AFTER THE OIL WHAT NEXT?

AFTER THE OIL WHAT NEXT?
It is no figment of imagination that Nigeria is one among many countries naturally blessed with an abundance of resources, crude oil inclusive. What is ironical however is that quite a large percentage of its teaming population live below poverty line. One may attribute this to mismanagement by the leaders who at various times have been deficient in their abilities to harness such resources to the optimal advantage of Nigerians. While other resources have been completely abandoned for crude oil which incidentally is today the mainstay of the nation's economy, one is more disturbed by the ugly fact that the technical expertise required for exploration and exploitation of the resources largely depends on foreigners. What is also certain is that this resource will not last forever; it is not perennial, it surely will get dried up someday.

According to views of Experts, the Nigerian crude oil reserve is put at 35.3 billion barrels. If production continues at the current rate, of 2.35 million bbl/day the oil will not last more than four (4) decades, which is a matter of roughly forty years before it gets dried up. Saudi Arabia, the country with the largest crude oil reserve of 261.9 billion barrels has 66 years with which to get exhausted. Also Iraq with a reserve quantity of 115 billions of barrels still has about 100 years of life span. Kuwait with 101.5 billions of barrels has 100 years of sustenance. In the case of the United Arab Emirate (UAE) having 97.8 billion barrels in its reserve, can only carry on in about 97 years time. Iran’s oil reserve is put at 125.8 billion barrels and would cease to flow in about 93 year’s time.

Nigeria should have more cause to worry because it ranks lowest in terms of quantity and production life span. The question as to what happens to its economy forty (40) years after inspires a bleak future especially as there will be no more crude oil to rely on thereafter; the present generation of Nigerians and Nigerian governments need to begin a redirection of their focus away from the crude oil to renewable resources which are more environmental friendly such as Wind, Solar and Hydro energy which are in abundant supply in Nigeria; they could be harnessed and developed to replace the post-oil-age era after forty years, but by which institutions or machinery would it be realized?

Over the past few decades, Nigeria has emerged as one of the key political leaders in Africa. Despite a long history of under-performance, driven primarily by leadership and visioning problems, it remains a key global strategic energy partner. It has crude oil and thus the capacity to influence the dynamics of global commerce and industry. But when our oil reserve gets exhausted, we will witness dramatic national transformations with enormous consequences. Oil has been the driving force of Nigeria's economic wellbeing. Oil dominates our foreign earnings. The progress we made in agriculture before the dawn of petroleum has been left behind.
However, the challenge for Nigeria is not necessarily what happens now, but what happens when the oil wells dry up. In others words, what would be the position of Nigeria, politically and economically, when the country can no longer generate foreign exchange from the sale of oil.

Our nation remains governed in a political system of extreme stagnation and avalanche partisanship. A system that breeds venoms with capacity to destroy the heartbeat that keeps the nation moving forward. It has created a syndrome that continues to prevent the nation from utilizing the gains of oil sales to advance the citizens, the infrastructure and give Nigeria a needed clout in the global arena.
The nation has failed in many areas because our past leaders are entangled in managing government processes and political pandering instead of being servant leaders, by serving the interests of the masses. However, a look into Nigeria's future without oil will be challenging. At least, the nation will come to reality after years of poor judgments and mismanagements which have caused deep pains on the citizens.

There will be serious challenges in various sectors of the Nigerian Economy as government loses its capability and propensity to spend. Economic crisis of unmitigated proportions crystallizing in collapsed economic sectors, governmental and societal institutions will be prevalent. The banking and finance sector of the economy will witness great upheavals as government’s patronage dwindle. Currently, Nigeria depends heavily on fossil fuel for her energy needs, despite the best efforts of government to generate electricity, Nigerians are perpetually in darkness, the post oil and gas era will no doubt witness severe energy crisis. Sadly Nigeria is currently not doing anything realistic in harnessing alternative energy sources apart from fossil fuel.

