Thoughts on economic restructuring (1)

The debate for the restructuring of Nigeria is ongoing and it seems to be the latest fad in town. The debate is premised on some fundamental and undeniable aphorisms. The first is that a majority of Nigerians are not happy with their living conditions, the way they are governed and what they get out of the Nigerian union. Daily, we see opportunities in all spheres of life, but they are wasted and are not converted into the possibilities of development. But we can start a process that taps the energy wasted in unnecessary ethnic, religious and other agitations into models for enhanced qualitative production of goods and services and public service delivery.

However, some sections of the Nigerian elite are resisting the restructuring agenda and believe that they will lose their entrenched interests and privileges in a restructured Nigeria. Again, the cry of marginalisation by all segments of the society has become the standard song. But, where are our leaders in the corridors of power? What do they think about this demand of virtually all and sundry for restructuring? This discourse will focus more on the development and economic components of the restructuring exercise. Admittedly, it is the political configuration that allows the economic restructuring to proceed unabated and in the direction of positive change in the standards of living of all.

All permutations about restructuring and revenue sharing have been mainly argued with an eye on how the proceeds of crude oil will be shared. But wait a minute to see if these facts will jolt our people out of our obvious benumbing slumber and the bliss of ignorance. India projects that by 2030, all cars sold in their country will be electric powered. The Asian country is a major buyer of our crude oil. France will end sale of diesel and petrol-powered cars by 2040 in a “veritable revolution” which is part of the country’s commitment to meet the Paris Climate Change Agreement and to make it carbon neutral by that year. Volvo, the car manufacturer, will phase out petrol only cars in 2019; all new models will be either electric or hybrids. Volvo’s plan will become effective less than two years from now; not in the medium term or distant future. Norway aims to end the sale of petrol and diesel powered cars by 2025, which is seven years from now. On the other hand, Germany will put one million electric cars on the road by 2020, which is three years from now while China sold more than 500,000 electric vehicles in 2016.

These are the countries that have announced their plans and it is clear that many more countries are going to follow suit. And the United States of America’s climate change policy will likely shift in the next couple of years to align with the undeniable climate reality. The implication will be further reduction in the demand for fossil fuels. With the foregoing dates fast approaching, countries and companies will accelerate the race to develop more effective and efficient alternative energy solutions that will sound the death knell of the internal combustion engine which demands hydrocarbon fuels.

In essence, in the next four to five years, the price of crude oil will further reduce to about half of its current value. By 2030, it may simply be unprofitable for companies to continue drilling oil in commercial quantities. It is imperative to start with a question that brings home the reality of the Nigerian nation; being a nation so dependent on the sale of crude hydrocarbons.  Where shall we go with our oil and what shall we deploy it for? To drink the oil as the climate revolution roars full steam? Crude oil will soon have little or no value or at best a nuisance value and many oil based investments will be stranded. The climate change revolution is beyond oil, carbon and greenhouse gas based economic growth and industrialisation. It is about a new paradigm of economic growth, livelihoods, jobs, opportunities and development. Is anyone out there in the federal and state executive and legislature listening? Anyone out there in government circles with a thinking cap?  For over 40 years, we messed up the opportunity of huge earnings from petrodollars. Now, the price of petroleum products have come crashing and there is a plan to almost phase it out; how come we are not even discussing this development and its prospects? Rather, we are in the business as usual, rent-sharing federation account allocation mode!

We must therefore be restructuring the polity and economy to other sources of foreign exchange and government revenue earning. We need a restructuring process that sits us down into new planning and policy frameworks which would question the received wisdom that we are meant to be among the backwaters of the world.   Clearly, the restructuring we need should start from the new paradigm of decoupling carbon intensification from economic growth and decarbonising the entire value chain of development if we are to remain relevant in the new age. This ideally should start with agriculture and its full value chain, manufacturing, information technology, services and other key sectors. It is a restructuring process that will not centre the generation, transmission and distribution of energy in Abuja when the companies and people that need energy for production and service delivery are scattered across the federation. We have been on the need to generate and distribute 10,000 megawatts of electricity for over 17 years and we have stagnated over the years. The new paradigm of development will focus on tapping and using renewable energy to power our economic activities.

States should be competing with incentives to drive talent and propel startup investments in disruptive technology that will lift Nigerian from the doldrums to a competitive economy that can hold its own in the comity of nations. The planning process needs to be restructured to guarantee short, medium and long term strategic planning. A process that properly defines costs and externalities before projects are started will be generated. The idea of defining costs in a way and manner that fails to recognise environmental, health and other social costs which are the hallmark of the carbonisation of economic growth and development will need to be fully interrogated and proper cost benefit analysis of projects drawn up and publicly debated before approval and implementation.

This restructuring will answer specific questions and the accompanying challenges. For instance, the country should be planning for a post-oil economy and what the Niger Delta will look like. With oil being of little or no value and everyone falling back to massive agriculture, a heavily polluted Niger Delta will be unable to farm and fish. Extreme poverty and crime will set in. Thus, Nigeria needs to clean up the Niger Delta in the next 10 years. We also need to take the campaign against desertification more seriously. If rural Nigeria and agribusiness must fall back on the land for sustenance, the desert needs to be contained. The containment process will create new jobs in tree planting, nurturing, water and irrigation systems, production and distribution of clean cook stoves and other alternative energy forms to rural and urban dwellers.

 
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