It is true that over-reliance on oil is the major reason Nigeria has been badly hit by the oil price slump. And it isn’t only a Nigerian phenomenon. It also affects all oil producing nations and the world economy as a whole. But it isn’t enough to know that the fall in the oil price has drastically reduced our revenue as a country and weakened our currency in the world market, we should also be curious and aware of the reasons for the slump. We should not only be concerned about what is happening, let us also consider how it is happening and what we can do as a nation and more importantly, as individuals about it. So after days and days of surfing the internet and small talks, here are a few things I found out.
While we still pride ourselves as being one of the largest producers of oil, America that usually records the highest demand for oil was innovating new ways of producing the same product. The use of techniques like fracking and horizontal drilling to extract oil from shale formations saw the US production sky rocket by 70% between 2008 and 2015. You can imagine what that does to the market. A buyer suddenly became a big shot producer. Look at it from the perspective of a trade by barter – we all have the same thing, how then do we make an exchange?
We were unprepared for the surge in supply. This is made even worse at the moment with the Organization of Petroleum Exporting Countries refusing to cut down on supply. This makes sense in a way. If we cut down on supply, we lose our quota of the market to the country that has the product readily available for sale. But the law of supply and scarcity cannot be cheated. When something is readily available for and from everyone, it loses value. The free fall will continue for a while. And while citizens in countries like Japan enjoy low cost of petroleum products, the oil-reliant nations endure austere conditions.
Another interesting point is that we are also heavily dependent on the economies of other countries. Our wealth as an oil producing nation, is determined by the nuances and situation of other countries with a plan for growth and development. The most significant of this being China. When China was working their way to economic boom, the world was feeding off the fact that they needed. With all our jokes and taunts about ‘Chinese’ products, the decline in their economic activities over the past few years has significantly affected the international market and specifically, the demand for oil.
The underlining factor in all these is the over-dependence on indices outside of our control. We seem to always go cap in hand begging for our precious resource to be bought at a price that is convenient for the buyer per time. Sometimes it works in our favor and sometimes it digs a hole in the cap.
The introduction of Entrepreneurship studies in our higher institutions is a laudable initiative. But many seem to still confuse owning a business with entrepreneurship. It isn’t just about selling what’s already being created, it is about creating a solution to problems. And not just solutions to problems that are obvious but to also tilt the status-quo that people don’t even realize can be better. That slight digression is to say these:
- The weight of our economy cannot be sustained by waiting for a price to be set on what is supposedly our most treasured resource.
- We have other resources that are yet to be explored. Top of these is human resource. How do we optimize the minds of our citizens and direct them towards creation and innovation?
- It is time to start producing things that they didn’t even realize they needed. We all have smart phones, don’t we? You did not ask for it. It came and you were told that you needed it and shown why you needed it.
- We cannot keep depending on external markets. A Nigeria with a thriving export sector is a wonderful goal. We should also think about empowering the citizens within with the purchasing power to buy the products we eventually produce.
- The opportunity for production in this country is immense; from agriculture to manufacturing to science and the arts. Take your pick. If done right, we really should have no fear of over saturation or dependence on any one sector. That means you also have choices as an individual.
We may look at these and say that they can only be addressed on the macro level, by the government. But that will be a faulty thinking. In many ways, the attitude of our country in international affairs is the sum total of our own mind-set as individuals. Think about the ways you have been accepting less from people because you do not know what you are worth or have a plan for yourself.
While the government is to set the pace in innovative and workable policies, we should start recognizing areas we can create value. Are you being productive or merely being a dependent consumer? If you are being productive, do you know its value to yourself and in the larger scheme of the nation?
It has been said before. It will most likely be said again. But what you do with it is what counts. Stop waiting on others to make things work. Now is the time to create so much value that you can make people an offer that they cannot refuse.
Please share your thoughts. I’d love to know what you think.