The first challenge however, will be cleaning the empty oil wells. It is unfortunate that the oil companies, who despite knowing the public health and the environmental impacts of gas flaring, continue to flare gas recklessly in Nigeria. We hope they will have the morality to clean those wells and restore them to pre-drilling ecological landscapes before they depart. Within Africa, Nigeria's influence will be tested. Since our nation has not developed any creative technology that will sustain the economy, some African nations may dominate us. South Africa could become like a hegemonic empire in Africa with extreme power. That nation continues to invest massively in education, giving Africa its best universities, and attracting the best African brains.

On the international scene as Nigeria lose her ability to influence matters in the continent, South Africa would become unrivalled and could rule Africa. As the economies and political power of other African nations such as Ghana, Libya (which continues to deport Nigerians in hundreds) and Egypt grow; the capacity of Nigeria to define and influence the African Union will shrink despite enormous opportunities for new Africa leadership to position the continent competitively. As South Africa takes the central role, there will be broad impacts across the Economic Community of West African States (ECOWAS) region. A post-petroleum era will produce massive complications and fundamental dislocations in Nigeria's capacity to influence the region as South Africa becomes more prosperous owing to a highly diversifying economy. As it buys into more African markets, its abilities to influence governments will become more pervasive and that will dwarf Nigeria's influence. Also, there will be tendencies for more educated Nigerians to move abroad with potential strangulation on the economy.

Politically, Nigeria could emerge as a true federal system from its present quasi-federal structure. While the Nigerian union will be continuously morphed to remain strong, the states will be expected to go back to fundamentals to develop ways to function because central funding will diminish. Without crude, assessing external (international) loan will be difficult and many Nigerian states will be challenged to be accountable and innovative with their resources. They will establish structures and institutions to create wealth and inter-states competitions will emerge. This will be followed by effective tax and revenue collection techniques. From federal parliament to state assemblies, the political system will be revamped. The present system which is extremely expensive and supported by the largesse of the crude oil will be transformed. Some states will become creative in representative system in order to save cost. I see a scenario where some states will sponsor representatives on part-time with the number of positions reduced by half. Yes, new politics will evolve and the democratic system will be seriously tested.

One cannot imagine what will happen to education in Nigeria if it cannot be funded properly with the enormous oil revenue. In the post-petroleum era, the present model of higher education in Nigeria will collapse and government will request schools to fund themselves with minimal central supports. Schools will have to become very competitive and innovative to attract grants and revenues to survive and grow. Unfortunately, it must still overcome the present lost years of decay perpetuated by poor funding and outdated model.

SOLUTIONS:
The challenges that will confront the Nigerian economy in a post oil and gas dispensation would be diverse and enormous. The unacceptable state of Nigeria's over-dependence on an oil based economy is most galling given Nigeria's enormous endowments of natural and human resources. This is more so given the fact that Asian countries, such as Singapore and Malaysia, with similar colonial heritage and attributes attendant thereto, and similar natural resource endowments, have recorded significant successes in the development of their economies since 1965 when they were at par or even behind Nigeria. Singapore, some 30 years later had a per capita income of US$10,000; whilst that of Nigeria was US$300.

Nigeria's economic decline, especially during the last 20 years is illustrated by the fact that per capita income, which was US$1,000 in 1965 had declined to US $300 by 1998. Within 18 years, Nigeria had declined from being a low middle income country and amongst the fifty richest countries in the world, to one of the 30 poorest. This is unacceptable, it is time to plan ahead for the post-oil-age by investing on healthy and viable programmes that will enhance the living condition of people. In the contemporary context, this is the time to think ahead to generate ideas that would sustain the next generation because when they are left in this state of inertia, the concomitant effect could be too devastating.

Human Capital Development:
The nation still has time to prepare for the post-petroleum era. It has to invest in education. This include diversification of Ideas I hope you note from what we are saying that the problem could not always have been just implementation, as is popularly asserted. There is need to open our minds and diversify our ideas and our thinking as well. There are many wrong ideas in high places in both the public and the private sectors. This is important as education remains one of the best ways to sustain any economy. It is an organic engine for national political and economic succession and catalyst for national prosperity. investment in human capital will become the major at element of capital formation. Brain power is already emerging as the major engine of economic growth world-wide. This is true of both developing and developed countries. Production will increasingly be knowledge based and an increasing proportion of the knowledge will be privately owned and protected by various forms of intellectual property rights.

