Oil and Nigeria (Part 2)

The Irony of Oil

Particularly peculiar to oil-rich nations is the irony of the situation in which such countries find themselves. Despite enormous riches that accrue from oil year in-year out such countries still remain relatively poor. Nigeria has caught cheaply the Dutch Disease that is commonplace amongst oil-rich nations (The Dutch Disease is a global acronym for nations whose rich natural resource endowment paralyze their production potentials turning them paradoxically to poor underdeveloped nations because they lost the motivation, discipline and capacity for self-development, self reliance and sustainable growth). Despite our oil riches, over 64% of our people live below the internationally recognized poverty line of $1.25 per day. Our saddening condition can be largely attributed to the corrupt nature of the Nigerian society; corrupt officials within the Nigerian society can't seem to let the oil money do what it ought to do (such as: build schools and health care facilities, repair roads, provide job opportunities e.t.c.) Rather they continue to ship these riches in large quantities for their personal gain. As observed in The New York Times in its edition of 1st August 2000: "if oil revenue is managed well, it can educate, heal and provide jobs for the people. But oil brings risks as well as benefits. Rarely have developing countries used oil money to improve the lives of the majority of citizens or bring steady economic growth. More often oil revenues have caused crippling economic distortions and been spent on showy projects, weapons and Paris shopping trips for government officials”. As aptly put by Bishop David Oyedepo: "With such enormous resources (obtained from our oil reserves) we had all the opportunity to develop our infrastructures but our leaders chose rather to sell the future of an entire nation to selfishness on the altar of corruption"

More pitiful is the situation in which the oil producing regions in Nigeria find themselves, they more than anyone else have suffered the most at the hands of a resource which ought to be a blessing. And "As people and transnational oil corporations have been fighting over this "dark nectar" in the delta region, immense poverty and environmental destruction have resulted"...the Niger Delta people have been robbed and have been left standing out naked in the cold. One would ordinarily expect that the Niger Delta region would be the foremost beneficiaries of the riches accruing from oil but this has not been the case as the region is being plunged deeper and deeper into a state of despair and hopelessness as their oil-attached dreams and hopes are being crushed year after year. Quoting the BBC news article: "The day oil was first discovered in Nigeria" in which they interviewed Chief Sunday Inegite who had this to say as regards the excitement the day oil was discovered in Oloibiri: "They made us be happy and clap like fools, dance as if we were trained monkeys". However, today nobody is dancing....and with all such frustration, no wonder the Niger Delta youths took up arms.

Oil and Nigeria (Part 1)

Oil was first discovered at Oloibiri in 1958 in commercial quantities after several exploration efforts which began way back in 1908. Then it was as if the heavens had suddenly smiled down on us; our turn to shine had come and nothing was going to stop us. But looking back over 54 years of oil rigging and exporting in Nigeria we begin to wonder: Where are all the schools that the oil money ought to have built? How come our roads look fairly the same, I thought the oil money was supposed to take care of that! How come our per capita income is not so far away from where we left it at independence? What of the oil-producing states I mean since the oil is located in their terrain one would expect them to have become mega-cities by now, what happened? All of the dreams and hopes that had suddenly become ours with the discovery of oil have over the years eluded us. In the following sections, I'll just do a casual analysis of oil in Nigeria and what it has meant to us.
The Rise of Oil
Back in secondary school, I chose History as one of my elective subjects and in our history classes we were always talking about the rise of this leader or that empire : The rise of Ibn Khaldum, the rise of Shaka de Zulu, the rise of the Kanem Borno empire and so on and so forth. So also the discovery of oil in 1956 and the turnout of events in the years following paved the way for "The Rise of Oil"
Actual oil production began in Oloibiri in 1958 with an initial production rate of 5100 barrels of crude oil per day, and then in 1972 production rate climbed to 2.0 million barrels per day and eventually in 1979 oil production peaked at 2.4 million barrels per day. From 1965-1975, the nation's annual revenue witnessed a tremendous increase from $295 million to $2.5 billion with much of the increase coming from oil. Because of this tremendous increase we took the easy way out focusing all of our energies on the exploration of our bountiful oil reserves and its attendant benefits; thus neglecting other sectors of the economy especially the agricultural sector, as oil revenues increased, agricultural production and revenue plummeted. From 1970-1982 around the time of the oil boom production of groundnuts fell by 64%, Cocoa 43%, Rubber 29% and Cotton by 65%. Oil came on the scene took center stage and knocked every other "performer" off the scene. Today statistics tell us that about 80% of our revenues are obtained from crude oil; it makes you wonder if "the oil empire" collapses (like the kanem borno empire collapsed) what would happen to we who are so intimately attached to it.
P.S. To be continued....

