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End Of Oil Dependent Economy – 1

By Dele Soboawale

“Budget: Oil production estimates short by N1.1 tr”. Daily Trust, September 9, 2013.

“Rising debt profile: In search of solution”. Daily Trust, same day.

The first story continued by informing Nigerians that “About 65 million barrels of crude oil worth N1.1 trillion was short in the first half of this year, using the 2013 estimate by government”.

The second story was the real wake up call to Nigerians about our dismal economic future if we continue with our over-reliance on crude oil for our survival. According to the paper, “the country [Nigeria] began a new journey into the shackles of foreign and domestic indebtedness in which by 2011, statistics indicated its total foreign debt soared to the tune of US$47.9 while the domestic debt platform rose to about US$42.3 billion, much higher than even before the debt relief”.

Nigerians who have not lost their memory would recall that Dr Ngozi Okonjo-Iweala, was the Minister of Finance under Obasanjo who came, preached to us the virtues of avoiding debts; took $24 billion of our external reserves to help get Nigeria out of our previous debt trap. It is one of the great ironies of Nigeria’s contemporary history that it is the same Minister who is supervising our gradual but inexorable return into the debt trap. Three reasons account for this.

One, the 65million barrels shortfall which Nigeria had experienced, so far, would by the end of the year have escalated to close to 100 million barrels shortfall. The 2013 Budget had since been reduced to something like a piece of soiled toilet paper – already used and to be discarded. It is a fact, which the government of Nigeria is reluctant to admit, that this year’s budget has failed miserably and should be discarded as a guide to government action from now on.

As a corollary damage to the collapse of the current year’s budget, the projections for 2014, in the three pears rolling plan, must also be discarded. There is no measure known to anyone that the Federal government had taken to stem the growing tide of stolen crude oil. So, it is safe to assume that the revenue shortfall from crude exports will continue until next year. My experience with budgeting had taught me that next year’s projections must take heavily into account the actual for the current year. With this year in shambles, and no plan to reverse the trend, next year’s calamity is a foregone conclusion.

The Minister of Finance during the opening of another conference of the National Council on Finance and Economic Development, NACOFED, with the theme “Reconstructing Nigeria’s Public Finance” announced that: “Clearly we have to do something about our rising level of domestic debt”, as if we don’t know the options available to us.

Nobody needs a Ph. D in economics from Harvard or MIT to know that with our debt stock at such frightening levels, reduced Federal government revenue, next year, will dictate one of two unpleasant options – none of which will do us any good. Nigeria will either spend an increasing percentage of its revenue servicing debt, if it honours its obligations, or it will have to default on some of its payments and suffer the consequences of a severe drop in credit rating. Bluntly stated, our sources of loans and credits will begin to dry up and the interest we will be forced to pat, if we receive any credit at all, will go up. Nigeria will return to the vicious cycle of debt — from which we escaped when Okonjo-Iweala was here the last time.

The most important reason we are in this mess and why the future is so bleak is related to our stubborn refusal to diversify our economy and multiply our revenue base. The first National Economic Summit Group, NESG, workshop was held in 1992 when Chief Shonekan was the Head of Government under military President Babangida. That workshop addressed, extensively, the issue of diversification into agriculture, manufacturing and exports. I was in the group discussing Diversification. I stopped attending the NESG seminar when it became a mere talk-shop; we talked; passed resolutions; wrote communiqué which governments since Babangida ignored because oil was flowing at a higher rate and the price of crude was going up. The attitude was “why bother to do the hard work when easy money could be made in oil?”

Last week, twenty one years after the first, the NESG was still discussing diversification with agriculture taking centre stage. But, every person at that seminar knows that agriculture alone will not get us there. We need to develop other sources of revenue, very quickly, or we are doomed. Oil is beginning to fail us; or are we failing oil?

One source of revenue, which we spoke about but failed to seriously address is tourism – which is a multi-faceted sector. It includes cultural, social, geographical, educational and, of course, sports tourism. Given our typically myopic attitude to most things, we behave as if sports mean football. And, even on that one we engage in capital flight; nobody comes here to engage in sports tournaments and spend their dollars. Thank God, we now have a chance to start engaging in sports tourism and benefiting from it instead of losing out. Below is an example of what we can do.


Seldom does one come across concrete steps being taken by individuals and governments proclaiming the need to diversify our economy – especially through promotion of tourism. It is absolutely delightful to discover that Chief Ade-Ojo, Chairman of Toyota Nigeria, had done just that at Ilara Mokin, Ondo State.

I had gone to Ilara Mokin to document the facilities at the ELIZADE UNIVERSITY, also situated at Ilara Mokin, when my attention was drawn to the proposed 1St Annual Smokin Hills Invitational  Golf Tournament, holding from September 20 to 22, 2013, at the Smokin Hills Golf Resort. That Golf Course is certainly one of the best in Africa. For that matter so is the ELIZADE UNIVERSITY.

It is the vision of the promoters to develop the Smokin Hills into a global golf tournament bringing the best golfers in the world to Ilara Mokin, Ondo State and Nigeria. For now, any Nigerian golf enthusiast who fails to try Smokin Hills would have missed something extra-ordinary in Nigerian golf today.

The Federal and Ondo State Ministries of Tourism, should certainly be full participants in this landmark event which promises to turn Ilara Mokin and surrounding communities into tourist havens in the future.

According to the organizers: “Our goal is to quickly graduate into Annual Smokin Hills National/International Golf Tournament, Ilara Mokin. This tournament is therefore a dress rehearsal for a future big international event. Ilara Mokin is 15 kilometres, south of Akure, the State capital, with a functional airport…This is the newest spectacle in the world of Golf, as it is the undisputable number one in Nigeria; and one of the best in Africa”.

For those who have not been privileged to visit Smokin Hills, that statement by High Chief (Dr) Ayo Ojo, Chairman Organising Committee, of the tournament, might appear presumptuous; but, I will urge the reader, if a keen golf enthusiast, to suspend disbelief and go toIlara Mokin for the first tournament. Call me afterwards – if you are not captivated by the course and if you don’t wish to return soon.

For more information, please call: 0816-132-5093; 0803-350-4229; and 0802-290-5095. I will be there to cover the event personally. See you there.


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