BEYOND AGRICULTURAL REVOLUTION AND ECONOMIC DIVERSIFICATION: AN ASSESSMENT OF POLICY IN THE WAKE OF DWINDLING OIL REVENUE

BEYOND AGRICULTURAL REVOLUTION AND ECONOMIC DIVERSIFICATION: AN ASSESSMENT OF POLICY IN THE WAKE OF DWINDLING OIL REVENUE

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CHAPTER ONE

1.1 BACKGROUND INFORMATION

In the pre-and post- independence era (1930 to 1965), the Nigerian economy was predicated on agriculture. Agriculture employed about 70 to 80% of the country‟s labour force (Falusi and Olayide, 1980) and contributed 60% of the nation‟s gross domestic product (GDP) and foreign exchange earnings (CBN, 1985). Nigeria was heavily dependent on agriculture. It was the major source of funds for implementing the first development plan, 1962-1968 (Umaru and Zubairu, 2012).

In the oil boom era (1966 to 1977) the oil sector came to a prominent position as an important source of the national revenue. The oil sector which used to contribute a meager 2.6% of the GDP in 1960 contributed 57.6% to the GDP in 1970 and up to 99.7% in 1972 (Keke, 1992). Agriculture, on the other hand, contributed only 12% to the GDP in 1970 which culminated in rising food import bill leading to the persistent huge deficit in the balance of payments over the years (Ugwu, 2007). Within a decade up to 1983 however, agricultural output in Nigeria declined to 1.9 percent and export fell to 7.9 percent. Agricultural imports as a share of the total imports rose from 3 percent in the late 1960s to 7 percent in the early 1980s. Nigeria‟s unfavorable agricultural development resulted from the loss of compositeness among farm exports as the real values of the Nigerian Naira appreciated substantially from 1970 to 1972 and from 1982 to 1983. According to the Central Bank of Nigeria report, “export-oriented agriculture declined from 42 per cent of the total export in 1970 to less than 3 per cent in 1985.” (Umaru and Zubairu, 2012).

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In the post oil boom era (1977 to 2002), the price of crude oil started falling and/or fluctuating and there has been a growing concern to revitalize the agricultural sector as well as diversify the economy.

The sector has suffered from years of mismanagement, and inconsistency in the government policies and the era of huge oil revenues has also contributed in the neglect of the agricultural sector. Major agricultural products are Cassava, corn, millet, cocoa, palm oil, groundnuts, rice, rubber, sorghum, yam, and livestock production. The sector still accounts for over 26.8percent of GDP and two thirds of employments. Nigerian is no longer a major exporter of cocoa, cotton, groundnuts, rubber and palm oil. In order to revamp the agricultural sector, the federal government had embarked on and implemented several agricultural policies and programmes some of which are defunct or abandoned, and some restructured while others are still in place. These include the farm settlement scheme, National Accelerated Food Production (NAFPP), Agricultural Development Projects (ADPs), River Basin Development Authorities (RBDAs), National Seed Service (NSS), National Centre for Agricultural Mechanization (NCAM), Agricultural And Rural Management Training Institute (ARMTI) and Agricultural Credit Guarantee Scheme Fund (ACGSF). Others were the Nigerian Agricultural Cooperative And Rural Development Bank (NACRDB)/agricultural bank, Operation Feed the Nation (OFN), Green Revolution Programme, Directorate Of Foods, Roads And Rural Infrastructure (DFFRI), Nigerian agricultural insurance company (NAIC), National Agricultural Land Development Authority (NALDA), Specialised Universities for Agriculture, Root and Tuber Expansion Programme (RTEP) and rural banking scheme, etc (Salami, 2007).

