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Free oil money damaged Nigeria- Prof. Olaitan

By Jimoh Babatunde

Former Vice-Chancellor, Olabisi Onabanjo University, Ago-Iwoye, Prof. Wale Olaitan, said that Nigeria has an unproductive and poor economy based on bonanza from oil sector.

He said unfortunately, the bonanza from the oil sector is not showing enough capacity to pay for our profligacy.

The former University VC said Nigeria has been so damaged by the free money from the oil bonanza that we are not prepared for any hardwood again. “Even when the government talks about diversification, the expectation is to jump into another sector where free money could flow. Unfortunately, there is no such other sector.

He added that any other sector that would bring revenue would need the hard-work of production and this is what the government and the people of Nigeria do not want and do not want to engage in.

He said: “We see the Federal Government setting out a budget with massive revenue expectation from the Customs and Ports Authority in an economy in recession as if there would not be a decline in importation under recession.

“And we see State Governments also projecting massive increases in tax collection even without any projected improvement in production within the States.”

Prof. Olaitan said ordinarily as production increases, tax accruing to government increases which is why government is always interested in helping to expand and increase production.

“But Nigerian governments would want more taxes even where production is plummeting because they are already so used to easy money. But there is a logic to the world that we cannot run away from however we try in spite of our oil bonanza – and that is that you can only live on hard-work and production.”

Delivering a paper weekend at the Third Anniversary Annual Lecture of the Nigeria Institute of Management (NIM), Ede Chapter, Osun state, Prof. Olaitan said Nigeria is assailed in very many respects at this time and not just in its economic organisation.

“Yet, the one that strikes such resonance because of its impact and high effect on virtually all Nigerians is the economic crisis. And outside of the concern of Nigerians about the growing lack of resources and incomes for the majority in the country in the midst of growing prices, Nigerians are simply nonplussed about the nature of the economic crisis facing the country,” he said.

Quoting the National Bureau of Statistics (NBS) that the economy has been on rising contraction in the first six months of 2016, he said production has a major role to play in the country’ s economy.

He added that “This means that every economy and its health would be much dependent on the nature and health of production, such that where production is not going on well, the economy would definitely be in stutters. ”

He said the implication is that all Nigerians are living at a lower level of production reality this year with the recession in the economy as the country is not able to reach its last year’s level of production.

Prof. Olaitan said what the recession has done is to exacerbate the poverty level which United Nations report says has been ‘increasing’.

While noting that Economic recession is about contracting production, he said what should concern Nigerians is why would production in an economy start to go down.

He said in the case of Nigeria that the economy operates essentially as a monocultural one that picks its strength mainly from petroleum. “Unfortunately, what constitutes the strength of the Nigerian economy does not contribute to production which we have said is the real strength of any economy. We therefore have a situation in which the Nigerian economy is essentially weak on production.”

Noting that the oil sector contributes only about 10 percent to Nigeria’s GDP, even though the country derives 95 per cent of export earnings and 70 per cent of government revenue from the sector, shows a distorted economy, making most of its money from a sector that is not known for production.

He said ordinarily, money should result from production such that there would be more money by having more production. “But in this distorted economy, money comes without production to the extent that revenue is from the oil sector which is not known for production.”

He added that the major issue that is responsible for the current downturn and recession is simply the fact that Nigeria has less revenue from oil.

“The major reason for the current recession is therefore the decline in the oil prices especially against the backdrop of depending heavily on the oil revenue for revenue and spending not related to production.

“The decline of the oil revenue which is the mainstay of the economy would necessarily lead to profound decline in the economy itself, hence the recession.”

While noting that Nigeria Nigeria has been a poor country for long and not just under the current recession, he said this is so because we are all used to describing Nigeria as a rich country.

“But it is all a further reflection of the warped and false sense of life that has pervaded the country since the era of petrol revenue.”

He said even at the height of the country being described as the largest economy in Africa that production level in the country was low.

He added that South Africa has productivity that is almost three times the achievement in Nigeria.

Prof Olaitan said though what we are witnessing now is a decline in the revenue from our bonanza sector, we should realize that it would not just decline but end sooner or later.

“There would be a time there would not be easy money from any bonanza and we would then have to face the ultimate reality that economy rests or production and nothing else. And that it is only to the extent of our production that we would be able to enjoy.

“This is the lesson that is creeping on us through the current recession except that we are busy confronting it by not acknowledging where it is coming from.”


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