“A man who fails to plan has already planned to fail.” This adage aptly describes the failure of those saddled with the responsibilities of managing the economy and resources of the country over the years-A consequence millions of ordinary Nigerians are now paying for.
Didn’t we see it coming? Probably we did but, felt an Oil apocalypse was not yet in sight and, if it were, was just a figment of cooked up economic imaginations.
Nigeria’s past and present governments must have absolutely concluded that the ‘Oil jamboree” will continue without glitch. Ranked number six in the world and one on the continent in production of humanity’s most important resources-a raw-material fueling the World’s economies, Nigeria’s rulers did not only go to bed, they also failed to plan for the future by eating “with both hands.”
The warning lights were obvious we only failed to heed the warnings.
In the last three years, events in the global market for Crude coupled with other factors have not only brought to manifestation the fears and uncertainties currently wreaking havoc in the sector but, has also seen the price of the product plunge to a lowly 33$ per barrel and fragmented the influence of the once powerful OPEC bloc ( Organization of Petroleum Exporting Countries) now hapless and helpless in saving the situation-Their failure to reach an agreement to scale back production to shore up demands at the last meeting in Austria validates this point.
The ongoing crises rocking the oil industry has had a reverberating or a ‘shock wave’ effect on the economies of Oil reliant countries-A bloc Nigeria belongs to.
Beyond the shores of Nigeria, the Saudis, Kuwaitis, Qataris, Venezuelans to mention a few have also been caught up in this Oil quagmire and are currently looking for a way out.
The Saudis-who are the World’s number one producer-know the gravity of the crisis. Posting a $98b deficit is enough to set the alarm bells ringing in the kingdom. And with further slump in price expected to hit $20 per barrel-the last time it happened was 14 years ago-Riyadh knows that a ‘knee-jerk’ response is needed to save its economy-a situation that prompted the Kingdom’s ruler, King Salman to admit that the economy must be diversified and loosened from the ‘apron-string’ of oil.
The Oil landscape is witnessing a paradigm shift in influence of major players from non-OPEC bloc and technology.
Non-OPEC states with huge crude deposits like Russia, Mexico, Brazil, USA and so on also have significant influence and have strongly used it in breaking OPEC’s monopoly on the market; this explains why the bloc’s member states like Saudi and Venezuela differed on whether to scale back production or keep the taps running with the Arab Kingdom opting for the latter and the Venezuelans, the former.
Technology, especially in renewable energy, aimed at making the planet greener seems to be winning the battle.
The huge investment in this field considering the breakthrough made in alternative energy to power the transport sector, further makes the oil industry even more vulnerable.
And with reports stating that $500b had been lost in the economies of OPEC member states in the year 2015 and with a gloomy prediction for 2016, King Salman’s ‘diversification mantra’ is not far from the truth.
Yes! Steering the economy away from oil is the way out. And it is time Nigeria followed suit.
Failure to plan for an “Emergency exit” when such tsunami tidal waves sweep across the industry has led us to where we are now-A struggling economy, coupled with dwindling oil revenues has left a massive budget deficit that has left the economy screeching and the government struggling to meet its constitutional responsibilities.
Moreover, years of mismanagement, looting and corruption in Nigeria’s oil industry has caused more damage than the current oil quake rocking the country’s economy and those of other oil producing countries.
However, that is expected to change as the new ‘government of change’ is working assiduously to stem the rot and reposition the sector.
President Muhammadu Buhari has done well in creating an atmosphere of transparency in the operations of the state owned oil company (NNPC) and also streamline the activities of other players in the once secretive industry.
The major panacea to shielding the country from the unpredictable and volatile oil market is to diversify the economy, thereby reducing the dependence on Crude.
While its Arab neighbours growl under the negative impact of the plunge in oil price, the Emirati government seems to be impervious to its effect. Why? The United Arab Emirates had long diversified its economy by turning itself into an investment hub in health care, commerce, tourism and a real estate mecca of some sorts. So, when the current oil tsunami struck, the gulf nation found solace in other sectors.
Thus, it becomes imperative for the present government in Abuja to change its monolithic economy, by paying attention to other sectors too.
Boasting of tourism potentials, Agriculture and mineral deposits, the country can emerge from this doldrums to becoming a sub-regional powerhouse in West Africa and at the same time fulfilling the potentials of being ‘Africa’s largest economy’.
The recent budget of the government that allocated an improved chunk of funds to Agriculture and Solid minerals shows that the Buhari -led administration is on a constructive mission to save the economy.
Having witnessed a shortfall in revenues, which has had a dire effect on his campaign promises, the former general is under no illusion of the task before him.
The race to beat the drop is not only a headache for Nigeria but, a rat race against time by other oil-reliant economies in the gulf, Latin America and even Africa.
The current crises should not be seen as a disaster rather, it should be considered as a wakeup call for these countries to start remodeling their economies to remain competitive and strong in the ever changing and volatile economic landscape.
Nevertheless, a bitter reality staring the Nigerian government in the face is accompanied by handwritten words on the wall implying: Gone are the days, the unfettered honeymoon between the state and its crude deposit is over.