From excess crude to extinct crude: Which way Nigeria? (2)
Continued from yesterday
NORWAY’S buffer fund allows it to maintain a highly diversified economy and in addition, prepare for a future, when inevitably, oil will run dry.
Bjorn Vidar Loeren of the Norwegian Oil and Gas Association indicated that oil could run dry in another 50 years. Other experts estimate that oil could run out in as short a period as 30 years and gas in 50 years. However, the Norwegian government is not worried as it has made many investments which can be employed for developing new industries when the oil well runs dry.
Loeren states that Norwegian politicians have been very clever and disciplined so that when the oil age comes to an end, there will be enough money which can be converted into something else. He further indicates that it is prudent to share the revenues from oil over a number of generations rather than spending everything upfront.
The Norwegian oil management model can be followed by other resource-based economies of the world such as Nigeria in order to reduce their dependence on minerals, and launch a great economic leap forward.
In the light of the decline in oil prices, the economic outlook for Nigeria is hazy but not hopeless. A lot can still be done to reposition Nigeria and save the nation from economic collapse.
There are a number of moribund or near-moribund sectors of the Nigerian economy, such as the textile and steel sectors, in which the government can invest to provide a buffer to the oil sector in the long term.
The Nigerian textile industry is a vast empire which had been left to waste. Its history dates back to 1960s and 1970s, when several textile mills came into existence following government intervention schemes in the industry.
In 1980, the Nigerian textile market had become the third largest in Africa, with over 160 vibrant textile mills, providing over 500,000 direct and indirect jobs. By 1985, there were about 180 textile mills in the country, employing about one million Nigerians. Companies like United Nigerian Textile Limited (UNTL), Aswani Textile, Afprint, Asaba Textile Mills, Edo Textile Mills, among others, were blazing the trail as the country’s textile capacity accounted for 60 per cent in West Africa.
However, by the end of 2009, only about 34 textile companies were still functional, employing fewer than 25,000 workers. Although, the Federal Government in 2009 set up the N100 billon intervention fund (the Fund) for the textile industry, which is managed and disbursed by the Bank of Industry, the fund is yet to bring the textile industry back to its former glory. According to the Coalition of Closed Unpaid Textiles Workers in Kaduna, an estimated 600,000 people are still rendered jobless in the industry. The attempts at reviving the sector through fiscal policy and monetary intervention such as the Fund seemed to have failed to yield the desired results owing to many factors including huge infrastructural deficits and cheap imports from Asia.
ther African countries have been highly supportive of their textile industries in order to improve their competitiveness. Ethiopia, for example, attracted foreign direct investment in the textile and garment industry in recent years creating 28,000 new jobs as a result. Ivory Coast had one large textile mill; its government, however, took effective steps to check imported counterfeit textiles to protect local industry. Ghana on its part had three large textile mills and only allowed import of all raw materials, dyes and chemicals and spare parts at zero per cent duty. The Nigerian government can take necessary measures and put in place similar policies that would support and protect the nation’s textile industry.
On a related note, the revival of the steel industry holds enormous growth potential for the Nigerian economy. One of the campaign promises of the previous administration was that it would revive the steel industry. Despite the promises and massive investments, not much has been done by successive governments to revitalise this and other abandoned national treasures.
The admonishment of John Fitzgerald Kennedy is apposite: “Let us not seek to fix the blame for the past. Let us accept our own responsibility for the future.”
Opatewa, oil and gas attorney, lives in Victoria Island, Lagos. Tel: 08039651217,firstname.lastname@example.org
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