Do you know that we must salute the efforts of theGovernor of the State of Osun, Mr AdegboyegaOyetola in jump-starting the economy with capital projects to promote employment in the State? Did you read the June 12, 2019 inaugural speech of President Buhari? Did you see his plan to create 100 million jobs in 10 years, making it 10 million jobs per year, or 27, 397 jobs per day? Are you aware that with political will and robust monetary policy laced with sustained development financing and complementary fiscal measures that compel us to patronise what we produce, this objective is achievable? Have you read the free to air solutions to our problems as prescribed by His Royal Majesty, Sanusi Lamido Sanusi, the Emir of Kano?
Are you aware that last week, between 28 and 29 June, 2019, the 14th meeting of the G20 was held in Osaka, Japan? Do you know that the participating countries discussed Global Economy, Trade and Investment, Innovation, Environment and Energy, Employment, Women’s Empowerment, Development and Health? Do you know that the G20is an international forum for the governments and Central Bank Governors from 19 countries and the European Union (EU) founded in 1999 with the aim to discuss policy pertaining to the promotion of international financial stability? Do you know that the G20 economies together, account for around 90% of the gross world product (GWP), 80% of world trade , two-thirds of the world population, and approximately half of the world land area? Do you know that the United States and China seized the forum to resume talks to arrest the on-going trade wars between the two countries and the world? Do you know that President Putin called trade liberalism an obsolete idea and that protectionism is key? Do you know that Nigeria is not protecting its local industries enough?
Do you know that we need such strategic interactions now as Nigeria accounts for nearly 20% of continental GDP and about 75% of the West Africa n economy? Do you know that it is a little sour to state that despite this dominance, its exports to rest of Africa are estimated at only 12.7%, and only 3.7% of its total trade is within the Economic Community of West African States? Do you know that the economic outlook needs to turn up if truly we need to create 27,397 jobs per day? Have you been told that countries with an abundance of natural resources tend to have less economic growth, less democracy, and worse development outcomes than countries with fewer natural resources?
The year was 1993. Richard Auty, an economist, analysed how countries rich in mineral resources were unable to use that wealth to boost their economies. In his study, he showed how countries rich in mineral resources had lower economic growth than countries without an abundance of natural resources. Are you aware that investigations revealed that the manner in which resource income is spent, system of government, institutional quality, type of resources, and early or late industrialization, all have been used to explain successes and failures of countries to be or not to be in the net of paradox of plenty? The ‘Spectator’ cuts in : “It is generally observed, that in countries of the greatest plenty there is the poorest living”
Do you know that the IMF has classified 51 countries as “resource-rich”, countries which derive at least 20% of exports or 20% of fiscal revenue from non-renewable natural resources? Are you aware that 29 of these countries are low- and lower-middle-income countries including Nigeria? Do you know that the common denominators of these 29 countries include: extreme dependence on resource wealth for fiscal revenues, export sales, or both; low saving rates; poor growth performance; and highly volatile resource revenues? How does this happen? You care to know? Come along, please.
Do you know that the prices for some natural resources are subject to wide fluctuations? Do you know that crude oil prices rose from$10/bbl in 1998 to $145/bbl in 2008? Do you know that this volatility played havoc with government planning and debt service? Are you aware that these abrupt changes in economic realities provoked widespread breach of contracts and end of social protection, eroding the rule of law and popular support? Do you know that where governments choose to borrow heavily in foreign currency, as this appears an attractive option by lowering the cost of interest payments on the foreign debt as they may be considered more creditworthy, due to the existence of natural resources, the debt servicing becomes an issue when there is price slump?
Do you know that at this time of boom, economic diversification may be delayed or neglected by the authorities in the light of the temporarily high rents that can be obtained from limited natural resources? Are you aware that the abundant revenue from natural resource extraction discourages the long-term investment in infrastructure that would support a more diverse economy? Do you know that this lack of investment leads to negative impact of sudden drops in the price? Do you know that occasional attempts at diversification that may occur are often grand public works projects which may be misguided or mismanaged by extreme corruption because of surplus oil boom? Do you know that authorities of such countries may be persuaded in meddling in the internal affairs of sister countries in the guise of playing ‘big brother role’? Do you know that if the resource prices fall, however, the governments’ capacity to meet debt repayments will be reduced and graduates to a political and economic issue? Do you know that this is what is happening now to Nigeria and Venezuela?
