This piece is intended to be a wake up call to an often overlooked policy of investment diversification to ensure the financial continuity for a country that has its economy mostly dependent on earnings from depleting natural resources – crude oil and solid minerals.
Nigeria as a country has done very little over the years that it has cashed in so much from crude oil sales, to invest in other forms of income earning foreign assets, as most countries in its league of oil producers – such as Venezuela, Iran, Saudi Arabia, Kuwait, Emirates-Dubai & Abu Dhabi, Indonesia, etc. have been doing.
It is noteworthy that our infrastructures - highways, bridges, educational, industrial, health, and social-economic, are grossly in peril due to planning, implementation and maintenance deficiencies. In accordance with an old and tested adage: “If you fail to plan, you plan to fail”. And even when any efforts are made at these, our history is replete with ugly tales of poor enforcement rules, and low quality standards. This is not often due to lack of maintenance money, but an uncanny self-serving culture of anything goes that has done very little to sustain a viable system of efficient services.
Mr. President, at this point in our checkered history and development, it is important that we look over our shoulders to see what is happening around us all over the world. The awakening and concerns in today’s global economy do not only speak to our short term goals, but to our long term survival in a comity of nations where the savvy are investing wisely while their milk and honey are still flowing, to shore up their bases and ensure a stable future for their countries. And this should be looked at as saving for the rainy day, not just as a recurrent public works commitment which promotes the convergence of the financial interests of the planners and implementers alike, for self aggrandizement.
Strictly speaking, the economy of the greatest democracy in the world, the USA, is threatened. Its industrial and fiscal infrastructures are in great danger of damage, and this has untold serious consequences for the rest of the world.
Having said this, let us for a moment not imagine that the US will fold its hands and do nothing. We must look very carefully at the immediate and remote plans of action of the United States under President Barack Obama, come January 20, 2009. One of which is to invest up to USD15 billion per year in renewable energy and infrastructure development.
Consequently, Nigeria should take a heed from this revelation, and try to take advantage of its remaining economic capital to build a nest-egg, as a matter of urgency, to ensure our future economic security. We must therefore reorder our priorities to align with a shifting political economy, and also anticipate a changing dynamics in the balance of power in tomorrow’s world. This will ensure that we are not left holding the bag with crude oil and mineral resources that nobody needs. Instructively, the old imperative of quantum reserve for sustainability is fast being replaced with a new world matrix of national interest and preservation.
The politics of oil has up until now given disproportionate advantage to those who possess the resources. But in the emerging order, this is unlikely to continue in view of the afore-mentioned planned huge US investment in alternative renewable energy - an action that will likely trigger a fast-track race of the superpowers, the principal consumers of fossil fuels, in this direction. We should then undoubtedly, anticipate that a shift in demand, and consequently lower prices paid for crude oil will impoverish countries solely dependent on it for their national and international balance of payment and trade.
For these reasons, Nigeria needs to accelerate a consolidation of a realistic foreign asset portfolio that has critical mass and is hence cost effective. This can be achieved through a well orchestrated sequence of actions and acquisitions. A lack of high profile foreign asset interests by our government, accounts for why Nigeria has yet to attract certain types of foreign investment class, international private equity and venture capital placements in a competing global market.
Below are some basic ideas that can be explored to good use:
1. Articulate a national foreign investment policy, and implement a diversification strategy toward income producing foreign asset class. These assets must be prime, science and technology based, and non-toxic portfolio.
2. Invest heavily in renewable energy infrastructure, through wind and solar power solution to our growing energy deficiency.
3. Engage in an elaborate, honest and transparent scheme to rehabilitate and rebuild our transportation systems – rail, road and waterways, educational and health infrastructure to the point we will only need to provide for recurrent maintenance mandates.
4. Create a viable local social policy of economic development that is inclusive and caters to the needs of the less privileged and physically challenged in our society. In this regard, it is time to call on our better angels and good visionaries to develop a system of social welfare and back-to-land, back-to-nature job creation programs to help eradicate poverty.
5. Embrace the successful practice of changing “the culture” through knowledge. One way of achieving this, is to embark on a considerable increase in publicly funded library infrastructure accessible to the citizenry, the police and the military. Different than structured education, knowledge through reading enhances productivity.
Statistically speaking, and for the benefit of the reader, Nigeria has gone through an unenviable economic progression especially in the public sector, despite the huge financial and human recourses bestowed upon us. It is estimated that between USD 400 and 500 billion have either been stolen or mismanaged. This is enough money, if well managed, to build and rebuild our roads, bridges, health and educational systems, modernize our decaying energy infrastructures and re-plan our cities for the 21st century. Needless to mention that the simple measure of wellbeing, our income per capita has been eroded steadily since the seventies from a high of USD1, 800 per capita to about USD 400 per capita currently. The average monthly income of most Nigerians is at a subsistence level of USD32 – and nearly 55% live below poverty line at less than USD1 per day. And the economic figures confound the imagination with such high unemployment, consumer price index (CPI) and inflation rates estimated in the double digits. Consequently, this has resulted in an unending brain drain to the west, and rise in crime rate.
Although in the eyes of the ordinary folks it may look great, but compare our most recent, so called planned, major development, Abuja to similarly built new cities around the world such as Brasília in Brazil, Milton Keynes in the UK, Abu Dhabi and Dubai in the Emirates, including cities in China, India and Indonesia etc. Abuja pales in comparison to the former, in terms of advanced systems and technology utilization, finesse and entertainment, dollar for dollar. Abuja was conceived as a 20th century city for a 21st century world. As a result was hardly envisioned as a fiber optic wired environment to keep up with modern technology interface. Digital broadband is at a minuscule subscriber penetration of 0.02% because it lacks the support of and
capacity for the necessary digital hotwire for real broadband non-wireless T1T2-DSL-FIOS-CABLE high speed internet and Wi-Fi connectivity. Unfortunately, Nigeria ranks number 62 of 69 ratings in digital e-readiness for 2007 according to Economist intelligence unit. It may seem an after thought, and can be implemented at a much higher cost, but the time is now to start making these improvements.
Finally, the sixty four thousand dollar question is, what will Nigeria be selling to make up for her budgetary shortfalls, after crude oil and minerals sales have fallen off the trade table? Nigeria’s dependency on crude oil and gas export is at a mind boggling 95%, and represents about 85% of national revenue, according to World Bank estimates.
The inevitable migration to renewable alternative energy, which before now was suppressed according to the widely held notion, that the oil producers and automobile manufacturers worldwide have conspired to slow the development of environmentally friendly alternative to the internal combustion engine used in today’s automobiles, will now move full speed ahead. It portends serious economic danger for fossil fuel beneficiaries, and calls for total rethink in an impending global economic woe exacerbated by high oil prices and a perilous automobile industry.
Mr. President, I therefore urge you to please take the bold steps and make the necessary changes to avoid the inevitable that may occur for doing nothing. And as is often said: “make hay while the sun shines”. Also philosophically speaking – just before the sun goes down, and shall we say “Nigeria we hail thee” as we await and hope for a ‘messiah’ – and you may perhaps be that ‘messiah’. Inaction in this matter is not an option.
Franklin A. Nwandu
PhD Candidate. MSc-RED, Columbia University
Email: [email protected] & [email protected]
New York, NY. 10017, USA
googletag.cmd.push(function() { googletag.display('comments'); });
googletag.cmd.push(function() { googletag.display('content1'); });
googletag.cmd.push(function() { googletag.display('content2'); });