After 57 years of motion without movement, the rulers of Nigeria might have fi nally realized the futility of running a one-handed economy. Th e last recession triggered by an odd combination of tumbling oil price and elusive production target plunged the exchange rate of the naira to an all-time low of N520 to the dollar in February 2017 and placed the rulers on notice that Africa’s largest economy was heading in the direction of Robert Mugabe’s Zimbabwe.
It has now dawned on government that Nigeria’s shameful dependence on imported food and refi ned petroleum products is a calamitous development and that Nigeria must attain selfsuffi ciency in these items to overcome economic despondency.
With youth unemployment hovering menacingly around 45 per cent, population growing at 3.5 per cent and the economy lumbering along at below one per cent, the suff ering in the land is becoming unbearable. A skewed income distribution system keeps 70 per cent (110 million) of the 182 million Nigerians toiling below poverty line. Th ings are really bad, but there appears to be a glimmer of hope at the horizon.
Th e reason for a measure of optimism is based on two major policy thrusts of the federal government in recent times. Th e fi rst is in agriculture. Nigeria may be decades away from full-scale mechanized farming, but government’s new policy in agriculture is obviously boosting food production.
For the fi rst time in the history of Nigeria, government at all levels is encouraging the construction of sophisticated rice mills for the processing of the grains from the bumper harvest of the last one year engendered by very friendly weather. Th e involvement of Lagos State government in rice production in collaboration with Kebbi State government has given Lake Rice a chunk of the market at an incredible price of N12, 000 per 50kg bag.
During the last Muslim celebration, Lagos State government thrilled the market with 70 truck-loads of Lake Rice and drove down the price of imported rice from N18, 000 to N14, 000 per 50kg bag.
With Lagos State government going into a similar collaboration with Kano State for rice production, the scene is set for the eventual fl ooding of the market with local rice. Aliko Dangote’s venture into rice production is another source of optimism for attaining self-suffi ciency in rice production and staging a determined fi ght against youth unemployment.
Th ose who were urging Nigerian youths to create jobs for themselves by returning to agriculture were just being hypocritical as they only wanted the youths to engage in subsistence farming with machetes and hoes. No one can drive young graduates to the farm with back-breaking implements. Now with Dangote luring youths back into agriculture with mechanized farming implements, the response is impressive.
He would end up killing two birds with a single stone. While the days of rice imports are numbered, the new measure is also giving youth unemployment a hard knock. Th e next glimmer of hope emanates from the recent approach of both the private sector and the federal government towards ensuring self-suffi ciency in refi ned petroleum products. Nigeria’s four refi neries are one huge cash guzzler.
Th ey gulp down billions of dollars in spurious turnaround maintenance (TAM) and at the best of times, chip in less than seven million litres of petrol daily. Data from the National Bureau of Statistics show that Nigeria spent N2.5 trillion on refi ned petroleum products import in 2016.
Th at is about $10 billion at current exchange rate. Th e imported infl ation engendered by refi ned petroleum products import is solely responsible for the high pump price of fuel and the surging infl ation rate in the country.
Th e situation is not better in the petrochemical sector. Nigeria imports 60 per cent of the resins used for plastic productions. It sells crude oil at rock bottom price and imports plastic resins at three times the value of the exported crude oil. Now there are strong indications that Nigeria might end its shameful dependence on imported refi ned petroleum products in two years time. Two years sound like eternity given the rot in the economy, but there is a sound basis for hope because solid infrastructure is being put in place largely by the private sector. Production in the Dangote refi nery in Lagos would almost certainly commence at the end of 2019. Besides, after two years of dithering, the federal government is set to fl ag off meaningful rehabilitation of its four refi neries with private sector funding. Th e measure would not only improve the capacity utilization of the plants, but would increase their installed capacities.
Th e steps taken by Dangote and the federal government would not only make Nigeria self-suffi cient in refi ned petroleum products but would launch the country into the exclusive club of products exporters in the world. With refi ned petroleum products, plastic resins, fertilizer and rice out of Nigeria’s import list, something close to $20 billion dollars would be saved annually in foreign exchange.
Th at would give the naira considerable boost in the foreign exchange market and manage to reduce youth unemployment. Th at is just a glimmer of hope that would give government considerable time to establish a functional steel industry that would drive the country’s industrialization. Th e ultimate solution lies in economic diversifi cation and industrialization as technology renders oil increasingly irrelevant.’’