Petroleum Industry Bill

By Francis E. Ogbimi

IT is clear from the comments of President Muhammadu Buhari, the National Assembly and others, that the main objectives of the Petroleum Industry Bill, PIB,/Petroleum Industry Act, PIA, are to attract foreign investments into the petroleum industry and increase the revenue Nigeria earns from it.  

The Chinese believe that the directionless nation has millions of laws that are useless because they do not give the nation a direction. The PIB would do nothing to improve productivity in the industry or improve the living standards of Nigerians. That is because the assumptions underlying its preparation are false. Mere capital investments do not develop an industry/a nation. 

Nigeria’s stagnation is not caused by lack of capital. The Nigerian experience shows that no amount of money builds a nation. Nigeria is owing to a shameful level with the economy in a sorry state. The Nigerian petroleum industry remains undeveloped not because of shortage of capital inflow but because Nigerian governments over the years have not been interested in developing the nation and the industry.

Rather governments have only been interested in the immediate benefit of earning/stealing liquid/ready money from the industry. The problem of the cesspit-corruption in the petroleum industry will not be solved by the PIB. It is industrialisation Nigeria needs to transform the nation and the petroleum industry and solve the problems of unemployment, poverty, corruption and insecurity. 

The Nigerian government and Shell Petroleum Development Company assessed 50 years of the Oil and Gas Industry, OGI, in 2006, after investing over $10 billion every year, and concluded that there was nothing to show for it. Nigerians know the state of the Nigerian economy and its infrastructure today.

Do Nigerians now have the knowledge, skills and competences for exploiting the OGI today after FDIs have flowed into it for over 60 years? So, what is the new thing about PIB? Does our experience support the belief that mere capital investment promotes SEGI? No! If our experience has disproved all our assumptions, why are our leaders – intelligentsia/intellectuals, politicians and business people still encouraging borrowing and campaigning for capital investments especially FDIs? Can we build a nation by doing the things we know do not promote SEGI? No!  

Do mere capital investments promote sustainable economic growth and industrialisation, SEGI; do mere foreign direct investments, FDIs, promote SEGI? To Nigerian intelligentsia/intellectuals, leaders in government and Nigerians in business, these are not questions because the answers are obvious. The issue at stake here, however, is SEGI, not GDP-growth or growth without development which economists measure naively as change in GDP. SEGI builds-up individual and national competences.

Mere capital investments do not build-up the competence of individuals and nations for manufacturing and lead to industrialisation. History, logic and Nigeria’s experience have proved unequivocally that mere capital investment does not promote SEGI. Nigerians in government should stop campaigning for FDIs and borrowing and focus on promoting SEGI.

This article is important for at least four reasons. First, all Nigerian national plans since 1960 and SAPs, NEEDS, Vision 20:2020 and President Jonathan’s Transformation Agenda and PMB’s frivolous-borrowing for infrastructure have all been based on the assumption that mere capital investments  promote growth. Second, Nigerians believe very strongly that mere foreign investments will enable Nigeria to realise maximum benefit from the OGI. Third, most Nigerians believe that Nigeria can build-up a reliable infrastructural network including a regular electricity supply system through mere capital investments.

ALSO READ: Perspectives on the Nigerian Petroleum Industry Act

Fourth, Nigerians believe that the private sector is the engine of growth because it has a lot of capital to invest. These beliefs have no scientific bases. That is why Nigeria has been measuring growth without development. That is why over 70 per cent of Nigerians are very poor. That is why Nigeria is the poverty capital of the world. 

The World Bank (1998), in its World Development Report, stated that technological knowledge means know-how; those countries which possess less of it are caught in the poverty bracket. Poor countries, the bank continued, and indeed poor people are not able to compete in the global system not because they do not have capital, or other material resources, but because they have less knowledge.

I agree with the bank that the difference between the agricultural-economies in Africa on the one hand and the technologically advanced economies in Europe, America and Asia on the other hand, is a matter of difference in the level of knowledge, skills and competences, KSCs, possessed by the citizens.  

Europeans and Asians, our curiosity-driven research revealed had artisan/crafts/agricultural economies for thousands of years before achieving the modern industrialisation. The area occupied by the modern Western Europe was harnessed into the Roman Empire in 55 B.C. The western portion of the empire was smashed by the Germanic tribe called the Vanders, in 406 A.D (Carrington and Jackson, 1954). The modern nations of Western Europe evolved from the western portion of the ruins of the Roman Empire.

The population of England was 7million in 1700, government’s revenue was just £7million a year, and London was then the only city in Great Britain to which all goods were shipped (Trevelyan, 1948). Britain, however, achieved the first modern Industrial Revolution, IR, in the period of 1770-1850 (Gregg, 1971). By 1850, England had become industrialised and most people worked for weekly wages. Population had become 36 million, about 80 per cent of the population lived in towns – 20 per cent lived in rural areas- the reverse of the situation in 1700. Government revenue had risen to £770 million by 1931.

England was the most progressive nation in Europe before the industrial age. Other European nations achieved industrialisation after England did. Industrialisation took Asian nations more than 2000 years. This means that it took both the capitalistic nations of the West and the non-capitalistic nations of Asia 2000 years and longer to achieve industrialisation, suggesting that capital is not the primary factor in industrialisation. European and Asian nations toiled for thousands of years before achieving the modern industrialisation because they neglected learning for that long. 

Are the International Oil Companies to exploit the oil for Nigeria forever? Are some nations made to remain agricultural nations forever? Why is the Nigerian experience totally devoid of wisdom? By 1945 China was occupied by Japan. It was the American bombs dropped on Japan that sent Japan packing from China in 1945.

China quarreled with Russia in the late 1940s and Russia removed many of the structures it had erected for China from Chinese cities (Stokes and Stokes, 1975). With Mao Zedung as the leader of the Peoples’ Republic of China, the nation decided to learn. All the citizens of the nation were mobilised for learning (education, training, employment and research) as from 1949.

By 1984, China had achieved the modern industrial revolution. China is now a world power. Russia did not erect structures for China forever. Let us mobilise all Nigerians for learning and achieve rapid industrialisation like Japan did 1886-1905 and China did beginning 1949. Industrialisation is the solution to the myriad of problems confronting Nigeria today.

*Professor Ogbimi, a public affairs analyst, wrote via: [email protected]

Vanguard News Nigeria

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