Ebonyi: Umahi strategises for zero oil economy

Posted by Uchenna Inya | 17 October 2019 | 898 times

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In view of dwindling oil revenue, Ebonyi State governor, Chief Dave Umahi, says he has marshalled out plans for the survival of the state by the time the nation runs short of revenue from crude oil, UCHENNA INYA reports.

Crude oil was first discovered in Oloibiri Bayelsa State in June 1956. Since then, Nigeria has largely depended on it for survival. But there are worries that the nation may run out of oil in the next 20 or 50 years.

It is against this backdrop that Governor Dave Umahi of Ebonyi State had since he came on board in 2015, has been advocating for diversification of the economy as a result of  the dwindling oil revenue.

Oil has remained a major source of revenue for the country and most of the states depend on it for survival. But Ebonyi State has started strategizing on life after oil. To this end, the state has shifted attention to agriculture as its people are predominantly farmers.

The government had established three rice mill clusters across the three senatorial zones of the state. It has also launched what it termed “one-man-one hectare policy,” which makes it compulsory for all government officials and every individual in the state to own a farm.

The one-man-one hectare policy explains why the state is one of the three largest producers of rice in Nigeria as 53,000 farmers in the state were profiled on rice production in 2016.

Cassava production has also remained a priority crop in Ebonyi State. Apart from introducing hybrid vitamin A and C cassava stems, the government procured for farmers in the state, four numbers of five-ton/hour cassava processing machines, including machines for cassava starch and flour.

Reiterating the need for diversification of the economy, Governor Umahi, who was the guest lecturer at 59th Founders’ Day Celebration of University of Nigeria Nsukka (UNN), last week with the theme: “Preparing Ebonyi State for tomorrow’s zero oil economy,” said apart from oil, there are great opportunities for non-oil sectors to grow. This, he said, has been visible since 2001.

According to him, the country can develop different sectors by taking the important steps from the government’s side.

Umahi said Nigeria needs credit access for small business, opportunities for medium-size business, modernization in agriculture sector, development of textiles, development of tourism and creative industry, independence of businesses and private sector participation in economic development, reduction of the involvement of the government in economic production and introduction of new opportunities as well as human capital development through education, capacity building and empowerment instead of relying only on traditional sectors.

His words: “This topic otherwise captioned planning for the inevitable: “Ebonyi State must survive in a restructured Nigeria and in a zero oil economy” is a wakeup call to all leaders of the various levels of government. Before I start, I wish to refer to the remarks by President Muhammadu Buhari, in a lecture titled: “The zero oil plan: Nigeria must survive in a world in which we sell oil no more.”

He said that “for over 50 years, the Nigerian economy has depended mainly on a single export product, crude oil, as its main source of national and government income. Crude oil has essentially funded almost everything in Nigeria-from the goods we import, the infrastructure we build, to our public sector wages. It has also provided the primary underlying support for our currency. While the obsession with oil may have worked in the past, Nigeria needs a very different economic paradigm for its future. This is a great inspiration to leaders at all levels.

“Countries like China, United States and the European countries are now focusing on the future and the urgency of the complicating realities of oil economy in the midst of daunting climate change and technological innovations. As it is today, the European Union is projecting that by 2050, wind and solar energy will displace energy generated from crude oil. This is aimed at tackling climate change, international petroleum competitiveness and economic diversification.

“China is leading the world in the manufacturing of electronic cars and machines. All these technological innovations will surely crash the value of oil in the near future. There are probably three reasons why Nigeria needs to genuinely pursue zero-oil economy or diversification.

“First is to insulate the economy from the risk of being vulnerable to a single commodity as the different oil prices crashes have shown. Second is to create jobs that can raise the living standard of an average Nigerian. Oil and gas jobs account for less than one per cent of total employment and the young population can no longer be absorbed by the public sector. Third is to prepare for life beyond the oil revenue.

