When the Oil is no more ... a push for diversityBack

Let's imagine that we woke up and suddenly discovered that the crude oil reserves within our borders have been exhausted and we no longer have the capacity to produce petroleum like we used to. This will understandably destabilise any economy, especially one that is hugely dependent on one main sector for her economic sustenance.

 

It has been repeatedly said that the oil and gas deposits in Nigeria will not last forever. The mere fact that oil wells dry after some period of drilling goes to buttress this fact. Therefore, if petroleum is exhausted, will our economy standstill while the rest of the world moves on?

 

The discovery of petroleum in commercial quantity in Nigeria marked the beginning of the nation's mono-economy. The agricultural sector, which was initially the mainstay of the nation, lost its relevance due to the drive for petroleum exploration and exploitation. Our vast arable land mass continue to lie in waste and have only been able to produce cash crops for local consumption.

 

The millenials of this generation can only visualise the stories of how Nigeria fared in other aspects some decades ago. The groundnut pyramid in the Northern part of the country (where sacks of groundnut were piled up to form a triangular structure similar to the Egyptian pyramid) as not as common as they were in the past. 

 

The attention given to the mining industry has lessened despite Nigeria’s enormous mineral reserves such as coal, iron ore, bitumen, gold, uranium and the like. The Ajaokuta and Delta Steel Companies are no longer as productive as they were in years past. Placing the burden of sustaining the economy of a nation on just one sector is a risky one, especially one that is as large as that of Nigeria.

 

Nigeria has the capacity to be one of the leading nations, not just in Africa but in the world  - if only she can utilise her enormous resources and transcend her almost total reliance on revenue derived from petroleum to generating revenue from other important areas such as the automobile industry, agriculture, mines and minerals, transport etc.

 

 

Light at the end of the Tunnel

 

Much as there are reasons to be concerned about the concentration on the oil and gas industry, we still have the capacity to harness other sectors for our national growth. The recent rebasing of our Gross Domestic Product (GDP) which moved Nigeria to top in Africa and 26th in the world with a GDP of Five Hundred and Ten Billion Dollars ($510 Billion), clearly depicts that other sectors are involved in the development of the nation as this new GDP was announced at a time when the oil industry has been bedevilled with a lot of challenges such as increased oil theft, pipeline vandalism, corruption and so much more.

 

 

Worthy Competitors

 

The Telecoms industry since its liberalisation has proved to be a worthy competitor with the oil and gas industry. Similarly, the ongoing transformation of the nation’s agricultural, power and the transport sectors are not a mere coincidence with the new GDP but a reflection of the revitalisation of the these sectors.

 

Nigerians are surely excited to hear of the headway being made in the automobile industry such as the recent announcement by Nissan Motors that its first made in Nigeria vehicle would be unveiled in April 2014. Already, the signs for the automobile industry are good as Innoson Nigeria Limited; an indigenous automobile company is currently engaged in importing and assembling parts of vehicles in Nigeria so as to reduce the cost of importing the already made ones.

 

 

What diversification would do -

 

Diversification will:

 

  • create more jobs;
  • enhance industrialisation;
  • increase our Gross Domestic Product;
  • increase our exports;
  • increase our revenue; and
  • revitalise other sectors.

 

For the revitalisation of the various sectors to be effective, policies and laws need to be made. Some areas where these laws could be key are:

 

  • The Railway system - By virtue section 2(1) of the Nigeria Railway Corporation Act (Amendment Bill) 2011, the railway matters are no longer the exclusive responsibility of the federal government as states and the private sectors can now participate in this area. Similarly, the Minister of Transport is empowered by section 2(1) to issue licence to operators who wish to participate in the sector. The current revamping of the railway sector will surely need more regulations and laws to encourage more participation as government cannot handle it alone.

 

  • The Automobile industry - the announcement of increased tariff on the importation of cars is a step in the right direction as its aimed at discouraging the importation of foreign made vehicles so that those produced locally will be patronised. This policy will help the automobile industry. However, even with this increased tariff, the importation of vehicles will still persist and the development of the automotive industry may not be as fast as expected. Therefore, beyond the policy, there is a need to amend the National Automotive Act of 1993 so as to provide for the outright ban on the importation of vehicles into the country so that local production can be encouraged.

 

  • The Agricultural sector - the continued investments of the government in agriculture and the newly introduced dry season farming programme is an indication of its importance to our economy. Therefore, more incentives should be put in place to encourage more investments in this vital aspect of our economy.

 

 

As the government is playing her role in creating an enabling environment for diversification, local and foreign investors, stakeholders and major financiers, as well as the government itself, should take maximum advantage of this regime to explore these other profitable areas so as to set the stage for Nigeria’s economic diversification and ultimate industrialisation.

 

 

References:

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