new security architecture, so as to steel the confidence of prospective investors in the industry. Thus, in a glorious future time, you never can tell, the Apapa Port, in Lagos, may race past Durban or Algiers as the largest and busiest in Africa.” For that, it is estimated that Nigeria could earn as much as $150 billion annually, in the first five years. There is a projection of nearly $380 billion, a decade later. Then, all the parties involved in the economic renaissance – producers of cash crops and those involved in the extractive industry – beyond non-oil products – would have become a reliable source of tax revenue – alongside custom duties for government. The appealing picture that one paints here is based on the belief that government would have been gracious enough to dole out some generous seed funds, via the EXIM Bank, Bank of Agriculture and Urban Development and Bank of Industry, to reputable individuals, who would take the Nigerian economy out of recession.

Therefore, the skippers of the Nigerians Ports Authority (NPA), Nigerian Shippers’ Council, Nigeria Customs Service, Nigeria Police Force, licensed freight forwarders and clearing agencies, Maritime Workers Union of Nigeria (MWUN), Nigeria Labour Congress etc., should be actively involved in laying a new foundation for a virile non-crude oil export economy for Nigeria.

In the economic diversification era, it is expected that a new alliance involving the well-motivated producers of non-oil products — farmers, manufacturers and miners would emerge. This will be a renascent community of economic interest, whose activities would dictate the structure, content, management and sustainability of the new market. This is an alliance, further, that would be so powerful — it’s hoped — to the extent of dictating what Nigerians consume. In its activities, it’s an alliance that as the Nigerian consumers are being weaned away from foreign food items, it may help to strengthen the Naira in its competition with such currencies as the dollar and euro — and fatten the country’s foreign exchange base. Out of the new alliance of producers of agricultural produce would emerge Stakhanovites — individuals who would be genuinely entrepreneurial, if only to make the best of their new-found position in the Nigerian economy. The new non-oil export architecture should accommodate the country’s teeming number of the unemployed — including long-idle graduates of tertiary institutions. Beyond crude oil, the diversification process of the Nigerian economic base should be to reduce the unemployment queue, and so help, to an appreciable level, the associated security threat, beef up the country’s export and foreign exchange bases and strengthen her food security.

Ighoyivwi is a Mass Communication student at Bishop Ajayi Crowther University.