Do you know that in many poor countries, natural resource industries tend to pay far higher salaries than would be available elsewhere in the economy as many workers will like to migrate to oil companies? Do you know that this tends to attract the best talent from both private and government sectors, damaging these sectors by depriving them of their best skilled personnel? Do you know that these natural resource rich countries crowd-out of human capital by relying on natural resource exports and tend to neglect education because they see no immediate need for it? Do you know that they tend to neglect agriculture and manufacturing as they have enough surplus foreign exchange to import food, drugs and other amenities rather than encourage local manufacturing? Do you know that the authorities of such countries prefer foreign contractors to handle their few infrastructure in order to create ‘Abacha Loots’ off-shore?
Do you know that natural resources are a source of economic rent with a potential source of conflict ? Do you know that while the security outfits of government are up to defend the government’s assets, their top brass may be compromised to let justice face the wall? Do you remember the exploits of Asare Dokubo and ‘Government Okpolopolo‘ as footnotes of restiveness in the Niger Delta of Nigeria? Do you know that resource wealth may increase the vulnerability of countries to conflicts by undermining the quality of governance and economic performance popularly called the “resource war”? Do you know that careless access to resource revenues by belligerents can prolong conflicts as suggested in a study that the rise in mineral prices over the period 1997–2010 contributed up to 21 percent of the average country-level violence in Africa?
Did you try to find out why Iraq invaded Iran and Kuwait under Saddam Hussein? Why did Libya invade Chad repeatedly in the 1970s and 1980s? Why did the western powers dismantle Libya and Iraq? What are the secret motives behind the United States’ hostile relations with Iran? Do you know that these conflicts are patterns of petro-aggression found in oil-rich countries to bring them to their knees? Do you know that as of 2016, the only six countries whose reported military expenditures exceeded 6 per cent of GDP were significant oil producers, namely: Oman, South Sudan, Saudi Arabia, Iraq, Libya and Algeria? Do you know that it has been found in a study that oil wealth might negatively affect democratization and that it strengthens authoritarian regimes, making transitions to democracy or the much-touted federalism a pyrrhic dream? Do you know that it has been found out that oil wealth weakens democracies? Do you know that a 2019 study found that oil wealth is associated with increases in the level of personalism in dictatorships? Do you know that the oil-rich states provide citizens with generous benefits and low taxes, thereby making them less responsible in terms of tax-culture? Do you know that it has been correlated that rises and falls in the price of petroleum are in tandem with rises and falls in the implementation of human rights in major oil-producing countries? Can you imagine the gruesome way in which Saudi Arabia assassinated Kashogi in its embassy in Turkey and how the Crown Prince is still enjoying red-carpet receptions in most capital cities of the world, including Washington? Do you know that corrupt members of national governments may collude with resource extraction companies to override their own laws and national interest?
Are you aware that research showed thatresource-poor economies like Singapore, Taiwan or South Korea, by contrast, spend enormous efforts on education, and this contributed in part to their economic success as ‘East Asian Tigers’? Do you know that the oil and gas industry has lots of influences in the world today? Do you know that this is why the costs of other commodities increase with increase in the cost of oil and gas? Do you know that this is the reason it takes a political will to regulate the cost of oil and gas in order to ensure that the costs of other goods and services are reduced or kept optimal? Do you know that no modern society can run smoothly without oil and gas as at today? Do you know the oil sector is divided into two sectors, namely: Upstream sector and Downstream sector.
The upstream sector of the oil and gas industry involves processes including the searching for and the recovery of crude oil as well as its production. In the upstream sector, discovery or exploration of crude oil takes place. Do you know that Nigeria has a lot of problems in this sector? Do you know that Nigeria has about 606 oil fields with most less than 100 million bbls of excractable reserves? Are you aware that Nigeria has about 176 trillion cubic feet of natural gas reserves? Do you know that only 12 per cent of the gas deposit is re-injected while about 75 per cent is flared because of inadequate gas infrastructure? Do you know that a UNDP Report revealed that there were 6,817 oil spills between 1976 and 2001 which resulted into a loss of over 3 million barrels of oil of which 70 per cent was not recovered? Do you know that 69 per cent of these spills occurred off-shore. 25 per cent in the swamps and 6 per cent on land? Do you know that at the upstream sector, 50 per cent of the spills occurred through tankers and pipeline accidents, 28 per cent through sabotage , 21 per cent through oil operations and 1 per cent through mal-functioning equipment? Do you know that vandals had caused shut down of pipelines, environmental pollution, fire-outbreaks, decrease in electricity and loss of lives? Do you know that over a million barrels of crude oil are lost to corporate thieves per day? Do you know that unknown to Nigeria, for several years, oil companies based their total production figures on unconfirmed volume estimates, using dip-sticks to make volume calculations?
