Oil Money: Honey or poison?

Another decade has just begun. What this journey portends for Nigeria is very hazy. On Thursday December 5, 2019, Nigeria’s 2020 budget was passed. The only snag is that it is still based on the same oil income. What becomes of revenues generated by various sectors of the economy with relation to how they are used, what they are used for and other fine details remain unclear though. Actually the subject here is oil. About 46 years ago, The New Nigeria Newspaper wrote an incisive Editorial. The words of that Editorial still rings true. Below is The New Nigerian Editorial of 29/6/1974 titled: OIL MONEY: HONEY OR POISON?

It is commonplace to say that Nigeria is at the moment very lucky because of oil revenues. In a very real sense we have much more money than our system can absorb. Unofficial estimates put the figure added to our reserve this year at N200m. In many essential respects this bounty has been a blessing. It has enabled us to repay some of our outstanding foreign loans, liberalised commercial and industrial policies and has enabled increased revenue to be diverted to building of modern infrastructure commensurate with our executive capacity.

But the reverse side of this coin is painful to contemplate. The nature and source of oil money put it in a class of its own. A few years ago, a disturbing international report was published arguing in stark terms the failure of all underdeveloped oil producing countries to make more than marginal use of their splendid fortune. No effort is involved on our part. It is the foreigners who employ their capital and skills to exploit this resource and we simply receive huge autonomous additions to our national income.

Such un-worked for riches can land a country in trouble of a peculiar kind. There is soulless opulence of the few, in evil contrast to crushing poverty of the many. There is unimaginable corruption and disastrously wrong allocation of resources. Above all there is the absence of hard work without which the country cannot pull itself together. In that sense the oil money becomes poison rather than honey. How will an economic historian 50 years hence explain the relative expenditure on agriculture and on the various forms of so-called “culture”: All-African Games, Black Arts Festival and all the rest of it? He must conclude that we had taken leave of our collective senses.

Happily, in the Nigerian case, the situation is by no means irretrievable. We could deploy considerable energies and resources in producing a commodity which is more important even than oil: food. We must at all costs get agriculture on the move again. There are millions of acres lying fallow when they could be used to grow food for our burgeoning population. The setting up of the two River Basin Commissions is a great step in this direction (although the staffing has ensured that the two schemes would not take off for some time.)

Nor are we unmindful of individual state efforts. But fiddling about with N10-15m is just like one grain in a silo. We need a monumental plan. A N500m plan with the help of, say, Danish and Chinese experts under our direction, would do wonders for grain productivity in this country. We may or may not have oil in 50 years. But to survive we must have food. The ground work can be done now.

29/06/1974