#INSIGHTWITHLARIGOLD: Nigeria: When the Oil is Over by @Lanre_Olagunju

Published:19 Jan, 2013

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Nigeria’s oil and its derivatives are the most explored of all its natural resources; yet, oil money hasn’t done much for the country in terms of economic development, job creation and poverty reduction, basically because corruption, wastefulness, insensitivity, lack of structure and infrastructure has hindered its even distribution. With an average daily oil production of 2.4 million barrels, and other countless resources, rather than progress, Nigeria has remained an important case-study in explaining the intricacies of being broke and wretched even in the midst of abundance.

Whether Nigeria will remain an oil giant or not is gradually becoming non-debatable, after the World Bank’s published prediction. The prediction says Nigeria’s oil will be depleted in 41 years, though the nation can keep supplying at 2011 levels for another 41 years. Many aggrieved Nigerians are less concerned if the oil dries up tomorrow, hoping that if it does, probably the entire nation will sit up and diversify into other economic sectors.

According to the Association for the Study of Peak Oil and Gas (ASPO), the global rate of discovery has been falling steadily since 1965, after it was discovered that the world oil-field peaked at about 55 billion barrels (8.7×109 m3)(Gb)/year.

Though there’s been a whole lot of heavy criticism and sentiments on Matthew Simmons oil peak theory, most especially for being overly focused on Saudi Arabia in his book, Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy. Wikipedia explains peak oil as the point in time when the maximum rate of petroleum extraction is reached, after which, the rate of production is expected to enter terminal decline. Quoting Matthew Simmons, “…peaking is one of these fuzzy events that you only know clearly when you see it through a rear view mirror, and by then an alternate resolution is generally too late.”  The calculation of peak oil has a lot to do with observing and noting the rate of production of individual oil wells, and also the combined production of related oil wells. But Nigeria is not a nation that keeps records, how can one trust the Nigerian National Petroleum Corporation to have a detailed oil production data? So the World Bank’s prediction shouldn not be discarded. Moreover, crude oil falls in the category of non-renewable energy source, basically because it is produced from the remains of plants and animal, and that takes millions of years.

For energy source to be categorized as renewable, it essentially has to be replaceable within days or years. So mathematically, if we are consuming it faster than the earth produces it, obviously one day soon we will eventually run out of it. Happily, the world won’t run out of energy as long as there’s energy from the sun, singularly because a large percentage of all the energy we use comes from the sun. More so, energy from the sun that reaches the earth surface in an hour is literally much more than we can consume in a year.

There can’t be a more appropriate time for the Nigerian government to benefit from the power of foresight than now. There’s no guarantee that petroleum will remain a highly sought after source of energy. America’s import of Nigeria’s oil decreased by 125% between July 2011 and 2012. That aside, The United States Energy Department is all out to ensure that America produces 11.4 million barrels per day of oil and liquid hydrocarbon, come 2013. Energy wise, Obama’s administration is so concerned about America’s self-reliance.

This is the time for Nigeria to get back to her “economic first love”- agriculture, which used to be the mainstay of the economy before the advent of oil. Way back in 1961, Nigeria produced about 42% of the world’s consumed groundnut. The neglect of the agricultural sector ensured her dominance was eclipsed by China, USA and Argentina. Nigeria also lost palm oil relevance and dominance to Malaysia and Indonesia, just like she lost cocoa to Cote d’Ivoire and then cotton to Mali and Burkina Faso. Report has it that Nigeria losses US$10 Billion (1.6 Trillion Naira) in potential annual export revenue opportunity from groundnut, cocoa, cotton and palm oil, assuming Nigeria maintained her 1961 market share.

Currently, Nigeria is the world’s number two importer of rice, importing two Million MT of rice , besides that, Nigeria Imports over 1 Trillion Naira in wheat, rice, sugar and fish every year. Then we say there are no jobs! Nigeria depends majorly on importation of feed; hence, she imports inflation, driving poverty northward. The beauty about agriculture is that it actually provides jobs. So it’s not just about providing food. In practical terms it boosts the economy as well. Agricultural development has contributed to Thailand’s low rate of unemployment which is the lowest in the world at 1.2%. Malawi became absolutely self-sufficient in food production within one year by focusing on agricultural transformation after the late former President, Bingu wa Mutharika said “Enough is enough, I am not going to go on my knees to beg for food. Let us grow the food ourselves.” Another example is Kenya, look at the sea of jobs Kenya has created through Private sector driven marketing institutions. Kenya is now at the number one position in the global horticulture market, creating 8 Million jobs in the Kenyan Horticultural sector.

I am @Lanre_Olagunju

#INSIGHTWITHLARIGOLD runs on www.omojuwa.com every Saturday.

 

*A large part of this article was first published on www.AfricanLiberty.org

 

 

 

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