Do you know that the engagement of Molecular Power System to carry out due diligence on the oil and gas exports in the country revealed certain sharp practices? Do you know that the company reported that between 2011 and 2014, there was a short-fall of 727,460 metric tonnes from shipments to seven countries estimated at over $461 million? Do you know that kidnapping and occasional bombings are still wrecking havocs in the area? The noticeable problems of the sector include: dysfunctional management and information, the challenge to increase the production of liquid fuels, the issue of non-renewability of crude oil, operational challenges due to obsolete technology, reduction in the demand and supply of crude oil, the challenge of environmental pollution, fluctuating crude prices, economic uncertainty, inadequate skilled personnel and corruptive marketing system. This is the paradox of plenty
Do you know that the down stream sector is challenged by problem of appropriate petrol and gas pricing? The downstream sector of the oil and gas industry involves the refining of the crude oil and/or raw natural gases obtained in the upstream sector as well as selling or distributing the products obtained. Many products are derived from the refining of crude oil and these may include diesel oil, liquefied petroleum gas (LPG), asphalt, petroleum coke, gasoline, kerosine, fertilizers, antifreeze, plastics, rubbers, pesticides, synthetic rubber, jet fuel and many more. Do you know that the downstream sector that relates with the consumers? Are you aware that the facilities involved in this sector include petrochemical plants, oil refineries, natural gas distribution companies, retail outlets to mention but a few? Do you know that there is a challenge in the area of Business Joint Ventures to reduce cost and as fast as possible? Do you know that risks should be shared and there should be diverse commercial terms? Do you know that state of the art technologies should be transferred in order to aid efficiency at all levels and value chains of the industry? Do you know that the country needs gas infrastructure as soon as possible to stem down flaring of about 75 per cent of the reserves? Do you know that the world has now moved to robotic technology in the upstream and down-stream sectors? Do you know that this country needs better logistics in the distribution activities for oil products? Do you know that we need to improve in health, safety and environmental security? Do you know that our refineries need modernization and expansion that will be efficient, flexible and integrated refineries?
Do you know that pricing is a major challenge in this sector in Nigeria? Do you know that supply of oil comes from challenging and remote regions of the world and this result to high oil prices? Do you know that if the production cost of crude is high then prices will also get high and because of the above mentioned factors, crude prices are relatively high in the world? Do you know that is the reason most developed countries are looking for other sources of energy? Do you know that the increased cost of services is another huge challenge facing oil and gas? Do you know that this increased cost cuts across the value chains from exploration to production as well as refining and transportation? Do you know that this simply results to higher commodity prices and it has driven the industry activity to a point where the service industry lacks the capacity to respond? Do you know that in order to keep the products available at affordable prices, governments divert other funds for education, health, infrastructure and social protection to pay subsidies to importers of oil products?
Hurray! Do you know the Governor of the Central Bank of Nigeria has come to our rescue as he unfolded his vision for the next five years to maintain sound financial structure, promote monetary stability, safeguard the value of naira and stable exchange rate, prove a financial adviser to the federal government in the areas of price and exchange rate management, development financing, building foreign reserves and employment creation? Do you know that CBN will continue to build the external reserves which currently stand at $47.3 billions, restrict 43 items (that include textiles) from accessing foreign exchange to impact on manufacturing and real sector growth through import substitution and employment generation? Do you know that we have to sustain our production capacity in rice and other grains? Do you know that it is our collective duty to ensure that the potential and prospects of the economy are optimally realized? Do you know that economic recovery requires the joint efforts of everyone, if we must create 27, 397 jobs per day? Do you know that Mr Emefiele said his next five years would pursue an economic agenda that would make the economy grow by double digits through targeted programmes that would boost output, work with Deposit Money Banks to boost credit to the real sector as well as the creative and education sector, increase support to farmers in order to bring down the rate of inflation? Do you know that growth in agriculture was lackluster in 2018 due partly to clashes between farmers and herders coupled with flooding in key middle-belt regions and continued insurgency in the northeast? Are you aware that on the macro-economic front, the delay by the National Assembly in approving the 2018 budget affected implementation and increased fiscal uncertainty by pushing the bulk of spending to the second half of the year? Do you know that by June 2018, the stock of public debt stood at $73.2 billion, up from $71.0 billion in 2017, representing 17.5% of GDP? Can you remember that in November 2018, the government issued a Eurobond of $2.9 billion, which reflected its new debt management strategy of prioritizing foreign debt to mitigate the high financing costs of domestic borrowing?
