Nigerian President-Elect Seeks To Shift Investment From Oil To Other Sectors

The following is a cross-post from Firedoglake where it first appeared

Nigerian President-Elect Muhammadu Buhari, who beat incumbent Goodluck Jonathan and will take office on May 29, pledged to invest more resources into other sectors of the economy like agriculture instead of relying on oil.

Buhari believes such investments will provide much-needed jobs for Nigerians, especially amid the massive drop of oil prices:

In the economy, we have to quickly turn to agriculture and mining because that is where you can do the quickest work and earn results.

In terms of oil exports, Nigeria is a top producer with the country being Africa’s largest petroleum producer. Moreover, it holds the most natural gas reserves out of all African countries.

In addition, Nigeria is a member of OPEC after joining in 1971. The country depends so much on oil and gas that it “accounts for about 35 percent of [the nation’s] gross domestic product.”

Although, being the country with the most oil includes some downsides such as corruption. Indeed, The Wall Street Journal reported on June 19, 2000 how, in spite of their profitability, resources, including oil, have been a clutch for African nations such as Nigeria.

‘With the advent of oil, the government lost its initiative,’ sighs Chidi Duru, a Nigerian lawmaker who blames the oil feeding frenzy for the decline of the country’s once-prosperous farm economy. ‘In a sense it has become a curse, not a blessing.’

Recently, allegations arose that the previous administration, under President Goodluck Jonathan, took $20 billion from oil revenues. Ngozi Okonjo-Iweala, the country’s finance minister, denied it ever occurred.

Nigeria also depends on energy imports because its refineries are not reliable enough to fuel the country. For a country once believed to be the next Saudi Arabia or Kuwait when oil was discovered in the 1950s, oil has failed to develop the country, even though it accounts for as much as 25 to 30 percent of the country’s GDP.

In 2005, crude oil production peaked at 2.4 million barrels per day, yet “began to decline significantly as violence from militant groups surged, forcing many companies to withdraw staff and shut in production.”

The problem of violence is not new for Nigeria and goes further back than the recent presence of Boko Haram. Although, it is the tip of the iceberg as journalist John Ghazvinian explained brought by oil explorations in his 2007 book, “Untapped: The Scramble for Africa’s Oil”:

[A]s for Nigeria, it is simply the doomsday scenario, amalgamation of all the worst oil has to offer Africa: corruption, ethnic hatred, Dutch disease, and rentierism, organized crime, militant rebellion, hostage taking, and sabotage of industry activity, and a country held together tenuously by a political establishment whose leaders, in the words of a US government think-tank, ‘are locked in a bad marriage that all dislike by none dare leave’

Global oil prices are already low at more than $65, down from their high of more than $100 last year, and Goldman Sachs released a report estimating prices to go as low as $45 by October.

Foreign direct investment declined in the first quarter by one-third and oil revenues set to decline even more due to an oversupply of crude oil. Moreover, foreign exchange reserves, currencies of developed countries like the U.S., are down by 20.6 percent in just one year despite rising by one percent in one month.

Still, Nigeria is no stranger to investing in other export sectors. In fact, before the discovery of oil, Nigeria was known for such industries as agriculture with Ghazvinian noting, in 1960, “the country was nearly self-sufficient in food, and agriculture accounted for 97 percent of export revenue.”

Although, as the nation relied on oil, “the country’s agricultural base saw the bottom fall out.” Living standards fell and poverty rose. In 1980, 28 percent of Nigerians were in poverty, yet the number rose to 61 percent in 2012.

For the richest nation out of all African countries, Buhari’s goals may be described as ambitious. He still will search for more oil in spite of depressed prices and will remain committed to boosting other export sectors once in office. It is fair to say, though, boost exports will not be an easy job.

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