Save our Country

I wrote this essay in school recently and well....the results of the essay competition was not announced; logistic reasons maybe. Anyways I decided to post it here; soooo here it is, it is titled "Save Our Country"


Nigeria! The 8th most populous country in the world with an enviable supply of natural resources yet she remains a substantial member of the less developed countries (LDCs) category. Unemployment rates keep taking an upward turn, the standard of living is one of the poorest in the world, income per capita is considerably low and constant power supply has continually eluded us. Our technological base is definitely not one to be envied, abandoned projects trail the Nigerian experience, corruption has eaten deep into the society both at the higher and lower levels and the list goes on and on. However, as the economic adviser to Mr. President, I recommend the following economic principles which I am sure single out facets of the problems that plague this country and also provide solutions to these problems. These recommendations if implemented will set Nigeria on the path toward being one of the most desired countries to live in by the year 2025.
The quantity and quality of a nation’s labour force is one very crucial factor that contributes to permanent economic growth. Here in Nigeria, we have the quantity but we need to enhance the quality of the available quantity. For Nigeria to excel, she has to discipline herself and engage aggressively in investment as it regards the development of human capital. Education in Nigeria has been described as being “dysfunctional” largely because of the decaying infrastructures in the educational sector; the nation should therefore channel a reasonable proportion of public expenditure towards correcting this problem. Countries like China have taken advantage of their surplus labour and are engaging in numerous productive ventures, other nations even flock to their terrain to take advantage of the quantity and quality of their labour force, there is the fact that Chinese workers were able to build a 15-story hotel in just six days. Nigeria should not be left out of the league of countries that are making waves with their surplus labour force: we should improve human capital, remembering that “The most valuable of all capital is that invested in human beings” – Alfred Marshall
Corruption! Corruption is one of the major diseases affecting virtually all countries in the LDC category. There is corruption in our schools, in our offices, in the government houses, on our roads, in our homes; corruption has become an integral part of the Nigerian society. Emphasizing more on the mammoth place of corruption in Nigerian politics, I propose that one can hinge the corrupt nature of Nigerian government officials on their future expectations. Future expectations simply mean that individuals behave a certain way because of what they expect to happen in the near future. Evidence shows that large-scale corruption began with the oil boom in 1970; Nigerian government officials knowing that in the near future, revenue from the export of oil will no longer accrue to them decide to take the share of the oil wealth that belongs to them and their family (immediate and extended families) while they can. I remember seeing a cartoon in the newspaper; the cartoonist was exposing the sort of dysfunctional reasoning that Nigerian leaders possess. The politician that the cartoonist drew was shown insisting that until he and his family had taken their share of the national cake there was no way he was going to relinquish power. You may ask: How do these, politicians take their so-called share of the national cake? Well, some of them channel huge amounts of money into projects that exist only on paper, others do not even bother to cover their tracks, and they just ship the money in large amounts overseas contributing to the development of other countries while the citizens they swore to serve continue to wallow in abject poverty. During elections these supposed reformers come forward with captivating manifestos, however when they occupy office all of these promises are forgotten in the euphoria of the benefits of such an office and any of them (if any) who may still have good intentions upon occupying office are overwhelmed as they realize that they are not equipped, not prepared for such a position, and that they lack feasible and logical means of carrying out their intentions or plans. This should not be so; I propose that Nigerian leaders should have credible accolades that signal to the market, which is the electorate that they are capable of handling the job assigned to them and the demands of the office they intend to occupy, Job Market Signaling should become an integral part of the electoral process here in Nigeria. Also for development to take place corruption has to be eradicated, if not all of the increase in growth will still not translate to the grassroots and the standard of living will remain poor.
Furthermore, let us look closely at the concept of the invisible hand and the free market system in economic theory. These two concepts propose that individuals seek to fulfill private interest and in so doing social interest will also be fulfilled via the invisible hand mechanism. If as individual Nigerians we seek to develop ourselves; and by developing ourselves I mean developing our personalities, expanding our knowledge base, breaking new grounds, we would individually contribute to societal development. If we develop ourselves well enough, along the line we would also be developing our society. Let us remember that the developed countries are not necessarily developed because their economic policies are better than ours, no; their development can be traced to the large number of developed minds existent in their societies, in America there are over five million self-made millionaires, self-made in the sense that their wealth was not inherited or transferred via won competitions and the like, these people worked for what they have and their wealth is reflective in the society as a whole. In order to develop Nigeria into the Nigeria of our dreams we must channel our private interests toward the fulfillment of societal interests.
Economic Planning, planning is a crucial factor for success be it individual success or collective success, success is a function of strategic planning. For Nigeria to be tagged as desirable to live in we must not neglect the important role that economic planning has to play. Economic planning is simply the mobilization of resources toward achieving well-defined goals, economic planning in Nigeria has largely been unsuccessful due to many factors including corruption, bureaucracy, lack of professional economic planners and so on and so forth. Despite the long trail of abandoned plans and projects trailing the Nigerian experience I believe that there is hope for planning in Nigeria, we should not simply adopt economic planning but strategic economic planning, which is economic planning that is characterized by milestones, commitment, transparency and continuity. There should be physical evidence that the plan is being carried out; this will boost the confidence of the electorate in the government, it will also induce private companies to participate in the development process.
In all, for Nigeria to be the one of the most desirable countries to live in by 2025, each and every Nigerian should be ready to shoulder some responsibility. We should hold our leaders accountable and ensure that those who are elected into office are those who have signaled that they can take on the job, we should consciously channel our private interests toward the fulfillment of societal interest and in all we must believe strongly that Nigeria has the capability to develop, remembering that “Development is impossible if it does not first take place in the minds of men” – Carnicross