The diversification of the economy through the non-oil sector is a welcome development. This is coming amid reported graft in the oil and gas sector and concerns about the economy buffeted by rising inflation, naira depreciation, foreign exchange volatility and other macroeconomic challenges. Former President Olusegun Obasanjo recently decried the alleged systemic corruption in the oil sector and the need to prioritize agriculture as the centerpiece of the economy and investment inflows.
In an interview with the London-based Financial Times, Obasanjo claimed that Nigeria’s over-reliance on crude oil for its survival remains the “deadliest mistake” made by successive governments in the country. He maintained that the present economic crisis would have been averted if agriculture and agro-business have been given the needed attention. He blamed the Nigeria National Petroleum Company Ltd (NNPCL) and International Oil Companies (IOCs) operating in the country for their collective failure to account for oil production. He noted that the present state of the nation’s four refineries to meet the needs of the country despite huge investment in Turnaround Maintenance underscores the endemic corruption in the sector.
The former leader recalled that from 1999-2007, he invited one of the oil majors in the country to take an equity shareholding in the running of the nation’s refineries, but regretted that the company rejected the offer, citing lack of transparency and accountability in the sector. He further claimed that the refusal of the oil company to invest in our refineries led to the emergence of “amateurs” instead of “professionals” in managing them. This can also explain why the refineries are not working despite promises by government that they will soon be working.
He expressed concern that there are forces willing to frustrate the success of Dangote refinery. However, Obasanjo called for the diversification of the economy with premium attention on agricultural sector. Only recently, Aliko Dangote alleged that some ‘mafias’ were making frantic efforts to frustrate the full operation of the refinery, though he has recently soft-pedalled on this claim. There is no doubt that the concerns expressed by Obasanjo mirror the sad reality in the oil sector, the humongous amount lost annually to oil theft and pipeline vandalism, and the urgent need to diversify the economy.
For instance, latest statistics from the National Oil Spill Detection and Regulatory Agency (NOSDRA), revealed that Nigeria lost N834 billion in the first-half of 2024. This would have gone a long way in boosting agriculture and food production and security. Nigeria is also losing $1,000 on every barrel of crude it exports to added value from refining. This huge loss is no longer sustainable. While the NNPCL is claiming to be supporting local refineries, the Nigerian Midstream and Downstream Petroleum Regulatory Agency (NMDPRA) is not empowered in the statutes to support the monopoly of fuel supply and distribution. Nigeria should be moving from its current transactional economy to transformational one. This involves moving resources to higher value activities like agriculture, mining and manufacturing to high value crops within sophisticated, technology-driven value chain. The present administration should muster the political will to make this happen. Toying with food security is an invitation to mass hunger and unending nationwide protests witnessed recently. The present state of the economy requires a comprehensive review of some of the laws in the oil and gas sector, especially the NNPC Act that has made the operations of the company opaque and ridden with monumental corruption.
Oil theft, pipeline vandalism and lack of investors’ confidence hamper crude oil production. Last year, the Organisation of Petroleum Exporting Countries (OPEC) reduced Nigeria’s oil production quota to less than 1.3million bpd. According to NNPCL, the country currently has improved its oil production to 1.5million bpd from the 1.28million bpd in April 2024. Domestic consumption is put at 445,000 bpd. Experts in the sector have faulted this figure. Nonetheless, there is urgent need to reset the economy on the path of recovery and growth. To do this, the government must salvage investment across all levels – micro, small, medium and large-scale- with enabling business environment that can attract domestic and external stakeholders.
The diversification of the economy has become more imperative than ever before. The non-oil sector holds the ace in economic diversification, especially agriculture, mining, tourism, creative industry and others. This will grow the Gross Domestic Product (GDP) that was recently downgraded to 3.1 per cent by the International Monetary Fund (IMF) and the World Bank. Nigeria has moved down the ladder from being Africa’s largest economy by GDP to 4th position trailing behind South Africa, Egypt and Algeria. This is unacceptable for a country that wants to be among the 20 economies in the world. Above all, creative leadership, sound economic policies and private sector participation are all needed to quickly diversify the economy.