The pitiable condition of Nigeria’s future.
It is no gain saying that Nigeria would become the poorest country by 2037 because of its dramatic rise in population and slowdown in economic productivity. It is presently the third poorest in the world, according to Global Living Index, says Credit Suisse in its Annual Global Wealth Report. The former Chief Economist at Goldman Sachs, Jim O’Neil believes that corruption is a key driver for Nigeria’s growing levels of poverty with attendant misallocation of resources.
There are a lot of things that are wrong with the economic dynamics of Nigeria. Its market and economic structure from the export of crude oil, farm produce to the organization of its sub-sectors, such as industrialization, petroleum refining, agriculture, tourism, health, education and power are suffering serious inefficiencies and sectoral leakages.
Many have alleged that the nation’s managers have mismanaged the country’s economy. According to the National Bureau of Statistics, a government agency, it revealed that since 1961, Nigeria has received N118 trillion from crude oil sales, with little or nothing to show for it, as most of its state institutions are in comatose compared to other oil producing nations like Saudi Arabia, Iran and United Arab Emirate. Reports from the Nigerian National Petroleum Corporation (NNPC) show that Nigeria’s current production capacity is 2.5 million barrels per day. The country is ranked Africa’s highest producer of crude oil and 6th largest producer in the world.
The nation has not made any conscious effort to diversify its economy beyond oil. It is over reliant on crude oil and that is why the economy is deeply affected by the fluctuation in international oil price and militant activities in the Niger Delta. Manufacturing which would have helped to deepen the economic productivity has been left idle. Even the existing national budgets are not awarded in a way that it would power the industrialization sector. The multi trillion naira budgets of national and state governments fail to deploy local technologies and the involvement of local research in the universities. There cannot be a home grown technology, if the government keep importing without the domestication of local skills.
The implication is that with the use of foreign technology you provide jobs for people abroad. The Nigerian economy cannot grow by prayer, but by conscious effort in growing the capacity of its youths.
For example, in India, GSM handsets are produced for as low as N1, 000 for her people which makes economic sense considering the amount of people who need to be connected via phone. And if such monies are allowed to go abroad for the importation of phones it means a lot of foreign exchange and transfer of jobs from India.
India has also conserved its resources in smart ways; it is managing its petrol chemical industry efficiently. India only imports crude oil and processes the derivatives, as to minimize the cost of production. Another advantage is that it provides employment for its teeming youth population and makes its exports competitive in the international market.
Local processing of crude oil makes a lot of economic sense because several end products are derived, which include gaseous fuel, gasoline, Naphtha, lubricants, wax (paraffin), sulphur, bulk tar (tar gravel roofing) asphalt, petroleum coke, petrol chemicals, such as olefins, polymers and for the manufacturing of fertilizers. Continue reading