It
all started like a rumour. Some politicians in government claimed it
was fomented by the opposition to misinform and unsettle the ordinary
citizen. Later, the Minister of Finance and Coordinating Minister of the
Economy, Dr. Ngozi Okonjo-Iweala, tried to explain it away. She gave an
interesting-but really scary-analogy with which to illustrate the
situation.
According
to her, Nigeria was like a family without immediate cash to solve its
everyday needs, but whose parents had jobs, and therefore had a sure
means of raising money at the end of the month. Conclusion: Nigeria was
just temporarily broke. But within a matter of days, the alarm could not
be contained anymore. The minister rushed back and read out a press
release: Our economy is going down, and Nigerians must tighten their
belts!
The annoying situation is that a
singular global incident is whipping a big country, or a “great country”
as our leaders like to delude themselves, like Nigeria silly: steadily
falling oil price. Crude oil sale is the primary source of foreign
revenue in Nigeria; so, as the commodity’s price drops in the
international market, we take direct hits from its impacts. Our Excess
Crude Account, which was set up as a natural buffer in case of such a
situation, is now so depleted that it cannot have any remedy effect
whatsoever. And to worsen the situation, there is no economic boom in
the real sector. So, everybody must keep praying that the price of oil
bounces back to above the $100 mark so that we can go back to our
collective fool’s paradise.
But the hard truth is that we are
currently in a bad economic shape because demand for oil is dwindling
globally. It is not driven by witchcraft; it is demand and supply. Many
nations are secretly planning an exit from their dependence on the
so-called black gold. The governments of the world are in fact looking
for alternatives to fossil fuel in order to safeguard the environment
and leave a healthier earth for future generations.
We must wake
up to the reality that the Kyoto Protocol which Nigeria is a signatory,
is a document prepared with an intent to put a stop to the use of
petroleum in the long run. In its latest assessment of global warming
which was published recently, the United Nations through its
Intergovernmental Panel on Climate Change warned that the use of fossil
fuels must be totally phased out by the end of the century. It urged
governments to cut carbon dioxide emissions by up to 70 per cent by 2050
and 100 per cent by 2100, and asked them to be less reliant on mining
for fossil fuels such as coal, oil and gas.
Granted, we are
still decades away from the deadline, but what if the dwindling oil
demand is the opening salvo of the energy revolution the world hopes,
and plans, for?
Another hard truth is that we are not even
prepared to join the world in a new energy matrix; just as we are not
prepared for declining oil revenue. Austerity measures are just a
cosmetic approach. The fundamental preparedness should be in our
collective attitude. We must stop deceiving ourselves that “God has
blessed us with eternal blessings in subterranean places!”
Come
to think of it, Madam Okonjo-Iweala’s analogy betrayed our psychological
stance. She described Nigeria as a parent “who has a job”. Simply
interpreted, our job is oil; therefore, it is assumed that we cannot
lose that “job”. What audacity! We are so gloatingly secure in our false
sense of security that we never imagine a future without crude oil. It
is when we face this truth that we can appreciate that no matter the
amount of fasting and prayers we indulge in, sooner or later, the future
we fear will catch up with us. Truth is, sooner than later, crude oil
will cease to command money and power in the global market.
Two
facts show clearly our desperate condition. Firstly, our wealth had no
solid base-it was what we could colloquially describe as “paper money”.
International experiences show that as countries become richer, the
share of the agricultural sector in GDP decreases, and the share of
manufacturing and services increases. The transformation usually occurs
as a result of technological advances that improve agricultural
productivity and shift the factors of production towards manufacturing
and services. Ironically, the productive structures in Nigeria have not
witnessed any diversification whatsoever since our supposedly
providential-but actually inglorious-oil boom. The agricultural sector
has but a nominal growth; the manufacturing sector, plagued by lack of
power, is in a shambles; and the services sector is just crawling along.
Secondly, the renewable natural resources we have in abundance
are not deployed. It seems the government and the people that matter do
not care about what matters. Although the Federal Government continues
to hype its commitment to developing renewable energy to surmount the
erratic electricity supply challenges in the country, Bloomberg recently
wrote Nigeria off as a renewable energy non-starter. Having estimated
that renewable energy investments in sub-Saharan Africa would reach the
$5.9bn mark in 2014 and grow to $7.7bn in 2016, the reputed finance data
report entity noted that the investments are predominantly expected
from South Africa, Kenya and Ethiopia, leaving Nigeria out of the
high-ranking renewable energy investment destinations.
In fact,
one does not need an international financial analyst to see and feel our
hypocrisy when it comes to renewable energy deployment. During the last
Nigeria Alternative Energy Expo, the most respected of such forum in
Nigeria which is actually endorsed and supported by the government, the
two highest government functionaries in the sector-Ministers of Power –
did not deem it necessary to even show face in the meeting hall.
Perhaps, they did not want to face the hard questions from seasoned
global players in the industry who are perennially frustrated by the
murky alternative energy atmosphere in the country.
Yet, while
we waste precious time, the world is moving forward in search of
replacements for fossil fuel. Just this week, Nigerians were treated to
scintillating news about the “Shit Bus” of the United Kingdom. A bus in
Britain called the Bio-bus which runs on biomethane gas produced from a
combination of human waste and food waste has hit the road. What is
more, I just got news alert on my phone about an electric plane invented
in China, which is ready to hit the world market. What about news of
the sheep urine fuel, invented and deployed by another British bus
company? Yes, it is happening every day; people are looking away from
petroleum to alternative sources.
Two things we must do very
fast are: Stop rent-seeking, and institute a robust legal framework for
economic diversification. Advanced manufacturing and service industries
greatly depend on the enforcement of contracts between parties, the rule
of law, and the transparency of legislation. Together, these factors
encourage competition between investors and weaken the rent-seeking that
dominates business environments in countries like ours. The challenge
for us is to ensure that financial policy can foster growth and economic
diversification and those economic reforms can create job opportunities
to keep up with the rapid growth of the labour force. The draft
Renewable Energy and Energy Efficiency Policy Bill is one of such
documents; the National Assembly must ensure its quick passage. Without
entrenching these vital measures we are set on a highway to doom; but
with them we shall speedily become a nation to envy in no distant time.
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