Farouk Gumel - A case for why oil should not be Nigeria’s No.1 Focus

 


Farouk Gumel - Oil was discovered in Nigeria in the 1950’s and today, Nigeria is the eleventh-largest oil-producer in the world and Africa’s main oil producer. In 1977, the Nigerian National Petroleum Company (NNPC) was founded to participate and regulate the country’s oil sector. Since then, significant progress has been made in terms of increasing production, revenues, and consumption. We must thank NNPC for Nigeria’s dominance in Africa when it comes to oil production. This dominance however came with its downsides. As a nation, Nigeria became over reliant, or one could even say addicted, to oil revenues.

From the 1970’s, we convinced ourselves that Nigeria is rich. And maybe we are. But the reality is poverty has always been around growing side by side with our oil production and the apparent wealth. This is because as oil brings revenues to a nation, it does not create jobs in a nation. According to the International Labour Organisation (ILO), the petroleum industry directly employs 6 million people.This is less than 1% of the global labour force.

In the last decade or so, global oil prices have been extremely volatile. Many oil producing nations have seen their incomes drop significantly as average oil prices continue to drop. The apparent wealth of many oil producing nations suddenly disappeared. Countries who were smart enough to save started dipping into their savings. Those who invested started selling assets to make ends meet. We also saw a few who simply ran out of money and were unable to pay salaries or service their debt. The concept of “oil rich nations” quickly changed to “struggling oil dependent economies”.

Today, the 13 countries that make up the Organisation of the Petroleum Exporting Countries (OPEC) have a combined population of approximately 500 million people. Nigeria accounts for 208 million or 40% of this population.So clearly, we are an outlier and we must consider this as we plan for our future.

Although Nigeria, as a country, has been adversely impacted by the decline in oil prices, it remains a going concern and has been able to meet most of its international and domestic obligations. The country has, in recent years, aggressively pushed to move away from reliance on oil. We simply have no choice especially as the oil sector only brings revenues, it does not create massive jobs! According to the ILO in 2005, the Nigerian oil industry employs less than 315,000 people (direct and indirect).

Farouk Gumel, the Group Executive Director said “Nigeria looks to the agriculture sector to decrease oil dependency”. He adds that “agriculture recorded a steady growth even during the country’s recent recession. It is becoming the largest Economic sector in Nigeria and this is helping to improve Nigeria’s GDP. Furthermore, agriculture is the only sector that has the potential to create massive jobs”. In a recent interview Farouk gumel added,”Nigeria hopes strong fiscal and monetary policies will further encourage additional investments in the agricultural sector”.

Farouk Gumel said TGI Group is already investing millions of dollars in out grower farming programs for rice paddy, soya beans and maize in Nigeria. “These programs supply raw materials to TGI’s rice mill, multi seed oil crushing facilities and poultry farms.” He added. TGI also gives guaranteed offtake agreement to the farmers. These offtake agreements enable the farmers to borrow funds for the enhancement and expansion of their operations. He concludes that “Agriculture is the key to inclusive and sustainable economic growth thereby leading to long term peace and prosperity”.



Location: Unnamed Road, Nigeria

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