Apr. 15, 2014
“Northern Nigerian Economy Free of Oil Revenue”, A Lecture Delivered by His Excellency, Executive Governor of Kwara State, Dr. Abdulfatah Ahmed, at the Inauguration of New Leadership and Public Lecture organized by the Arewa Consultative Forum at the Musa Yar’adua Indoor Sports Hall, Murtala Mohammed Square, Kaduna on 18th February, 2014.
I am deeply honored to deliver the Arewa Consultative Forum (ACF) Public Lecture on an issue about which I have strong views. Since its formation in the year 2000, the ACF has evolved into a formidable platform dedicated to promoting the interests of Northern Nigeria within the context of the Nigerian Federation.
Indeed, the forum is one of the few with the pedigree and competence to set agenda for national discourse. I therefore thank the ACF for giving me the opportunity to contribute to the debate on the future of this great region. Having been born and raised in Northern Nigeria, I find it opportune to discuss a way forward in our collective aspiration towards restoring Northern Nigeria to its rightful economic status.
While I acknowledge that much of our infrastructural development is attributable to Oil Revenues, that the discovery of crude oil has caused severe dislocations in our socio-economic and political ecosystem is beyond reproach. As I would demonstrate later, the exploitation of oil triggered significant policy shifts, especially an ill-advised focus on the export of primary petro carbon by-products at the expense of agriculture, from which are yet to recover.
Furthermore, on-going agitation for resource control and allocation and the consequent clamor for fiscal federalism demonstrate the need to free our region’s economy from Oil Revenues. Additionally, Northern Nigeria’s immense agricultural resources strongly recommend a revival of the agro-based wealth that the region once enjoyed.
The truth is that a significant proportion of the food that we eat and export from this country comes from the farms of Northern Nigeria. If federal allocations were to cease today, for example, I am confident that the 19 States of Northern Nigeria will overcome the initial hiccups to build strong agro-based economies. Due to the obvious links between politics and economics therefore, the extent to which Northern Nigeria controls its economic resources will ultimately determine the degree of its political power and by extension, its freedom.
For how long, then, will we allow others to threaten us with economic strangulation unless we move in a particular political direction?
When will Oil Revenues that are outside our control cease to determine the future of the people of Northern Nigeria?
As we ponder those questions, let me emphasize that fears of Nigeria’s crude oil depleting in the next five decades recommend a timely disconnect between this region’s economy and the proverbial oil curse.
It is my hope, then, that at the end of this discourse, I will have illuminated a path to the sustained economic prosperity that this region so richly deserves.
Indeed, the deprivations faced by our people and the reversals we have experienced over the last 53 years mock our natural endowments, questions our capacity to effectively harness them and challenges our leaders’ claim to patriotism.
Before developing this point further, however, let me remind us of the previous glory of Northern Nigeria which, barely fifty years ago, held the promise of tremendous prosperity for its people through agriculture.
Northern Nigeria Before Oil Revenues
Nigeria entered independence with great optimism. Our people looked forward to a country that will meet their aspirations for good governance and prosperity. That expectation was premised not on oil, which was yet to be exploited, but on the nation’s vast agricultural resources.
At that time, agriculture was the most important sector of Nigeria’s economy. It was responsible for 70 per cent of GDP, 75 per cent of export earnings and a similar percentage of the working population. Accounting for this prosperity was the export of major cash crops such as rubber, cocoa, palm oil, cashew nuts, groundnut, cotton, leather, and others.
Although plagued at the time by low global prices, the mainly subsistence-based agriculture sector still thrived. It provided huge revenues to the then Northern Region, creating livelihoods, and providing food for millions. This expansion was also manifest in manufacturing as the fifties and sixties witnessed the emergence of agro-allied industries across our region.
The Nigerian farmer at the time, like the rest of the country, was prosperous. He could feed his family, send his children to school, access quality healthcare and other basic infrastructure and could boast of a reasonably comfortable standard of living.
While I have no wish to romanticize the Northern Region’s agro-based prosperity, the situation was no different in this area of the country.
