In the world we live in today, energy and economic diversification is not just an option for resource-rich nations, but a necessity. The underlying importance of ensuring energy security while developing other viable sources of foreign exchange earnings for economic development cannot be stressed enough. However, equal, if not more significant, weight should be given to the further development of Nigeria’s resource-rich non-oil sector.

Just as we were beginning to assess the effect of US shale oil production on global energy markets, the warning signs are starting to appear sooner rather than later. According to the US Department of Energy, due to the discovery of shale oil, US exports from Algeria, Nigeria and Angola dropped significantly in 2012 by 41% compared to 2011. In February 2013, US oil exports Nigerian crude to the US fell to 194,000 barrels a year. day and the Energy Information Association (EIA) described it as the lowest in more than 18 years.

As it is, the US remains critical to Nigeria’s relevance in receiving revenue from crude oil sales, as it is our largest buyer and any significant reduction in demand will drive oil prices higher. slump again, as we noted in 2008. As Ms Alison-Madueke highlighted while speaking in the UK last month, “Shale oil has been identified as one of the most serious threats to African producers, those producers could lose 25% of their oil revenue as they are displaced from the US.” Based on the way the oil market operates, this is quite unavoidable if one assesses the implications of the discovery of shale oil in the US.

According to the EIA, after the United States with 33% in 2011, India is the largest buyer of Nigerian crude. However, as we have seen over the years, more countries are now stepping up their oil exploration activities due to energy security and myriad increased profits. Jubilant Energy NV and Cairn India have recently announced their success in their oil exploration activities in the densely populated country and I am sure that this news could worry Nigerian government stakeholders. One could argue about the importance of proven reserves or the commercial viability of current recoverable crude, but we have seen in many cases with oil discoveries being initially discovered in patches before major discoveries are made.

ECONOMIC IMPLICATIONS

The impact of this trend is more significant, especially its future implication. The Nigerian government relies heavily on earnings from crude oil exports for domestic spending and reduced demand from its two main buyers could potentially lead to a sharp decline in government revenue. Unlike natural gas contracts, most crude oil contracts are traded on the spot market, so the security of demand is low. Furthermore, we could face a drop in crude oil prices that could lead to another conflict over production quota among OPEC member countries.

To nip this problem in the bud, we need to intensify our bid to become less dependent on crude oil revenues. Difficult as it may seem, we have seen in various press reports from government officials who are aware of this development and know what needs to be done to address these issues. The non-oil sector is a major driver of the Nigerian economy and is most relevant to the man in the street. The agricultural sector is already the largest employer of labor in the country and we have yet to give this sector the much-needed investment and attention to bring it back to its glory days.

We vividly remember how buoyant and attractive our international trade in agricultural products was decades ago, led by northern Nigeria. We also know the story of how Indonesia overtook us as the number one oil palm producer in the world after dominating the international market for a while. However, things are still not looking too bad in that area as in 2011 we were still ranked as the third largest oil palm producer in the world.

While I agree that no single sector can match the money-making potentials of the oil sector in the near term, a combination of key non-oil sectors can rival the oil sector and deliver more visible and significant benefits to the economy. nigerian. . In addition to the agricultural sector, we can see the huge impact that the rise of the telecommunications industry had on foreign investment and employment.

The electricity sector is still relatively underexploited if one considers what it could have been if a model similar to that of the telecommunications sector had been applied. As a natural monopoly, we are still awaiting how the Nigerian Electricity Regulatory Commission’s unbundling policies will materialize as it is important to get this sector where it needs to be in generation and distribution.

We have seen the damaging effect that the epileptic nature of Nigeria’s energy sector has had on another key non-oil manufacturing sector. Rising operating costs were one of the key reasons many manufacturing companies closed and once again contributed to a rise in unemployment and economic hardship. Without quoting precise numbers, the impact of an efficient and robust manufacturing sector will undoubtedly have a positive impact on our alarming unemployment rate.

The prospect of fully reviving Nigeria’s railway industry will no doubt help the economy considering the effect the now-defunct Nigerian Railway Corporation had in reducing unemployment in the workforce. However, it is good to see some investment decisions made in this area by the government in the last 5 years.

CONCLUSION

While it is obvious that the government identified these problems, the massive reduction in crude oil imports by the US will continue as it plans to become a net exporter of natural gas in the coming years. This is a clear statement of intent about where your priorities lie in the future. India will also intensify its search for crude oil and try to become self-sufficient in oil supply. Therefore, now is the time to intensify plans for the inevitable and devote more time and resources to developing the country’s non-oil sector for job creation, poverty alleviation and economic development.