Prospects good for oil rich Nigeria despite Boko Haram and a corrupt elite

Oil revenue provides 70 % of Nigeria's booming economy. Tax collection being notoriously poor, without oil Nigeria would be a country without much in the way of education, health services, infrastructures and urban renewal.

A lot has been said and written about corruption and a corrupt elite creaming off the country’s oil money. Although much of this is true it is only the cream that is taken, the bulk of the milk goes to the state.
 

But there is still a problem in the country with oil theft, now on an alarming scale, organized by corrupt officials, businessmen, and politicians.

Not so long ago the problem was the insurgency in the Niger delta where young well-armed, guerrillas sabotaged pipelines for well over a decade until a peace agreement was negotiated by the much underestimated late president Umar Shehu Yar A'dua, Goodluck Jonathan's predecessor who died in office. In reality the deal was a buyout but it served its purpose.

The proportion of the Nigerian economy derived from oil revenue is less than previously thought. As was in the news Nigeria of late reviewed its national income figures, a move endorsed by the International Monetary Fund. By these new figures the country has overtaken South Africa to become the continent's largest economy.

To get some idea of the scale of Nigeria’s economy, the economy of Lagos alone is one and a half times the whole of Kenyan economy. Nigeria has become the 16th largest economy in the world. Some say that within ten years Nigeria could be among the top five economies of the world. That remains to be seen.

However, the statistical revision shows that the share of the oil and gas industry in the economy is not as high as 32% as before believed but stands at 14%. Nigeria has diversified much more than was ever guessed.

Today services are the main engine of the economy, contributing half of national income. Telecoms which were before estimated at 0.8% are now reckoned to be 6%. The film industry, Nollywood, an equally fast
growing sector, is 1.4%. Manufacturing has also increased.

Despite the scores of articles about how the Muslim northern half of the country is so poor, in reality the situation in the north varies sharply from one state to the next, being particularly bad in the north east where Boko Haram mainly operates. In contrast the ancient city of Kano, the capital of the north, has an economy that easily rivals that of Ghana, one of Africa's more prosperous countries.

Earlier statistics grossly underestimated Nigeria’s opportunities and potentials. The new statistics display a much lower and healthy debt-to-GDP ratio for Nigeria. Thus Nigeria now can if it wants to be able to borrow more and grow faster. Foreign investment in the country now increasing rapidly will increase even faster.

If oil provides the bulk of the government's revenues it is fair to ask where the money goes. One can see the tarred roads, new bridges, the new railway line from Lagos on the coast to Kano, the more efficient airport at Lagos, the relatively new airport at the capital, Abuja where today light railways are link the commuter towns with the city. However 50 km from Abuja one can find villages whose health centers stock hardly any drugs. One can find rundown schools and roads full of pot holes.

Nigeria’s electricity consumption is well below the African average. Income distribution is worsening. In the insurgency torn north east of the country, poverty rate is as high as 60% compared with 30% in Lagos and 10% in Calabar, the south eastern city renowned for its beautiful women.

 
Calabar it must be said is by any standard an exceptionally well run city. Those who know only about the havoc Boko Haram has wrecked in Nigeria should pay Calabar a visit to see for themselves the other side of life in Nigeria.

Nigeria’s Agriculture does not get the attention it deserves. The number of extension and advisory agents is miserably low and few are women, even though much of farming is done by women.  Meanwhile the elite hold champagne gargling weddings while many people eke out a harsh existence.

If the country is incapable of helping the poor with sufficient facilities it should consider deploying cash payments. These should be sent regularly by phone, as is now possible thanks to Kenya's pioneering work. Mexico, Brazil and now India already do this and to good effect.

Receiving real cash direct to their phone, families can pay schools fees can pay for health services. Families would be able to afford fertilizers and buy motorbikes (useful for transporting goods to market).

Cash payment avoids an inefficient, lazy and sometimes corrupt bureaucracy, as well as all the middlemen. Oil money would go where it is meant to go. And if money reaches the homes of the north east, Boko Haram would garner less support.

Today oil in Nigeria is less important than it once was. But it is still the country’s black gold. And if used well it could transform completely the territory that Boko Haram today thrives in and so undercut it.