Investment in ICT:
Information technology will become the main engine of economic growth. It will displace oil, just as oil displaced steel in the second half of the last century, as the main engine of economic growth. Increasing advances in information technology, especially in the telecommunications sectors, will quicken the pace of globalisation of finance and trade. The government must recognise that Nigeria's efforts to survive and grow her economy in a post oil dispensation must be effected within the context of a world economy dominated by globalisation, liberalisation and technology; especially information technology.

In India, for instance, the export of computer software as of 1999 was already in excess of U.S. $2 billion and is set to become India's largest export industry before the end of the first decade of the 21st Century. The impact of the information technology industry on the domestic economy of India is very impressive and is responsible for creating new investment and employment opportunities in India. Nigeria has those attributes which have attracted IT companies, such as Microsoft, to invest in the IT industry in India: large domestic market, skilled labour and extensive use and knowledge of the English language.
Furthermore, through a combination of investment in the application of biological, mechanical and information technology (IT), production in the agro allied sector can also be enhanced.
Solid Minerals Development:
Nothing re-affirms Nigeria’s endowment of abundant material resources more than the country’s vast solid minerals deposits, spread out across all states of the federation. Before the advent of petroleum, agriculture and solid minerals sustained our economy. In fact revenue from these sectors were initially used to develop our oil. But the lure of oil resources made us to abandon these sectors to our obvious detriment. Even when data on our minerals deposits is still being computed thirty (34) solid minerals types have so far been identified in different locations of Nigeria. Out of this thirteen (13) are actually being mined, processed and marketed. The remaining twenty one (21) mineral types although in high demand in the international market are untapped.

There is no denying the fact that solid minerals mining is strategic to the economic stability of Nigeria in a post oil and gas dispensation. For instance statistics indicate that coal alone has an export potential of 15 million tonnes per annum valued at One Billion USD. Other minerals with an equally high export potential include Barite, bitumen, Iron-ore, Gold, Limestone, and lead zinc. These 7 strategic minerals which development needs to be urgently prioritized by government, have an estimated total export potential that clearly surpasses our current oil earnings. Legislations such as the Minerals and Mining Act 2007, the Nigerian Extractive Industry Transparency Initiative Act (NEITI Act) and the Environmental Impact Assessment Act (EIA) all recently passed by the National Assembly are right steps in the right direction which needs to be sustained for economic well being of the country in a post oil and gas dispensation

Alternative Energy Sources:
Already developed countries are channelling huge resources into research and development of alternative and renewable energy sources that would enable the transition away from fossil fuels, signalling their resolve to transit away from the fossil fuel economy. Likewise, government policies and regulations are providing incentives to the private sector to expedite this shift. For instance, Denmark put in place an energy tax levies aimed at restructuring the power markets by raising a levy on conventional energy supplies, and refunding it to renewable energy power producers in the private sector (EWEA, 1991). Street and Miles (1996) also reports that prior to 1989, private developers in Denmark received a capital subsidy of up to 30% for each wind turbine erected in place of the conventional fossil fuel-based power generation facility.
Likewise in Netherlands, under the subsidized market introduction programme (IPW) introduced in 1986, investment costs for wind power were subsidized by up to 40% and this translated into an increase in capacity to 120 MW of installed wind power in 1996 (Street and Miles, 1996). In the UK, the non-fossil fuel obligation (NFFO) requires regional electricity companies in England and Wales to secure specified amounts of electricity from renewable energy sources (Street and Miles, 1996). This demonstrates that actions are already being taken to curb the use of fossil fuels in developed countries. Nigeria likewise must join this train if she must survive in a post oil dispensation.

Agriculture:
Nigeria’s decline in agriculture is pathetic, in the 60s, agriculture was the mainstay of the Nigerian economy, a major source of employment and the country's main foreign exchange earner. The country not only produced enough to feed itself, it was the major food basket for the West African sub-region. We had cocoa in the West, rubber in the Mid-West, agricultural produce and palm oil in the East and South-South, food crops in the Middle Belt and the North. Nigeria's soil spewed forth cocoa, groundnut, tomatoes, yam tubers, cassava, maize and so on. Livestock was just as abundant. The need to diversify the economy can never be overemphasized. Our over dependence on oil based resources is a time bomb waiting to explode. We need to make concerted efforts to redirect and intensify investments in the agricultural sector in order to further expand the economy for Nigeria to survive in a post oil and gas dispensation.


