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Dear Buhari: Remove Crude Oil And Give Nigerians An Economy (READ)

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by Charles Iyare

Nigeria is the number one producer of crude oil in Africa and the sixth largest in the world. She operates a crude oil based mono-economy which accounts for about 80% of government revenue. That is why our over reliance on oil has contributed to the current down turn in our economy in the face of  fluctuating price of oil; and Nigeria’s inability to export other products.

The Niger-Delta area hosts most of the oil reserves and is bedeviled with infrastructural decay, poor roads, floods, destruction of farm lands and rivers. Many people who are farmers and fishermen have lost their sources of income as a result of oil spillage. There is also high level of poverty and unemployment. This is not unconnected with the increase in pipeline vandalism, insecurity, youth restiveness, kidnapping, cult-related violence, among other crimes that are being perpetrated in our land.

Unfortunately, successive Nigerian governments have not been able to exploit available mineral resources to improve on the lives of its citizens and engender growth.  Failure to entrench possible economic reforms has stalled the creation of enabling environment that allows institutions to thrive.  The failure to cater for the downtrodden, lack of accountability and transparency in governance coupled with self aggrandizement by those in power have plunged Nigeria into extreme poverty.

There is no gainsaying that the dwindling oil price (currently $38 per barrel) has brought untold hardship to Nigerians.  Yet, the government lags behind in its plans to diversify its economy. There have been a plethora of white paper reports on several economic retreats, summits, action plans without actions, as government continues to foot-drag on the exigency of economic diversification.

According to a publication in The New York Times titled Oil Prices: What’s Behind the Drop? Simple Economics by Clifford Krauss updated January 22, 2016, says that the United States domestic production has nearly doubled over the last several years, pushing out oil imports that need to find another home. Saudi Arabia, Nigerian and Algerian oil that once was sold in the United States is suddenly competing for Asian markets, and the producers are forced to drop prices. Canadian and Iraqi (Libya and Iraq despite the war in their countries have still managed to produce 4million barrels per day. Oil production and exports are rising year after year. Even the Russians, with all their economic problems, manage to keep pumping. Saudi Arabia’s meagre $5-6 oil price per barrel is another factor than will influence the continuous dwindling oil price that will put out high cost oil producers out of market.

According to a publication in the Guardian online news by Sulaimon Salau, on October 14, 2015 on how solid minerals can lift Nigeria’s earnings by $50b ‘‘…Nigeria stands to earn about $50 billion from her abundant solid minerals if the necessary framework is put in place to harness its mineral resources…’’ Sulaimon also said that Nigeria has been estimated to possess over 400 solid minerals, 40 of them available in commercial quantities, though only 13 of these are being exploited at present. This is believed to have dragged down the sector’s contribution to the national economy to a paltry 0.3 per cent and generating about $1.5 billion into the country’s coffers.

Nigeria’s huge solid mineral deposits should no longer be ignored. These resources range from iron ore, gold, bitumen, rock salt, gypsum, lead/zinc, bentonite/baryte, coal, Silva and gemstones, kaolin, tantalite , copper, among others in billions of tonnes. Nigeria has over three billion metric tonnes (mt)-deposit of iron -ore worth over $1 billion; 27 billion mt deposit of coal worth about $1 billion; 2.23 trillion mt of lime stone worth over $1 billion among others.

Solid mineral resources such as iron-ore can be transformed into steel and used for the production of automobiles, locomotives, ships, beams used in buildings, furniture, paper clips, reinforcing rods for concrete, bicycles, among several thousands of uses. Gypsum can be used to manufacture cement, plaster of Paris (POP) among other uses as well.

This is an indication that more jobs can be created for our teeming youths in this process. Improvement on power generation and distribution, creation of new industries can improve our economy to earn higher foreign exchange, and a stable economic growth, as well as improved social status and wealth for our country men and women.

But weak institutional and governance systems cannot steer Nigeria towards the right economic direction. There are more foreign-finished products in our markets than locally made ones.

This means that if far-reaching steps are not taken, Nigeria may fail to annex at least a whopping sum of $100 billion in the next ten years from its extractive sector, losing about N19 trillion in ten years (an equivalence of a four-year budget) and N1.9 trillion annually.

Charles Iyare is a public analyst who lives and works in Benin Cityt. This article was first published on Daily Independent

The opinions expressed in this article are solely those of the author. 

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