From the iconic groundnut pyramids to the fertile cotton farms and bustling tanneries, Northern Nigeria was at the cusp of unprecedented economic growth and prosperity for its people.
Several industries sprung in Kaduna, Kano, Gusau, Jos, and other parts of Northern Nigeria to take advantage of the regions superiority in the production of groundnut, cotton, leather, and other products. These industries spurred economic growth, generated thousands of jobs, and established these cities as emergent economic hubs.
Although oil revenue brought us unimaginable financial prosperity, it also stunted the inexorable emergence of an agro-based industry in Nigeria. Sadly, the relics of the textile industry here in Kaduna provide a graphic reminder of dashed hopes. The logical question, therefore, is:
What transformed a broad-based economy into one based mainly on the export of unprocessed petro-carbon and almost stagnated the economic development of Northern Nigeria?
The Oil Boom And Associated Dislocations In Our Economy
Nigeria’s exploitation of oil resulted in a dramatic transformation of our fortunes as a nation. Our national treasury witnessed unprecedented foreign exchange inflows due to huge global demand for oil. Subsequently, we invested these unplanned revenues in prestige infrastructural projects rather than in the productive sector.
Over time, the manufacturing sector’s contribution to GDP began a gradual decline from which it is yet to recover. Agriculture, which hitherto was the mainstay of the regional and indeed national economy, gradually took the back seat in terms of its share of our Gross Domestic Product (GDP).
Indeed, within two decades of the discovery of oil, Nigeria transited from self-sufficiency in basic foodstuffs to a net importer of food. Today, we rely on imported food such as rice, tomato, fish, poultry, and substitutes for those things we used to produce.
For example, we spend an average N1.3 trillion annually on food importation, according to Federal Government statistics.
To put this figure in context, it represents almost a third of the 2014 budget at N4.92 trillion. In addition, our food import bill is nearly double the Federal allocation to the three tiers of government for January 2014.
When our receipts for food export are factored in, these figures indicate that we are capable of funding our national budget from Agribusiness alone.
This means that if our agricultural potentials are properly harnessed, we can adequately grow our economy and achieve food security without recourse to oil revenue.
Despite this huge potential, the reversals that I earlier described were perhaps more pronounced in Northern Nigeria which was once renowned for its flourishing agriculture. So, what happened to those agricultural landmarks or activities such as the textile factories of Kaduna, Kano, and Gusau? What about Dadin Kowa and Vegfru agro processing factory in Bauchi?
What became of the Irish potatoes of the Plateau or the bounties of the Mambila Agriculture Belt? Have we forgotten the Wheat Belt and Chad Basin Area or Hadejia and Ja’maare Agricultural Belts? What about the many livestock ranches and related economic activities across the whole region?
In venturing answers to these troubling questions, a disclaimer is required. Despite our tendency for residual superstition, poverty, and prosperity are not products of divine decree. Neither are geography or ethnic composition responsible for which countries become prosperous and which remain stuck in poverty.
Rather, policy decisions and strong institutions determine which countries achieve prosperity and which remain stagnant.
I therefore locate the dislocations in our economic growth and prosperity in the skewed and shortsighted choices made by our policy makers over the years, particularly our failure to evolve policies that will provide power for industrialization. In addition, if we had focused on developing our productive capacities, sustained agriculture as the mainstay of our economy and promoted human capital development, Nigeria would perhaps be one of most prosperous countries not only in Africa but also in the so-called developing world.
We could have escaped the paralyzing poverty that currently holds majority of our people in its jaws. Nigeria could have been a major exporter of food to the rest of Africa and to the World.
Our real sector could have flourished, significantly grown our economy and, along with Agriculture, employed a majority of our youths. Perhaps, our people will have taken for granted the paved roads, hospitals, good schools and piped water that those of us in government ironically take delight in celebrating.
Rather, we have deviated to exporting unprocessed petro carbon products while food security remains elusive and our youths wallow in needless unemployment. Yet, we all know that no country has ever prospered from exporting unprocessed natural products.