Fight Against Corruption:
Transparency International in their Corruption Perception Index in early 2002, pronounced Nigeria as one of the most corrupt nations in the world. This is in spite of the fact that democratic institutions had been introduced and the Anti - Corruption Commission set up. Even as at today, Nigeria occupies the 130th Position down the ladder among nations adjudged to be corrupt by Transparency International Corruption Perception Index. Again, according to a recent report by the EFCC, official corruption and fraud have cost this country about US$400 billion during the last four decades of the 20th century.
This amount is about equal to all the aid given to Africa by Western donors during the same period. Think of the infrastructure this amount of money could provide, at least it could fix our power sector which needs about US$60 billion to revamp. Think of the multiplier effect this will produce in the economy. Regrettably, more funds are still being lost by the day as Nigeria have not yet come to terms with this worrying and embarrassing phenomenon. For Nigeria to remain afloat in a post oil and gas dispensation, the fight against corruption must be strengthened and sustained, all it takes is for the government to have the political will to fight corruption, every other thing is supplementary.
Effective Tax Drive:
By official estimates, defaults in tax remittances by companies, institutions, ministries, departments and agencies annually amount to over N260 billion debt for the Federal Government. The defaults come from Withholding Tax (WHT), Pay As You Earn Tax (PAYE) and Value Added Tax (VAT). The story of taxation in Nigeria is a litany of woes, tax evasions by prominent Nigerian Companies foreigners and individuals deny the government of much needed revenue to improve the economy, a few instances will drive home this point. In a recent report by Thisday Newspapers of 15th September 2009, the Economic and Financial Crimes Commission (EFCC) said it will commence prosecuting 30 prominent companies for alleged tax evasion and tax related offences with effect from January 2010. EFCC Chairperson, Mrs. Farida Waziri, made this disclosure in Lagos at the investiture of ninth President of the Chartered Institute of Taxation of Nigeria (CITN).

The premises of Peugeot Automobile of Nigeria (PAN) were on 27th August 2009 sealed off by officials of the Federal Inland Revenue Service (FIRS) over non-payment of accumulated tax of about N1.291 billion which is from 2005 to 2008. Also in a recent development the Akwa Ibom State Government commenced legal proceedings against Mobil Producing Nigeria Unlimited and five of its executive directors over tax evasion. Mobil was accused of withholding from the state government income tax from 1998 to 2003. For Nigeria to survive economically in a post oil and gas dispensation dislocations in our tax legislations has to be corrected. There is much work to be done on Nigerian tax law and in particular in the areas of tax evasion and avoidance. Similarly our tax authorities must put in place strategies for efficient and effective tax collection as at when due. Why should the tax authorities allow PAN to accumulate tax from 2005 to 2008 or Mobil from 1998 to 2003. These anomalies needs to be corrected if Nigeria is to survive economically in a post oil and gas era.

Diversification of the Economy:
What other nations, that have done better than us, have done therefore, is to take some resources from oil and invest in other areas to yield revenues not subject to the same risks as the dominant source of revenues. Again the Government must also appreciate the imperative for Nigeria, within the shortest possible time, to become integrated into the emerging 21st Century global economy. In this regard, the government must exert concerted efforts to attract investments both local and foreign, to the Nigerian Economy.



Conclusion:
The imperatives for success are the political will and the resolute commitment of the leadership, the continuous striving for excellence and to meet international standards; persistence - staying the course for as long as it takes to succeed, patience and, of course, doing every thing consistently to carry all stakeholders along. No doubt, given the disappointments and degradation of the past, the goals and the required discipline may appear very ambitious, and the odds may appear daunting especially in the much harsher and more difficult world we are about to enter in the next millennium. However, our own achievements in the 50s, 60s and 70s, and the recent Asian success stories demonstrate that those goals are achievable with our enormous resources.