Our New Oil Boom

Maik Nwosu

In a sense, Nigeria’s economy is on the roll presently. Our oil revenue has never been better. The price of oil has defied contrary predictions and soared above $140 per barrel, more than twice the projection in our current budget. So, our external reserves, which was almost non-existent a few years ago, is said to have exceeded $70 billion. This is the stuff of fables, almost. Since our national budget is fuelled by oil money, it seems as if we are actually making enough money in one year for two budget years. It’s a good position to be in.
We also seem to be in the position of contributing to the upsurge in oil prices as well as benefiting from it. There are several factors that account for this new oil boom, including the crisis in Nigeria’s Niger Delta region, where production figures have been flowing downriver for some time. Nigeria, once upon a time Africa’s leading oil producer, has already lost that position to Angola. So, while our production capacity is gradually being weakened, we appear to be recuperating our losses through the sharp rise in oil prices – at least for now. The downside is that the oil boom will not last forever, and we will require quite some money and uncommon political skill to rebuild our capacity and resolve the contentions in the Niger Delta.
But the new oil boom is also a prophecy of the greater challenges ahead. What the rising price of oil translates to in most parts of the world is a steep increase in the price of fuel or gas. In the US, for instance, where every dollar is a big deal, that price has already shot up by almost two dollars in two months. Since gas is needed to keep vehicles in motion and to heat homes and factories, higher prices translate into an increase in living and production costs. For an import-dependent economy like Nigeria, these higher production costs will get passed on to us as the eventual consumers of many of these products. So, we will actually end up paying for higher oil prices even though we are an oil-producing country. And since our excess revenue obviously does not affect our lives in a direct manner, these higher market prices ultimately increase the poverty level among the common people. So, our new oil boom also embeds a boomerang effect.
Besides, intolerable oil prices encourage a stampede in the search for alternatives to oil. That was how the search for hybrid cars that run partly on electricity began and for solar panels that rely on energy from the sun. And these alternatives, already being institutionalised, suggest that the long years of universal reliance on the majesty of oil may slowly be coming to an end. The world may never be able to turn its back on oil altogether, but this may be among the last of the oil booms in a world economy in which there has been such a boom almost every decade. Nigeria has benefited from at least three of such bazaars – the 1970s oil boom under the General Yakubu Gowon administration. From that largesse, we hosted a lavish Festival of Arts and Culture, FESTAC ’77, out of which we got FESTAC Town. Then there was the 1990s boom, during the Gulf crisis, under the General Ibrahim Babangida regime. According to the Pius Okigbo panel, much of the oil windfall then was spent on “non regenerative projects.” And now we are witnessing another oil boom, relatively. The grand question is: what are we going to do this time? What are we already doing?
The agonising thing is that the Yar’Adua administration is continuing with its small-minded shuffle as if nothing extraordinary is happening to our economy. We are constantly alerted to the increase in our external reserves as if we are bones that can be animated by statistics alone. But we are flesh, and we expect from the government a significant improvement in our living standards. And the new oil boom gives the government additional financial muscle to do so. Perhaps what the Yar'Adua government needs to do is to articulate a Declaration of Principles, setting out at least five areas that it will prioritise as emergencies and actually begin to do so. This will not solve all our problems, because we have very many, but a careful choice of emergencies can create the all-important kinesis. And that is the key: the government should empower the private sector, and not by rhetoric and tape-cutting nothings, to play an active role in Nigeria’s development.
In my reckoning, one of the emergencies should be power generation and distribution. Electricity has become the blood of the development process in the modern world. If we cannot ensure constant power supply by traditional methods, then we should seriously invest in nuclear research. Another emergency should be justice and security, including conflict resolution. Nigeria is a country where nothing happens, almost, because everything happens. So, massive investments in the power sector could eventually come to naught unless there is a way of holding everyone accountable, a process that should begin with the government all the way down to the most remote villages. To accomplish this will require an unprecedented and perhaps the most extensive review of a nation's security and justice system in the history of the modern world. Small measures will not do because the rot is already very deep within us. But we certainly need to, and we can, reinvent Nigeria as a country of rights and consequences. That will be the real boom.