Do you know that real GDP is projected to grow by 2.3% in 2019 and 2.4% in 2020 as implementation of the Economic Recovery and Growth Plan gains traction? Do you know that the slide in oil prices from late 2018 coupled with an output cut imposed by the Organization of the Petroleum Exporting Countries poses a risk to the economic outlook? Do you know that the National Assembly’s approval of the # 8.83 trillion 2019 “budget of continuity” has been delayed due to presidential elections that came in February 2019 and the subsequent election cases in Elections Tribunals? Do you know that the Federal Government needs to gain more traction as soon as the cases are decided to start the tall agenda of 10 million jobs in ten years? And now the issues!
In the new order of job creation, will the government just create enabling environment as usual or involves itself in establishing industrial clusters and staple crop processing zones to give firms a competitive edge through access to raw materials, skilled labour, technology, and materials? Will the Government allow the ‘Town’ and the ‘Gown’ to cross-breed ideas in research to activate our industrial templates? What will be the approach of government to Osogbo Steel Rolling Mill and Machine Tools already sold to investors that are not interested in the industries nor their job potentials? What will be the country’s new Power Sector Reform that ceded power to private powerless teams that are only interested in keeping Nigeria at the spectrum of less than 4,000 megawatsof electricity at the best of seasons? What happens to a high profile of recurrent expenditure in our budget at the expense of capital expenditure? Do you know that by this stroke, the government of Nigeria must take Emir Sanusi serious on his suggestions to make our country great again? What are his suggestions? You care for them? Come along, please. The voice of Emir Sanusi cuts in: “Nigeria is bankrupt. We must face reality. Since I have decided to come here, you have to accept what I have said here. And please, if you do not want to hear the truth, never invite me.”
Are you aware that His Majesty, Lamido Sanusi II, the Emir of Kano, has raised the alarm over unfavourable economic policies leading the country to bankruptcy, urging President Muhammadu Buhari to remove the fraudulent subsidy regime? Sanusi, who was former governor of the Central Bank of Nigeria, made the revelation on Tuesday last week, while speaking at the ongoing 3rd National Treasury Workshop organized by the office of the Accountant General of the Federation holding in Coronation Hall, Government House, Kano. He said: “The country is bankrupt and we are heading for bankruptcy. What happened is that the federal government do pay petroleum subsidy, pay electricity tariff subsidy, and if there is a rise in interest rates, Federal Government pays. What is more life-threatening than the subsidy that we have to sacrifice education, health sector and infrastructure for us to have cheap petroleum. If truly President Buhari is fighting poverty, he should remove the risk on the national financial sector and stop the subsidy regime which is fraudulent.
Since I have decided to come here, you have to accept what I have said here. And please, if you do not want to hear the truth, never invite me. So let us talk about the state of public finance in Nigeria. We have a number of very difficult decisions that we must make, and we should face the reality. His Excellency, the President said in his inaugural speech that his government would like to lift 100 million people out of poverty, it was a speech that was well received not only in this country but the world-wide.The number of people living with poverty in Nigeria are frightening. By 2050, 85 percent of those living in extreme poverty in the world will be from the African continent. And Nigeria and the Democratic Republic of Congo will take the lead. Two days ago, I read that the percentage of the government’s revenue going to debt services has risen to 70 percent. And then, you continue subsidizing petroleum products; and spending N1.5trillion per annum on petroleum subsidy. And then we are subsidizing electricity tariff. And maybe, you have to borrow from the capital market or the Central Bank of Nigeria to service the shortfall in the electricity tariff, where is the money to pay salaries, where is the money for education, where other government projects.”
Are you aware that following the statement made by Muhammad Sanusi II, the Emir of Kano, over unfavourable economic policies leading the country to bankruptcy, the Chartered Institute of Bankers of Nigeria (CIBN) and the Nigeria Employers Consultative Association (NECA) have joined the call for the President Buhari-led federal government to scrap the fuel subsidy regime as the way out of the woods to get employment for those who need it, to get food to the table of the famished, education for all, health for all, social protection for all including payment of retirement benefits. Do you know Government should educate the Labour movementand the students about the positive tendencies of this suggestions? Do you know that it is the narrow path we can take to escape from the present paradox of plenty? It is bitter but it is the absolute truth, Comrades. We must race fast from this paradox of plenty. The voice of the DGl of NECA, Mr. Timothy Olawale, cuts in:
“As far as we are concerned, fuel subsidy is a conduit for corruption. It is a means of enriching certain individuals. Such money going into fuel subsidy should be channelled into a productive sector of the economy and not consumption.”