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Rhythm of Thought

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Oil accounts for a large percentage of government revenue in Nigeria. From its oil dependent revenue, the Obasanjo and Jonathan administrations tried building up savings to avert any melt down that might result from the volatile nature of the oil market. This led to the increase in the balance of the excess crude account from 4.22 billion dollars in August 2011 to about 9 billion dollars at the end of 2012. Nigeria supposedly playing safe at the time also launched the sovereign wealth fund with an initial capitalization of one billion dollars. These attempts at economic stability were hinged on oil.
This was the situation that welcomed the Buhari administration in 2015 as the country ran into economic rough waters worsened by the fall in the price of oil.

While presenting the 2017 appropriation bill to a joint session of the National Assembly, President Buhari said for many years, Nigeria depended on oil for foreign exchange revenues much of which have been squandered. He also revealed that in the last 18 months of low oil prices, Nigeria’s foreign exchange earnings fell by about 60%, eroding the country’s reserves in the process. Figures in the bill are indications of the enclave nature of Nigeria’s economy. The proposal is based on a benchmark crude oil price of US$42.5 per barrel and oil production estimate of 2.2 million barrels per day. Aggregate revenue available to fund the federal budget of N7.29 trillion is N4.94 trillion. Oil is projected to contribute N1.985 trillion of this amount.
Are policy makers in Nigeria truly looking beyond oil? To president Buhari, “to diversify from oil we need oil revenues”.

Conferences have been held to deliberate on Nigeria’s economic future beyond oil. One of such was the 2013 Conference of the Nigeria Guild of Editors, with the theme “Nigeria Beyond oil”. Discussants at the event looked at the consequences of Nigeria not thinking beyond oil in a fast changing world. The conclusion was that it would be a heavy set back if Nigeria failed to look beyond oil in its quest for growth and development.  

The stark reality is that the world is thinking beyond oil. In the October 25, 2003 editorial of the Economist titled “The End of the Oil Age” the magazine stated that “advances in technology are beginning to offer a way for economies to diversify their supplies of energy and reduce their demand for oil, thus loosening the grip of the product on the countries that produce it. The magazine further stated that the only long term solution is to reduce the world’s reliance on oil. 

Sheikh Zaki Yamani, Saudi-Arabia’s oil minister from 1962-1986 in the year 2000 said that thirty years from then, there will be a huge amount of oil and no buyers. He said the Stone Age came to an end not because we had a lack of stones, and the oil age will come to an end not because we have a lack of oil.
A study partly sponsored by the Pentagon entitled “Winning the oil Endgame” alludes to this. The more than 300-page report, charts a road map for getting the United States completely, attractively and profitably off oil. While going through the report, I was struck by the point that the corner stone of the next industrial revolution is winning the oil endgame. The United States and other advanced countries have triggered the end game by working on alternatives for the product.

How prepared is Nigeria for this game?

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