Nigeria’s overdependence on oil: A Case for diversification

Before the discovery of oil in Nigeria in Oloibiri, Bayelsa State, in 1956, Nigeria derived major part of its revenue from agriculture. Every region of the country is noted for a particular agricultural product like palm oil, cocoa, groundnut, cotton, rubber etc. Western Nigeria was particularly the major producer of cocoa from which so much was made which was prudently used by the late political icon, Chief Obafemi Awolowo.

With money realised from cocoa, he built the Cocoa House (then the tallest building in Africa) in Ibadan, established the first TV Station in Sub-Saharan Africa and provided free education etc.

Northern Nigeria was particularly the chief producer of groundnut (I still remember the groundnut pyramid in the North). Eastern Nigeria gave the country coal and palm oil. Nigeria witnessed a reasonable development made possible by the money made from the sale of these agricultural products. Other non-agricultural resources complement the revenue of the country, but a greater part of Nigeria’s revenue then came from agriculture.

The discovery of oil in Nigeria is one of the greatest things to happen to the country. But, rather than been a blessing, it is causing more problems. The huge money generated from oil by Nigeria though has been used to finance developmental projects like building of roads, educational projects; Nigeria has not succeeded in using this money to resuscitate the dead power sector. As a result of irregular power supply, many industries have folded up, resulting in job cuts, scarce employment, and also making artisans, who rely on electricity for their daily income, losing money.

Nigeria is the sixth largest oil producer in Africa, but instead of seeing good infrastructure like good schools, roads, stable power supply, modern transport, technological advancement, all we see are terribly bad schools, dysfunctional power sector, ever rising unemployment rate. Nigeria is underdeveloped despite the huge money it generates from oil. Oil revenue is also responsible for the large scale of political violence and ethnic rivalry because citizens know there is extremely high pay for political office holders made possible by oil money. Politicians devise all means to get into public office. What regions can gain from the huge oil money is also partly responsible for ethnic unrest.

The most disturbing of the developmental issues regarding Nigeria’s oil is the worrisome overdependence on oil revenue and the neglect of agriculture. Nigerian leaders have failed to realise that oil can dry up. How will Nigeria finance its infrastructural projects if that happened in the future? Nigeria does not even have a good oil reserve compared to a non-oil producing country like the United States of America with large oil reserve.

As a result of global warming and the need for countries to explore alternative sources of energy (like solar, wind etc), less importance is being attached to oil because of its carbon emission (a major cause of global warming and pollution). This means that oil may become less relevant to the economic survival of nations in the future.

 

Let’s look at attempts by nations towards having alternative energy to oil. In 2007, the European Union member states agreed that the EU is to use 20 per cent renewable energy in the future and that it has to reduce carbon dioxide emissions in 2020 by at least 20 per cent. It is agreed that one-tenth of all cars and trucks in the EU 27 member countries should be running on biofuel. This means less reliance on oil.

It has been revealed by scientists that “an audacious proposal to build a 5,000-mile electricity supergrid, stretching from Siberia to Morocco and Egypt to Iceland would slash Europe’s C02 (carbon dioxide) emissions by a quarter. The scheme would make the use of renewable energy particularly windpower so reliable and cheap that it would replace fossil fuels on an unprecedented scale” (The UK Independent on Sunday, Nov. 25, 2007, pg 29).

It is said that “more than 70 French towns have already gone back to the past by introducing horse-drawn carriages to replace petrol and diesel powered vehicles for local tasks such as collecting rubbish, street cleaning and taking children to school. Many countries will soon join the revolution” (The UK Independent on Sunday, Nov. 25, 2007. Pg 3).

All the above simply means that oil is gradually losing its importance and may become less relevant in the future. Nigeria should learn a lesson for its overdependence on oil.

The time is here for our government to think about the good money we can make by exploring the gains in other sectors like entertainment, tourism, mining etc. Coals, bitumen for road construction are few of the mineral resources Nigeria have.

We should help develop our tourist attractions like building world class malls, event centres, entertainment facilities. We should also develop our beach, museums, monuments and historical sites. We should understudy how Dubai became a tourist destination and other tourist destinations like the United States of America, South Africa, UK, Kenya and The Gambia. We can also help develop the entertainment industry by providing financial support for entertainment practitioners. People will pay to visit our tourist attractions to enjoy products of our entertainment industry. Thus, we can make good money from diversification. Overdependence on oil is killing the economy.

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