Oil discovery in Nigeria.
On Sunday 15 January 1956, Shell Darcy discovered an oil field in Oloibiri, Bayelsa state. It was the first commercial oil discovery in Nigeria ; this discovery ended 50 years of unsuccessful oil exploration in the country by various international oil companies and launched Nigeria into the limelight of the Petro-State. As of 2000, oil and gas exports accounted for more than 98% of export earnings and about 83% of federal government revenue, as well as generating more than 14% of its GDP. It also provides 95% of foreign exchange earnings , and about 65% of government budgetary revenues.
Prior this period, agriculture was the mainstay of the Nigerian economy and source of revenue. The Western Nigeria was known for its cultivation of cash crops like cocoa and food crops like yam, beans, cassava, maize and others like poultry, Eastern Nigeria was known for its palm oil plantations, yam, and general commerce. Northern Nigeria was known for its groundnut pyramids in commercial quantities well positioned for export. It was also known for its traditional love for animal husbandry.
Effect of the oil discovery on Agriculture.
History and research pointed out that the discovery of oil marked the beginning of the end of serious attention earlier given to Agriculture in Nigeria. Ever since the discovery and subsequent discoveries, Cocoa of the Southwest began to die a natural death, the groundnut pyramid of he North gradually flattened out and the oil palm of the East fast became history.
With oil money being a quick money that we do not have to labor much before we lay our hands it, we began to see Agriculture as laborious and unrewarding. Between the year 2006 and 2014, we went through the boom era, crude oil was at an average price of $100 per barrel and went as high as $140 per barrel in mid-2014. However, with the discovery of shale oil by America, a major buyer and player in the international oil industry, there began to be a sudden and severe drop in the price of oil, the American ceased to buy and the oil price moved completely downward reaching almost $20 per barrel before stability set in. At this point, reality set in on our oil dependent minor economy. These event, couple with the general global economic down turn, Nigeria soon got into recession as may be expected, many Nigerians now complain of hunger in a country that once took pride in her enormous proceeds from the black gold.
What is the way forward?
The Minister of State for Petroleum Resources, Ibe Kachikwu on the 19th of June, 2017, during the 5th triennial delegates conference of the Petroleum & Natural Gas Senior Staff Association of Nigeria in Abuja revealed that Nigeria’s oil reserve will not last forever, he said Nigeria's oil reserve is about to dry and we need to have alternative sources of generating revenue to run the federation. He stated that the oil base may dry up in the next 30 years, while the gas may last just some 60 more years.
So, either the oil price stays at $50 per barrel it has risen back to now in 2017, or we completely got back to another era of oil boom, which all facts point out that it is not feasible, the reality still remains that without diversification of the economy, we may still run into more economic problems in the nearest future, no matter the price the oil sells for. We must make the economy never to be solely reliant on oil revenue again.
Agriculture as the best economic diversification tool.
Agriculture if properly done with right government policies, mechanization and individual citizens attention, Agriculture can fetch us much more money than oil. India, a nation with a population of more than one billion, is basically a service oriented economy with a presence of strong manufacturing and Agricultural sector which is growing substantially. Agriculture plays a significant role in the development of India, as it is the means of living for two-third of the employing class in India. It covers about 43 percent of India’s geographical area.
About 80% of Brazilian revenue is from Agriculture. The Gross Domestic Product (GDP) in Brazil was worth 1796.19 billion US dollars in 2016. The GDP value of Brazil represents 2.90 percent of the world economy. GDP in Brazil averaged 634.46 USD Billion from 1960 until 2016, reaching an all time high of 2616.20 USD Billion in 2011 and a record low of 15.17 USD Billion in 1960. This gives an estimated 204.3% growth in GDP from 1960 to 2016.
More than 80% Nigerian revenue is from Oil proceeds. The Gross Domestic Product (GDP) in Nigeria was worth 405.10 billion US dollars in 2016. The GDP value of Nigeria represents 0.65 percent of the world economy. GDP in Nigeria averaged 92.65 USD Billion from 1960 until 2016, reaching an all time high of 568.50 USD Billion in 2014 and a record low of 4.20 USD Billion in 1960. This is an estimated 172% growth in GDP from 1960 to 2016.
Brazil is now a leading producer of sugarcane, soya beans, wheat and poultry in the World. Brazil was a nation we were ahead earlier in terms of Agriculture as developing nations, but as they never discovered oil that will bring them quick money, they focused on what they have to drive their economy; Agriculture.
2 million farms dot America’s rural landscape. About 99 percent of U.S. farms are operated by families – individuals, family partnerships or family corporations. One U.S. farm feeds 168 people annually in the U.S. and abroad. In 2015, $133.1 billion worth of American agricultural products were exported around the world. The United States sells more food and fiber to world markets than it import, creating a positive agricultural trade balance for the nation. This is an economically powerful nation that has invested in other industries like technology, health, etc, and has also recently started its own exploration and exportation of its shale oil, who says Nigeria can not be as great with economic diversification?
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| RELATIVE COMPARISON OF OIL DEPENDENT NIGERIA GDP WITH AGRIC DEPENDENT BRAZIL GDP |
Agriculture is capable of reducing the country’s level of unemployment on the account that the sector is labor intensive. Agriculture will curb the effect of rural-urban migration which will help to decongest urban areas and make life easier for people both in the rural or urban area. It will help the government to make more effort in developing the degrading infrastructural facilities throughout the nation in attempt to ease movement of goods from one location to the other, likewise for preservation of Agricultural output. Development of the Agriculture sector will also help in improving other sectors and thereby curbing the level of the existing corruption in the country.
The list of the importance of Agriculture to Nigeria economy is endless. Therefore, the bulk of the work lies in the hands of the government and would-be entrepreneurs to take advantage of the enormous benefit that is in the Agriculture Sector instead of depending on crude oil, which seem not to be enough to sustain the country’s economy now and not so much promising as well in the future.
The global population is expected to increase to more than 9 billion by 2050, which means the world’s farmers will have to grow about 60 percent more food than what is now produced. This also gives opportunity to individual to start thinking which line of Agriculture he can suits in, consult agricultural specialist to guide on where the future opportunities lies and become one of the few that will hold the key to the future’s revenue. Soil: What is in it for you?
Ahmed Olanrewaju Aliyu.Researcher,Agribusiness consultant.
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