The collapse of common sense: In my previous article, I tried to remind us of what we have always known and talked about: that oil boom flatters to deceive. The world is, meanwhile, desperately looking for alternatives to crude oil — with several advanced countries setting dates, starting from 2025, to phase out vehicles powered by fossil fuels such as petrol and diesel. Sadly, Nigeria’s economic (and, perhaps, political) fortune is tied to the price of crude oil. The higher the price, the happier we are, and the merrier our mood. A little fall in oil price and the entire economy goes into a spiral: naira depreciating against the dollar; government revenues plummeting; public debts piling up; and inflation digging holes in our pockets.

Typically, oil exports account for 90 percent of government’s FX earnings. For a nation that imports far more than it exports, this is absolutely scary, especially as oil prices are not what they used to be and lower production quotas mean we are losing on at least two fronts. How can the currency ever gain value? To worsen matters, half of government revenue comes from oil, although this is a form of progress as it used to be up to 80 percent not so long ago. We can blame the COVID-19 pandemic for the current public finance crisis if we want, but the truth is that we have, for decades, been failing to put our house in order. We are only reaping what we sowed (pardon the pathetic pun).

There are still people out there who keep thinking the reports of the imminent death of crude oil are grossly exaggerated. They think that the black gold will continue to be the king in the energy ring — and this is EXACTLY our downfall in Nigeria. We are always waiting for the next oil boom. We are thinking oil will hit $100 again. We think the alternatives are neither “viable” nor “sustainable”. Is this not why, during the time of plenty, we usually embark on a spending extravaganza, launching white elephant projects, ballooning the cost of running government and saving little? “After all,” we humour ourselves, “Nigeria is a rich country.” Until the next oil price crash!

I did point out, in my previous article, that Indonesia earned $10 billion from exporting palm oil alone in 2019. That was just about 6 percent of its export earnings. In simpler words, what Indonesia made from palm oil exports alone, which accounted for a negligible fraction of their export earnings, compared favourably with what we made from our almighty crude oil. Ironically, Nigeria is not less endowed with cash crops. Given the right thinking and conducive environment, we can do very well in cocoa, oil palm, rice, cotton, groundnuts, ginger and sesame, but the ease with which petrodollar floods (or used to flood) our treasury has been damaging our mentality since the 1973 oil boom.

It is not as if we have not been talking a good game about reducing our crude oil dependency. Even when we were swimming in petrodollars in the 1970s — doing backstroke, breaststroke and butterfly — Gen Olusegun Obasanjo, then military head of state, used to say we should tighten our belt, dramatising it on national TV with his big military belt. He launched Operation Feed the Nation, an import-substitution initiative. President Shehu Shagari did Green Revolution. Gen Ibrahim Babangida did the structural adjustment programme (SAP) with emphasis on agriculture (and to his credit, breweries stopped importing barley and started using locally grown sorghum — till this day).

Over the years, several governments have launched initiatives in cassava, rice, pineapple, cattle farming and all. So you ask: if it is that easy to push crude oil to the background, why are we still where we are — awfully chained to petrodollars? My answer would be: beyond the rhetoric, can we sincerely tell ourselves we have put in our highest commitment into liberating our economy from the slavery of crude oil? Even when reform policies are making progress, there are people waiting to politicise the gestational pains and incite protests and strikes. We engage the reverse gear and go back to square one. It is like the snake and ladder game. That has been our lot, basically.

But the commonsense questions remain: why have we been talking so much about diversifying government revenue for decades and making little progress? Why does every government keep talking about green revolution but our hearts and minds and eyes are still on the international crude oil market? If we can make as much FX from palm oil or rice exports as we make from crude oil, why are we not making it then? Shouldn’t that excite and energise us? Why would you want to continue making the bulk of your FX earnings from a single product when you have so many viable alternatives? If it is so simple and profitable to diversify public revenue, why not just do it?

I don’t have the answers but I have suggestions. My starting point would be that the oil belongs to government. All revenues coming from oil sales, after costs, go into the federation account. Every month, the three tiers of government sit down somewhere in Abuja under the aegis of Federation Account Allocation Committee (FAAC) and share the spoils. Government is not lifting as much as a finger to make crude oil happen. The mining process is fully under the care of the oil companies. They set up the rigs and run the entire show. All the government does is to collect the fees, royalties and taxes and “FAAC” the revenue. No sweat. No pains. No stress. Oil money is so sweet.

Now compare that with palm oil farming and production. The companies will be set up by private individuals who acquire and pay for the land. So let us say I have Kolawole Oil Palm (KOP) Ltd located somewhere in Rivers state. Government thinks it is my company. Government thinks if I export my product, the proceeds belong to me. KOP’s income is not going to be paid into the federation account for the three tiers of government to FAAC at the end of the month. Therefore, the government does not have any incentive to pursue policies and provide amenities that will make KOP prosper. As far as they can see, it is KOP Ltd’s headache how it operates, not government’s.

But that was how common sense collapsed in Nigeria with the oil boom. In reality, if KOP Ltd prospers, Nigeria prospers. In setting up the farm or building the factory, KOP will engage all manner of professionals and suppliers, including architects, engineers and artisans. Most will pay PAYEE, company income tax, withholding tax, VAT and other levies which will end up in government coffers. But many of us cannot see the sense. When KOP starts operations, it will employ industrial chemists, accountants, technicians, admin personnel, and so on and so forth. Not only will jobs be created, government will also earn revenue from the statutory payments if the sector prospers.

Maybe they can actually see all these things. But it would be too much trouble for them to create the necessary environment for KOP Ltd to flourish, so they would rather focus on the easiest way out: FAAC. Why spend so much money to make the environment conducive for KOP Ltd when you can just go to FAAC and take home a cheque of N5 billion at the end of the month? Rather than make life easier for KOP Ltd with good roads, power, security and water, why not squeeze the company for more money by taxing it to death in search of IGR? That’s a good idea. Slam them with all kinds of levies for trying to turn your state into a farm and shut them down if they protest.

Talking about palm oil — which happens to just be an accidental example today — I would like to remind us that Nigeria was at a point the world’s largest producer. But that was before the unfortunate oil boom. We accounted for almost half of global production. Today, we are the fifth largest producer but Africa’s largest consumer and, sadly, a net importer. Even Republic of Benin exports more palm oil than the Giant of Africa. If we had maintained our dominance and not gone to sleep, according to experts, we would be earning about $20 billion in FX today from palm oil alone. So you know, FAAC earned $12 billion from crude oil exports for the whole of 2019. Just saying.

I don’t want to repeat the story I once heard that Indonesia and Malaysia took palm seedlings from Nigeria in the 1960s and went on to rule the world. I don’t know if this is an urban legend. Both countries now account for 80 percent of global palm oil output. My interest is not in the past but in the present. So imagine that our palm oil industry grows phenomenally in the next 10 years. Imagine the FX revenue if we meet local demand and become net exporters. Imagine the benefits of the taxes that will end up in FAAC. Imagine the benefits to the GDP. Imagine the positive impact it will have on tackling unemployment, poverty and crime. Imagine. And that is just palm oil.

To be sure, I know that the federal government and some states are making efforts to encourage the KOPs and wean us off the crude oil mentality. I am sorry if I have been sounding a bit negative. But I find it frustrating that growing the economy is not dominating national debate. Is it because agriculture cannot inflame ethnic and religious passion? Worse still, because we don’t need to write a new constitution in order to grow industry, we are not mainstreaming the debate. As things stand, agriculture is on the concurrent list — so all tiers of government are allowed to make things happen in the sector. Hopefully, common sense will prevail someday and we will all see clearly. Vision.