Furthermore, the Federal Government in 2004 launched another economic reform called National Economic Empowerment and Development Strategy (NEEDS) programme to

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encourage private sector participation in the development of the economy. It was also aimed at promoting growth and poverty reduction through a participatory process involving civil society and development partners. In the agricultural sector, NEEDS were directed to influence improvement in the production, processing and distribution of agricultural commodities. NEEDS was short-lived for only one year and therefore could not transform or make significant impact on the agricultural sector (Ugwu and Kanu, 2012). During the 2007, President Yar Adua‟s 7 point agenda also places emphasis on Food security (Umaru and Zubairu, 2012). The most recent of policies or programmes is the Jonathan Administration‟s Agricultural Transformation Agenda (ATA), which has recorded a good amount of successes. Despite all these, agriculture has failed to keep pace with Nigeria‟s rapid population growth. Nigeria once exporter of food, now relies on imports to sustain its growing population.

Undoubtedly, the discovery of crude oil has contributed and assisted Nigeria's economic prosperity and growth. Nevertheless, the current dwindling in oil price since June 2014, after five years of oil windfall, has immensely affected the economy of major oil exporters like Nigeria, Saudi Arabia, Iraq and Libya, etc. and was majorly aggravated by Middle East unrest and wars. Another huge blow to crude oil exporters was America's reduction in the number of barrels they import from nations. These factors have created a bad market for Nigeria and thus, her economy is presently shaking. This scenario is worsening by Nigeria's running mono-economic economy and the abandonment of agriculture.

Thus today, agriculture has suffered from long years of neglect, mismanagement, inconsistent and poorly conceived government policies, lack of government meaningful incentive to farmers, lack of basic infrastructure and a lot of bureaucratic bottlenecks in executing policies and agricultural programmes among government agencies (Ariyo, 1997). This

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is coupled with the seeming lack of motivation and foresight to seriously pursue policies that encourage economic diversification.

1.2 STATEMENT OF PROBLEM

Nigeria is a country blessed with a plethora of mineral and agricultural resources. A state whose economy was predominantly agro based as at independence and showed promise in the exploration and development of other resources cum sectors; saw a swift turnaround from this trajectory during the oil boom of the 1960s. The financial windfall and renewed status as an oil producing state sowed the seed of over reliance on oil bearing the fruits of lethargy towards all other sectors. The price, a total blind eye towards non-oil sectors and a sharp decline of the agricultural sectors‟ influence on the Nigerian economy and in general a gradual and outright rot of the sector.

Today, thanks to the continuous search for cleaner, more eco-friendly and healthier sources of energy by developed states, crude oil has assumed a diminished importance. Due to the giant strides in shale oil exploration, the United States which is Nigeria‟s principal customer has cut its importation of crude oil by eighty percent and has decided to look inward and become an exporter itself. The first thing that comes to mind is the search for alternative markets, but with most states preferring to patronize cleaner energy producers, it seems the age of crude oil is gradually coming to an end. The problem is for a country like Nigeria whose source of revenue is dependent almost solely on the export of crude oil, this fact is apocalyptic. Even now the governments‟ decision to embark on austerity measures, last adopted by the Shagari regime when oil prices fell globally, shows the side effects of this development. The dwindling oil price means dwindling revenue for the country, which in turn will stunt economic growth and development, causing untold hardships within the polity due to lack of adequate financial clout

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to cater for pressing needs. These effects call for a drastic shift in policy, which traverses along the lines of economic diversification and resuscitation of the agricultural sector.

1.3 OBJECTIVES OF STUDY

The objectives of the study are to:

i.            To examine  the flaws in policy of mono-cultural  economy and sole dependence on oil.

ii.            To examine the necessity of policy shift towards agricultural revolution and economic diversification in the wake of dwindling oil revenue.

iii.            To ascertain whether or not present policy adequately addresses the issue of dwindling oil revenue.

1.4 RESEARCH QUESTIONS

i.            What are the flaws inherent in operating policy of mono cultural economy and sole dependence on oil?

ii.            What factors necessitate policy shift towards agricultural revolution and economic diversification in the wake of dwindling oil prices?

iii.            Does current policy adequately address the issue of dwindling oil revenue or not?

1.5 RESEARCH HYPOTHESIS

H0Policy geared towards mono-cultural  economy and sole dependence on oil is not flawed.





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