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EXAMINE THE FLAWS IN POLICY OF MONO-CULTURAL ECONOMY AND SOLE DEPENDENCE ON OIL

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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).

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

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

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

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

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.

The objectives of the study are to:

To examine the flaws in policy of mono-cultural economy and sole dependence on oil.To examine the necessity of policy shift towards  agricultural revolution and economic diversification in the wake of dwindling oil revenue.To ascertain whether or not present policy adequately addresses the issue of dwindling oil revenue.What are the flaws inherent in operating policy of mono cultural  economy  and  sole dependence on oil?What   factors   necessitate   policy   shift      towards   agricultural revolution and economic diversification in the wake of dwindling oil prices?Does current policy adequately address the issue of dwindling oil revenue or not?

H0 – Policy geared towards mono-cultural economy and sole dependence on oil is not flawed.

H1 – Policy geared towards mono-cultural economy and sole dependence on oil is flawed.

H0 – Policy  shift  towards  agricultural  revolution  and  economic  diversification  is  not  necessary  in the wake of dwindling oil revenue.

H1 – Policy shift towards agricultural revolution and  economic  diversification  is  necessary  in  the wake of dwindling oil revenue.

H0 – Current policy does not adequately address the problem of dwindling oil revenue.

H1 – Current policy adequately addresses the problem of dwindling oil revenue.

Oil prices overtime especially from the 1960s  till  date  have  been  erratic,  with  no  suitable and accurate predictions regarding the fluctuations. This has had mixed effects on oil producing/dependent states. With them experiencing prosperity during oil booms and devastating economic effects, which are worsened by the price unpredictability, leading to lack  of  adequate planning to counter the sudden  drop in oil revenue. Beyond this are the major milestones recorded in the  search  for  and  processing  of  cleaner  energy  sources  and  alternatives,  which sooner than later might render crude oil obsolete.

In view of the  above,  one  realizes  that a  shift  away  from  a  mono-cultural  economic policy, promoting sole dependence on oil is inevitable. With the amount of resources available  in Nigeria, there have been calls for greater focus on the agricultural sector, the exploration of other resources cum sectors and the diversification  of  the  economy.  Despite  these  calls  the  country remains heavily reliant on oil even with the current  crisis,  leading  to  questions  being  asked  about what is being done to  tackle  the  effects  of  the  dwindling  oil  revenue.  This  study  therefore  serves the purpose  of revealing  the  authenticity  or  lack  of  in  the  formulation  and  implementation  of policy geared towards economic diversification and agricultural revolution.

The scope of this study concerns Policies implemented by government in the  wake  of dwindling oil revenue. In view of this, the study discusses  on  whether  or  not  the  government  has done enough to ensure growth in non-oil sectors and other policies it has adopted to cope with the  shocks  of dwindling oil revenue.  As  such,  the  study is  situated  on an analysis of the country‟s activities in the historic present- particularly from 2014 when the global  oil  crisis  began-  and  its  current activities; against this background, makes an assessment of policies, thus stating whether they are adequate or not.

There  is  this  perception  amongst  many  Nigerian  citizens  that   the   country  is   extremely  rich and that there is an infinite amount of money in government coffers. This is mixed with the belief  that  only  a  select  few  have  access  to  the  riches  or  enjoy  the  benefits  of  the  country‟s wealth. This has created  a  feeling  of  apathy  towards  issues,  be  it  within  the  country  or  how global  events  affect  Nigeria,  and  also  towards  government  policies  in  general  as  they  feel  they are not affected by them. This notwithstanding, the  non-informative  attitude  of  some  would- have-been interviewees, and the outright non-disclosure of some officials, even at government parastatals, pose a genuine limitation to the study.

The impact that  the  limitation  would  have  had  on  the  study  was   however  trivialized through the adequate adaptation of the  views  shared  by  other  respondents,  who  readily  shared  their informative views. A limitation was also faced in the collection of questionnaires that make

up the research instrument used  in  the  primary  data  analysis.  160  questionnaires  were  distributed but only 150 were returned, forming the sample size of the study.

This study  is  delineated  into  five  chapters.  Chapter  1  covers  the  background  of  study;  which  gives a concise history of Nigeria from a predominantly  agro  based  economy  to  an oil dependent one. Also, the  relevant  issues  of  statement  of  problem, objectives  of  study,  the  research  questions, and hypotheses, significance  of  the  study,  scope  and  limitations  to   study  and organization of the study are adequately discussed.

Chapter two entails the appropriate literature that covers the scope of the work. In line with this, associated concepts would be explained,  as  well  as  the  theories  that  serve  as  the  foundation  for the study.

Chapter three revolves around the methodology used in the  study.  It  incorporates  the  adopted designs, while exploring the sample population that served  as  a  representative of  the  larger population.

Chapter four serves as the main body of the work, wherein  the  objectives  of  the  study  are highlighted and treated. In delving into these, the study attempts to assess policy in the wake of dwindling oil prices.

Chapter five contains the summary of the work, conclusion and recommendations that are deemed relevant.

Rent Seeking: this is seeking to increase one’s share of existing wealth without creating new wealth. The effects of rent-seeking are reduced economic efficiency through poor allocation of resources, reduced actual wealth creation, lost government revenue, and  increased income inequality, and, potentially, national decline.

Crowding Out Effect: is argued by some economists to be a phenomenon that occurs  when increased government involvement in a sector of the market economy  substantially  affects  the remainder of the market, either on the supply or demand side of the market.

Diversification: the act or practice  of  manufacturing  a  variety  of products,  investing  in  a  variety of securities, selling a variety of merchandise, etc., so  that  a  failure  in  or  an  economic  slump affecting one of them will not be disastrous.

Agriculture: Is a science or art concerned with the cultivation of animals, land, plants, fungi, and other life forms for food, fibre, bio-fuel, medicinal and  other  products  used  to  sustain  and enhance human life.

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