To further demonstrate how policy lapses brought us to this pass, I refer to the comparative economic history of Nigeria and Indonesia to show how policies adopted by both countries led each down vastly different growth trajectories.
Indonesia and Nigeria both have large, ethnically diverse populations. They are endowed in natural resources such as oil and have a long history of agro-based economy. As of 1967, Indonesia’s per capita Gross National Product (GNP) was roughly half of Nigeria’s. Thanks to the right policy initiatives backed by appropriate political will however, Indonesia’s GNP doubled that of Nigeria by 1980.
The same disparity obtained in poverty alleviation, industrialization, life expectancy, and adult literacy rate in which Indonesia had recorded greater strides than Nigeria. I will not bore you by restating Nigeria’s continued poor position in these identified areas.
Clearly, Indonesia turned its Oil Revenue into a development miracle while Nigeria’s expected development became a litany of unfulfilled potentials.
So how did Indonesia grow its agriculture on one hand and manage its oil wealth on the other? The simple answer lies in the choices made by the policy elite in that country.
Like most of the eight Asian tigers, Indonesia focused on an export-oriented industrial policy. Nigeria, on the other hand, adopted an import substitution strategy that heavily depended on importation! Furthermore, Indonesia’s macro economic policies resulted in economic parity as opposed to the inequality that characterizes our economy.
Politically, Indonesia grew during a period of relative stability under a ‘benevolent military dictatorship’ compared to Nigeria where military rule significantly retarded our growth potentials, stunted our key institutions, and deepened those vices and values that continue to divide and hold our country down.
Finally, Indonesia invested heavily in human capital development, particularly in functional education, qualitative healthcare, and other basic infrastructure.
Comparatively, Nigeria remains hobbled by political instability, corruption, poor infrastructure, bureaucratic inefficiencies, poor macroeconomic management, especially our reliance on the capital-intensive oil sector and negligence of agriculture. These factors are traceable to our leaderships’ policy choices as well as the associated lack of political will and foresight.
Turning to agriculture, Nigeria has had its fair share of agricultural reforms aimed at restoring the sector to the centerpiece of our economic development. First was Operation Feed the Nation, which was introduced by the military administration of General Olusegun Obasanjo. Following the global oil shocks of 1980, the Shehu Shagari Administration also introduced Green Revolution.
Subsequent administrations also introduced reforms aimed at boosting agriculture and restoring the sector foundation of the national economy.
However, these centralized and often ad hoc interventions were either still born or made minimal impact. Certainly, the fact that it has taken more than 30 years for Nigeria to recognize agribusiness as the pathway to agro-led prosperity testifies to the lapses of these previous interventions.
Besides, we cannot achieve agro reforms with policies created in isolation from the states and local governments that will implement them. You should not determine where in Kwara State we require irrigation from Abuja, which is far removed from our local realities.
For me, the federal government’s role in agriculture should be limited to providing an overarching policy framework while the responsibility and resources for their implementation are devolved to states and local government.
To successfully grow our economy and drive our long-term prosperity, our agriculture must move away from a focus on primary produce and subsistence to fully exposing and encouraging investment along the entire agriculture value chain.
Road Map to Agro-based Prosperity for Northern Nigeria
I hold that only effectively planned and managed Agribusiness can sustain a Northern Nigeria Economy Free Of Oil Revenues.
Additionally, l assert that in order to achieve the agro-based prosperity that this region so deserves, we must also engender good governance, grow the right institutions to implement appropriate policies while entrenching equity and respect for rule of law as the foundations of agro-led prosperity.
However, we must not mistake Agribusiness for the ad hoc and centralized approaches to commercial agriculture that we have implemented over the years. Neither do I advocate the isolated agriculture programs implemented with limited success by states in the region.
Rather, I propose an approach that fully explores specified value chains by providing inputs to farmers and connecting them to consumers through the financing, handling, processing, storage, transportation, marketing and distribution of agro products. Each point of this value chain promises significant opportunities for economic activities, jobs and markets that will also grow the revenues of other components of the chain especially the small holder and large commercial farming concerns.
