Dele Sobowale
21 October 2007
opinion
WONDERS never cease! On Tuesday, October 16, 2007, I opened the Vanguard and on page 39 was an article entitled: Delta Without Oil written by Dr Emmanuel Uduaghan. And had the article not been credited to Uduaghan, governor of Delta State, I would have thought there might be two Uduaghans. Mark you, not because I underrated the intelligence of the governor, but because this article was against the run of play. Here is the governor of one of the largest oil-producing regions, not only in Nigeria, but also in the world, boldly coming out to think ahead by thinking the unthinkable.
Hitherto, the emphasis had been on getting a bigger slice of the oil revenue, resource control, etc. And those issues are still valid. As far as I am concerned, there should be return to true federalism under which every state will keep for itself, at least, 50 per cent of the revenue derived from that state and the balance should go to the distributable pool from which the state will again draw its fair share.
But, Uduaghan has gone far ahead of the rest of us by asking us to start the process of investing in those areas that are more sustainable for our future growth and development. I could not agree more with the governor and I pray that he will use his God-given position of leadership to start the process of putting Delta State on the path of progress that will in the future, not depend solely on oil. Permit me to just add a few more reasons to the list Uduaghan has provided in his excellent essay to prove his point if not for anything else, but to register my unflinching support for this crusade if he intends to launch one.
Brief history of oil prices: Today, the world is again experiencing a rising surge in crude oil prices. Today, Tuesday, October 16, 2007, it is at an all-time record high of $85 per barrel. Oil producers, who incidentally are also some of the least technologically advanced nations, experience bank accounts bursting at the seams. Most people in those countries are excited, but the more discerning are becoming alarmed. The latter are worried not because they are less patriotic but because they are aware of historical precedents which might be repeating themselves.
Back in 1973, immediately after the Yom Kippur War between Israel and the Arab countries contiguous to it, resulting in another victory for the Israelis, the oil- producing Arab countries teamed up with Nigeria and other non-Arab nations to form the Organisation of Petroleum Exporting Countries, OPEC, aimed at controlling the production and price of crude oil. But, at the beginning, the objective was more political than economic - they wanted to curtail the supply of crude oil to the west and through artificial scarcity, increase the global price of crude. The measure succeeded in the short run. But, it backfired in the long run.
Within weeks, the price of a barrel of crude which hitherto had hovered around 70 cents per barrel, skyrocketed to over $3 per barrel. Within three years, it was over $18 per barrel. Suddenly, the oil- producing countries had more money than they had the capacity to handle; they also induced global inflation on an unprecedented scale; factories closed down in the manufacturing west and Japan, unemployment rose drastically. The G7 countries i.e (USA, Japan, Germany, Britain, France, Canada, and Italy), the world's seven strongest economies at the time, led by the US, regarded this as the economic equivalent of war.
Indeed, President Jimmy Carter launched what he called a Moral Equivalent of War, MEW, the objective of which was to ensure that the U.S reduced its dependence on imported crude oil. Before long, throughout the developed world, a multiple-pronged attack was launched on the oil- producing countries; it was partly economic, partly political (including supporting coups in oil-producing countries), mostly technological. It took only a few years for the developed countries to have most of the funds recycled back to them through rising cost of imports and white elephant projects which the oil producers were lured into establishing.
Since the oil-producers were mostly backward and import-dependent, they were encouraged to invest most of their new found wealth on projects requiring a high percentage of imports and requiring perpetual import of spare parts if they were to be sustainable. The National Theatre was one example of governments of oil-producing countries proving to have more money than sense. Today, the project that was hurriedly approved in anticipation of the wasteful FESTAC 77 was designed to ensure that virtually everything but sand and water was imported.
General Gowon's reported pronouncement that: "Money is not our problem" and the profligacy that followed from it account for much of our predicament today. The attitude of his successors did not help matters either. Invariably, they failed to invest in ventures that were sustainable and which could reduce our dependence on crude.
For several years, from Gowon to Murtala Mohammed, Obasanjo and Shagari, the price of crude inched steadily upwards providing the false comfort that we were on an eternally upward moving escalator.
That was until about three years into Shagari's administration when the escalator reversed itself and started moving downwards. By the time Buhari and Babangida came to power, the price of crude had dived below $10 per barrel. But, the nation, meanwhile, had developed an appetite that only $18 to $20 per barrel crude could satisfy. By 1986, we were a debtor nation. And despite another windfall in 1991, occasioned by the Gulf War, we remained in debt until the escalation of crude oil prices which began under Obasanjo in 1999 enabled us to get out of the debt trap. Today, we are again living with a false sense of security. And, it is that complacency that Uduaghan is warning against. The alarm could not have come too soon. And we ignore the governor only at our own peril.
Our present predicament: Africans in general and Nigerian leaders in particular learn very little from history. That explains why we fail to recognize wars when we are engaged in them and we end up losing. The price of crude now approaching and might even exceed the $100 per barrel mark represents to the insightful, like the governor, the fact that another round of global economic conflict centred on oil might be underway. And, as in the past, we are currently winning. But, unless we experience a great paradigm shift, we would again in a few years be back where we started - at the bottom of global economic ladder.
Recipients of looted funds
And the reasons for the pessimism are not hard to discover. From 1999 to 2007, over N16 trillion was collected and distributed by the three tiers of government in Nigeria. That was more money than all the governments of the country put together from 1960 to 1999. Yet, we have very little to show for it although, Britain and other countries that were the recipients of looted funds from Nigeria benefitted a lot. Once again, as in the 1970s, the windfall of dollars is already being recycled back to the developed world by fraudulent public officials.
It is in order to break this vicious cycle that Uduaghan and people who think like him are urging the people of Delta State to start preparing for a future without oil. Furthermore, even the most optimistic projections place our oil reserves at no more than forty years at best. Forty years is nothing in a nation's history. So we must develop a vision for hundred, two hundred or more years.
We might not even have forty years of oil because technological advancement might have rendered oil less valuable by then. The internal combustion engine which accounts for a great percentage of oil demand might be altered. As it is, an increasing percentage of cars are running on other fuels and rising oil prices will only make them more attractive as alternatives to petrol. All the signs point to a future in which the world will depend less and less on petrol or crude oil. Thus for countries depending on earnings from crude, planning for a future without oil is an indispensable survival strategy.
A modest proposal: One thing is certain; over-dependence on oil is not just a Delta State problem but a national calamity. A prosperous Delta State cannot peacefully co-exist with impoverished states surrounding it. So, the governor, as a patriotic Nigerian, should expand the horizon of his appeal. He should actually lead the discussion on Nigeria without oil by arranging a national seminar in Asaba, as soon as possible, bringing eminent people from Nigeria and abroad to start charting the course for a future of this country without the one commodity that has brought us more pains than gains. Should he achieve that, he would have expanded the bush path to salvation to a single lane road which others can transform into an express road in the future for our country's sake. But, he would have taken the credit for it.
After reading the article from the governor as well as the development plan for Delta State by this new government, one has cause to believe that Delta State is poised for great things starting in the next four years. I want to thank Uduaghan for the courage and foresight which this piece has demonstrated. This, we hope, will not be the last of such interventions.
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