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 January 25, 2016 - 1:16 AM EST
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Oil Prices Crash - We Can Diversify Forex Sources Through Quality Education - Senator Baba-Ahmed

Crude oil prices began to fall in 2013. Now there is the fear that oil prices are almost down to production cost. What does this portend for

Nigeria
? Having failed to diversify our economy and revenue sources, it portends great deal of economic hardship for the country, and it will be in series and not limited to one area. One sector will affect the other. It will be a succession of crisis. It will affect everything, including security. It comes at a time
Nigeria
wants to end insurgency.

Did you foresee this situation? What is more important is the failure of our planning agencies and the so-called Ministry of National Planning. They went about doing the NEEDS, SEEDS and LEEDs and failed to do a forecast of the oil price fall. We didn't need all this. The most important forecast we needed was the dynamics affecting the international prices of crude oil. Also in complete failure were the offices of the Chief Economic Adviser, Minister of Finance. All of them failed to study and predict the trend. Another fundamental issue is since 1999, there is what we call Excess Crude Account, that is the difference between the budget benchmark and what was sold above the benchmark. That difference in the past 15 years should have been used to cushion the difference. The plus then should have been equal to the minus now. That money cannot be found. Our government should have been responsible enough to invest the excess crude funds in the past 16 years to cushion the effects of the fall in prices. If it was invested, we wouldn't be lamenting today. What immediate steps should government take to keep afloat? There is a mistake when we say immediate steps. Government should be proactive, not reactive. There should be long term planning. We shouldn't hastily react to the sharp drop because if we react spontaneously we will repeat the same mistakes, just because the price of crude oil has dropped. If it goes back to $100 per barrel, we will go back to our old way of life. What we need to do is to evolve a new strategic approach, not to react to the current trends. Good governance is the way to go. You can't diversify the economy without good governance. Diversification cannot succeed without good governance. They are one and the same thing.

Nigeria
has made progress by voting out the previous era. But democratically-speaking again, the new era has to live up to its responsibility of providing quality, good leadership within reasonable time. Good governance delayed is good governance denied. Good governance leads to diversification and diversification can only be aided by education, not university degrees and diplomas. The farmer who is better trained and educated is the one who knows how to use mechanised implements, improved seed and access micro-credit. To diversify government has to drop the notion of growth and pick up the principle of development, which is calculated on the basis of Gross Domestic Product (GDP). The statoscope used for the heartbeat of an elephant cannot be used to measure that of a mouse. The government thinks about growth in terms of GDP, but when you want to diversify GDP growth is not relevant. What is important is changes in specific industries that you will be interested in. A good example is how much of our agriculture GDP is attributed to people using farming implements and how many of that in the next one year are using mechanized farming implements, pesticides and fertilizers. For the past 50 years people carry bags on their heads and today in 2016 it is the same in the middle of
Abuja
. We are not changed; we are not developing. Apply the analogy to each and every sector of our economic life. How do we diversify the sources of our foreign exchange earning? Nigerians working abroad due to better education can equally be a source of forex. Take a look at the large numbers of Indians working abroad and the amount of money they send back home. Take a look at Lebanese who are working abroad. What is the percentage of Nigerians working abroad relative to our working population? You will find that it is relatively low, compared to our status. Also look at the character of Nigerian expatriates; do they look back to
Nigeria
and remit fund sufficiently or they just look at their mortgages abroad and upkeep abroad? Through better education
Nigeria
can get more of its citizens to work in foreign airlines. Not many Nigerians work in foreign airlines in spite of the fact that we fly a lot. It's not just foreign airlines. But also foreign companies. For instance, how many Nigerians are working in foreign companies? Why are very few Nigerians working in the
Dubai
construction companies and real estates? But if you check the patronage of Nigerians in
Dubai
, it is not comparable. It is because Nigerians are poorly educated. If Total Oil will have half a million Nigerians working in its company officially outside of
Nigeria
and most of them send five to ten per cent of the income to
Nigeria
, imagine what impact it will make. Foreign exchange from our well-trained Nigerians who work in foreign companies could compete favourably with crude oil. And only education will make that possible. We have no alternative than to educate ourselves. And to do it very well, I have always argued that low quality education like in medicine is dangerous, because if the quality is low, you will die. If the quality of education is poor, what you have is a disaster. How can government invest in education to realise this benefit? The anti-corruption stance of Buhari, as Draconian as it is, has not done anything on procurement, which is how money gets frittered away. Not talking about fraud in the procurement sector tells you they don't even know what corruption is. If you spent N1 billion on goods and services where only 10 per cent is delivered and 90 is missing, you have not done anything. I call it inefficiencies of procurement. You have a guard against such loss. If out of the money federal government is spending, it is delivering 95 per cent, the educational sector will be good. You see a building which N 1 billion was spent on is only worth N100 million. The same goes for equipment and very high unnecessary recurrent expenditure. Government needs to spend more on education.

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Source: Equities.com News (January 25, 2016 - 1:16 AM EST)

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