“Nigeria’s economy potentially lies beyond oil. In 1960, Nigeria had a leading position across several of her export crops, especially groundnut, cocoa, cotton and palm oil. At that time, her share of the world’s agriculture exports was in excess of one per cent. By the mid 1980s, however, agriculture exports collapsed as the country shifted towards petroleum exploration and by the 1990’s, Nigeria’s share in world export of agriculture had declined to less than 0.1 per cent.”

Umahi explained that the 45-year dominance of oil in the country started waning in 2016, when its prices and the value of the naira crashed, leading to recession.

He regretted that over the past five decades, the nation has been running a mono-product economy, entirely dependent, financed and operated on income generated from crude oil exports, which according to him has created vulnerabilities within Nigeria’s economy.

He said: “On aggregate, 90 per cent of the budgetary revenues of states in Nigeria are funded through allocations from the federation (mostly oil), while only 10 per cent is funded by Internally Generated Revenue (IGR) within states. The capacity for self-sustenance in many states has therefore been largely unexplored.

“This over concentration on a single commodity creates deep fault lines within the economy as global oil price crashes travel through all facets of the Nigerian economy. Nigeria’s oil resources should be used as a down payment to build a robust diversified export basket of other products – to create jobs, earn foreign exchange and attract investments.

“Essentially, Nigeria must ‘use oil to move beyond oil.’ Our large population of 180 million people means we do not have enough oil to meet the needs of all our citizens. A lower nation with a lower population than Nigeria has oil reserves of 9,900 barrels per person (for each citizen), Saudi Arabia has 9,241 barrels per person, while Nigeria has only 214 barrels per person.

“To translate this in another way, assuming Nigeria produced all its proven oil reserves in one day and immediately distributes the financial proceeds to all its citizens, the maximum amount each person would receive is $15,000, at $70 per barrel. In this scenario, after this ‘one time’ $15,000 cash distribution, there will be no oil for anyone.”

Umahi, who is the chairman South-East Governors’ Forum further opined that a restructured Nigeria based on a zero oil economy will transform into a nation with a different constitution in which the Exclusive and Concurrent legislative lists will look different from what they are at the moment.

“My vision is simple; to build a state economy that will thrive even when our income from crude oil goes to zero. A restructured economy is a diversified economy. It will usher in the following – new jobs, macro-economic environment stabilization, encouragement of youth development, supporting high social standards, fight against corruption at all levels, protecting environment, foreign exchange rate improvement, safety in public places, better coordination between cities, states, and government and cleaner environment.

“We are working on the stack reality that one day, federal allocation will diminish or worse still extinguish and the world would have moved forward without oil. Ebonyi State does not have her oil reserve yet developed and does not enjoy 13 per cent derivation. In planning for tomorrow based on our conviction that one-day oil will become history, we focused on these Programs: solid infrastructure, agriculture, solid mineral, human capital development, tourism, water production, entrepreneurship, vocational development, education, health, industrialization and security as critical sectors that will drive our initiative on zero oil economy.

“Agriculture is the mainstay of our economy and has the propensity to provide employment and wealth creation to majority of both skilled and unskilled population of our state. We have introduced entrepreneurship activities in agriculture, in primary, secondary and tertiary productions value chain. Our target is to encourage agri-business. We started by making farming compulsory for all public and civil servants and we had to declare one-man-one hectare programme to all elected and appointed people, including civil servants.

“This made Ebonyi State to emerge as one of the three largest producers of rice in Nigeria. We profiled over 53,000 farmers on rice production in 2016 and since then we have continued to increase the zeal of rice farmers and we gave them improved rice seedlings and other inputs, including soft loans.

“We launched mechanization of agriculture wherein many modern farm implements such as tractors, threshers, tillers were procured and given to farmers. We already have a history of being a state with the biggest rice milling clusters in Africa, so we had to increase the tempo by rehabilitating three numbers of five metric tons per hour capacity modern rice mills. We procured equipment and installed three numbers of three metric tons per hour capacity parboiling plant to operate side by side with the rice mills. This has increased activities in the rice value chain and we propose that by 2020, every local government area shall have a modern rice mill.” (New Telegraph)

Source: News Express

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