An obvious benefit of this approach is the emphasis on value addition as opposed to the sale and export of primary produce that has dominated our agriculture over the years.
Furthermore, this approach also makes it possible to forecast demand and therefore the expected financial returns due to its demand driven approach. The demand driven approach ensures that farmers and others along the value chain know from the beginning who will buy their produce or require their services.
Armed with that information, the farmer can, for example, raise credit and expand his business, safe in the knowledge that the market for his produce is assured.
Indeed, Northern Nigeria’s antecedents in agriculture and its current share of the food supply market in Nigeria clearly demonstrate that its agribusiness opportunities are limitless. Despite the retrogression described earlier, there remain largely untapped opportunities for agribusiness in the region, especially in view of high prices for food locally, regionally, and globally. Definitely, the economic future of this region lies squarely in appropriately planned agribusiness.
I am pleased to note that the Federal Government is advocating the same approach through its Agricultural Transformation Agenda. However, to achieve this vision of agribusiness-driven prosperity in Northern Nigeria, we must move beyond rhetoric and return to the basics.
One, we must put in place the necessary ingredients for building a prosperous agro-based economy. We must create basic infrastructure such as power, water supply, and good roads as dictated by the needs of agribusiness.
In Kwara State, for example, new road and power projects are dependent on the potential to service our emerging agro-hubs such as the rice belts on the bank of River Niger.
Two, we must focus on human capital development through the provision of functional education and access to affordable health care. The agriculture curriculum in our universities and research institutions must be reviewed in tandem with the dictates of agribusiness. Just as we have introduced entrepreneurship education from the senior secondary level upwards in Kwara State, I advocate that Agribusiness should be a compulsory part of the tertiary education curriculum so that our youths are equipped with the mindset and training necessary for successful agribusiness.
Three, there is need for greater collaboration among the 19 Northern States so that each can leverage on the others’ strengths in agribusiness for optimal resource utilization and to eliminate wastage. Indeed, we can grow agro-processing hubs in different states based on proven comparative advantages in those crops traditionally associated with Northern Region.
For example, Niger and Kwara States can invest in different aspects of the rice value chain and take advantage of the wet station and haulage facilities at the Ilorin Cargo Terminal.
Similarly, Katsina State can focus on cultivating cotton while Kaduna State specializes in the storage and processing ends of the value chain.
Four, I call for a Northern Nigeria Agribusiness Summit to fashion a road map for the restoration of our regions prosperity. This summit should involve major stakeholders in agriculture and should fashion out a modular approach to creating a strong Northern Nigeria Economy based on agribusiness. Legislative and institutional structures for proper implementation of the Summit’s outcomes should also be established to ensure compliance.
Five, at the core of successes and failures in our polity highlighted earlier is the quality of governance. Political parties must therefore entrench a democratic tradition that ensures adherence to rule of law, equity, and good governance by those elected on their platforms. Doing so will ensure that those who vie for political office have the experience and capacity to take bold decisions that will uplift our people and create incentives for increased entrepreneurship.
Six, as part of efforts to free the Northern Nigeria Economy, the 19 component states must increase Internally Generated Revenue. Clearly, opportunities for improvement in our Internally Generated Revenue remain extensive across the country. Without imposing additional burdens on our people, therefore, we have a duty to strengthen and expand the tax web to generate additional revenue for human capital development, infrastructure projects, and economic empowerment programmes.
As I conclude, let me make something very clear. For as long as the greater proportion of those without western education live in Northern Nigeria, as long as majority of our people live below the poverty line, as long as we harbor the largest number of people afflicted by disease, as long as our region remains a theatre of war, as long as our youths remain afflicted by unemployment, the vision of agribusiness-based prosperity that I have outlined above will remain a mirage.
As a matter of urgency, therefore, we must take firm action to end despair and deprivation in Northern Nigeria. We must prioritize people-focused governance that urgently transforms the lives of our people.
These, we must do. These, we shall do in the interest of a Northern Nigeria that is truly free.
Thank you for listening. God bless you.
First posted on Ilorin.info on Feb 19, 2014