Nigeria and oil question: Balancing our development path
The marriage between Nigeria and oil can best be described using the title of the faculty lecture by Professor Akin Iwayemi in 1993, ‘Oil: the Good, the Bad and the Ugly’. You get from oil whatever you bargain for.
I have divided my presentation into something similar to the story of the Israelites: The coming of Moses and the Deliverance from Egypt - the hope of the Promised Land: Journey out of Egypt: the law given, broken and the consequences; expecting the new messiah; diversification to the Rescue; the coming messiah: My vision of growth – balancing the role of oil and non-oil sectors and the way forward.
The coming of Moses and the deliverance from Egypt
The Holy Book wrote about the Jews spending 430 years in slavery in Egypt. They were oppressed and denied their basic rights. They groaned and cried and the Lord heard their cries and sent Moses to deliver them from captivity and take them into the Promised Land that He (God) had covenanted with their forefathers. After the demonstration of God’s power, the children of Israel left Egypt and finally got their revenge from
their oppressors. However, a journey that should take 40 days, eventually took over 40 years.
Nigeria’s history under colonialism was not as long as what the Israelites went through, and perhaps, in some sense, may not be as brutal. Nevertheless, no man wants to live under servitude to another man or in any form of bondage against his will. Several nationalists, including, Herbert Macaulay, Obafemi Awolowo, Nnamdi Azikiwe, Anthony Enahoro, Sardauna of Sokoto, and several others fought the colonialists until independence was won in 1960.
Shorty before its political independence, Nigerian economy was heavily dependent on agriculture – cocoa in the West, palm oil in the East and groundnut in the North. These crops were grown and exported to our colonial masters. It is debatable whether we got the right price for our exports and whether the right amount we earned came back to Nigeria. After independence, agriculture remained the bastion of the Nigerian economy – it provided the bulk of government revenue through taxes and levies on farmers and their produce and through implementation of the policy of stabilisation by the then marketing boards that ensured farmers on the average were paid lower than the value of their exports. Agriculture was the major source of employment and foreign exchange earning of the country. Therefore, given the relatively large number of people engaged in agriculture, income inequality was low and income distribution was fairly well distributed. The gap between the richest and lowest quintiles of the population was moderate.
In spite of our sole development on agriculture, the development gap between Nigeria and comparator countries was low. Our indices of development were not far from those of India, China, Indonesia, Singapore, South Korea, Malaysia and the likes. Nigeria’s GDP per capita in 1960 was higher than China, India and Indonesia. The gap between Korea, Brazil, and Malaysia was also moderate. Saudi Arabia and South Africa had substantial head start over Nigeria. However, these countries, especially, Korea, Malaysia, Brazil, Saudi Arabia and even South Africa opened up significant lead over Nigeria two decades after 1960. Korea’s per capita GDP for example was 32 times that of Nigeria in 2000, compared to just 1.7 times in 1960; Malaysia was 11 times compared to 3.2 times in 1960. While the gap has narrowed in more recent times due to improved management of the economy, aided by our rebasing, if we had pursued the policies and maintained the caliber of leadership we had at independence, we could have stayed on a higher growth trajectory and managed to narrow the development gap. Perhaps, we would have been among the most diversified and developed economies in the world today.
Oil exports began in 1958, with modest exports of 5000 barrels per day (Bpd). Exports of oil began to climb up in the 1960s and 1970s. Nigeria becam
I have divided my presentation into something similar to the story of the Israelites: The coming of Moses and the Deliverance from Egypt - the hope of the Promised Land: Journey out of Egypt: the law given, broken and the consequences; expecting the new messiah; diversification to the Rescue; the coming messiah: My vision of growth – balancing the role of oil and non-oil sectors and the way forward.
The coming of Moses and the deliverance from Egypt
The Holy Book wrote about the Jews spending 430 years in slavery in Egypt. They were oppressed and denied their basic rights. They groaned and cried and the Lord heard their cries and sent Moses to deliver them from captivity and take them into the Promised Land that He (God) had covenanted with their forefathers. After the demonstration of God’s power, the children of Israel left Egypt and finally got their revenge from
their oppressors. However, a journey that should take 40 days, eventually took over 40 years.
Nigeria’s history under colonialism was not as long as what the Israelites went through, and perhaps, in some sense, may not be as brutal. Nevertheless, no man wants to live under servitude to another man or in any form of bondage against his will. Several nationalists, including, Herbert Macaulay, Obafemi Awolowo, Nnamdi Azikiwe, Anthony Enahoro, Sardauna of Sokoto, and several others fought the colonialists until independence was won in 1960.
Shorty before its political independence, Nigerian economy was heavily dependent on agriculture – cocoa in the West, palm oil in the East and groundnut in the North. These crops were grown and exported to our colonial masters. It is debatable whether we got the right price for our exports and whether the right amount we earned came back to Nigeria. After independence, agriculture remained the bastion of the Nigerian economy – it provided the bulk of government revenue through taxes and levies on farmers and their produce and through implementation of the policy of stabilisation by the then marketing boards that ensured farmers on the average were paid lower than the value of their exports. Agriculture was the major source of employment and foreign exchange earning of the country. Therefore, given the relatively large number of people engaged in agriculture, income inequality was low and income distribution was fairly well distributed. The gap between the richest and lowest quintiles of the population was moderate.
In spite of our sole development on agriculture, the development gap between Nigeria and comparator countries was low. Our indices of development were not far from those of India, China, Indonesia, Singapore, South Korea, Malaysia and the likes. Nigeria’s GDP per capita in 1960 was higher than China, India and Indonesia. The gap between Korea, Brazil, and Malaysia was also moderate. Saudi Arabia and South Africa had substantial head start over Nigeria. However, these countries, especially, Korea, Malaysia, Brazil, Saudi Arabia and even South Africa opened up significant lead over Nigeria two decades after 1960. Korea’s per capita GDP for example was 32 times that of Nigeria in 2000, compared to just 1.7 times in 1960; Malaysia was 11 times compared to 3.2 times in 1960. While the gap has narrowed in more recent times due to improved management of the economy, aided by our rebasing, if we had pursued the policies and maintained the caliber of leadership we had at independence, we could have stayed on a higher growth trajectory and managed to narrow the development gap. Perhaps, we would have been among the most diversified and developed economies in the world today.
Oil exports began in 1958, with modest exports of 5000 barrels per day (Bpd). Exports of oil began to climb up in the 1960s and 1970s. Nigeria becam
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