“The world as we have created it is a process of our thinking. It cannot be changed without changing our thinking”
― Albert Einstein
Just as Moses received a divine message from God from the midst of a burning bush only he could see, as a nation we are faced with our ‘burning bush’ moment, but are we seeing and hearing the message?
Lets take a look at some of the quiet headlines we have seen this year…’President Biden ends the Keystone pipeline project and moves to rejoin Paris climate accords’, ‘French oil giant TOTAL acquires 20% stake in largest solar developer’, ‘54% of new cars sold in Norway in 2020 were electric’, ‘IOC’s in Nigeria reject deep water provisions in PIB’, ‘Surge in Tesla shares makes Elon Musk worlds richest man’, ‘ENI (formerly Agip), Italian energy company eyes clean energy investments in India’, ‘China aims for carbon neutrality by 2060’, ‘Renewable energy surpassed fossil fuel for electricity in Europe in 2020’, ‘All US federal government vehicles to be changed to EV’s’…
These headlines all point to one conclusion – we are seeing a gradual global movement away from petroleum.
It is coming sooner than we think.
Every major industrial change is preceded by a major breakthrough in technology – from the 1st industrial revolution driven by the steam engine powered by coal, which was overtaken by the internal combustion engine which ushered in the petroleum industry, for which Nigeria is a huge beneficiary to the present 4th industrial revolution which is a fusion of advances in artificial intelligence (AI), robotics, the Internet of Things (IoT), 3D printing, genetic engineering, quantum computing, and other technologies.
In lay man terms – advances in technology gives rise to major changes in the economy of countries, yesterdays economies driven by coal and the steam engine gave way to the ‘big boys’ of crude oil exemplified by OPEC countries, the IOC’s (International Oil Companies) and our days of economic boom as a country which gave way to the age of computing and data driven economies.
The geometrically increasing power of computing means that advances in technology are coming faster, and with it CHANGES in the global economy.
The world is moving away from oil, particularly the transportation industry with Electric Vehicles (EV’s) matching ‘petrol’ powered cars in price and performance.
This begs the question ‘Is Nigeria prepared or preparing for a post oil world?’ and ‘Are we in Plateau state aware of the negative impact such a scenario will have on us?’
Crude oil sales account for about 70% of the Nigerian governments revenue – and last year when prices crashed, a result of the pandemic we lost about 80% in revenue resulting in the Federal Government going cap in hand to the World Bank and IMF to borrow funds. And given that these monies are shared monthly via the Federation Account Allocation Committee (FAAC), Plateau state was not and will not be spared the effect of this shortfall and loan repayments as well.
So what do the figures tell us?
In a space of one year oil price went from ~$66/barrel in 2019 to <$30/barrel in 2020; and Plateau state lost about 22% of its revenue from the federation account. In the first half (H1) of 2019 our state received N21.37 billion from the FAAC and within the same interval, H1 2020, N16.53 billion was received from the FAAC. Internally generated revenue however remained almost constant at N9.41 billion in H1 2019 and N9.40 billion in H1 2020. Adjusting these figures for inflation which reached more than 14% last year and we will see that the actual loss of revenue (value) is >30%.
Simply put, if Mr Plateau made one thousand naira (N1000) in 2019 and he could afford to buy 2 large tubers of yam, in 2020 he made less than N800, and he could only afford one large tuber of yam and a little ‘change’ for keke Napep.
With the push by developed countries for increased utilization of renewable energy we should expect to see a continuous decline in revenues from the FAAC (or increased indebtedness beyond our capacity to repay) until a point is reached when Mr Plateau will have to depend on the crumbs from other peoples tables.
What can we do about this?
As a state, we do not have a lot of control over what is available from the federation account, but what to do about our Internally Generated Revenue is entirely up to us.
The Plateau State Government should take practical steps towards increasing our IGR.
A breakdown of the revenue we generate as a state shows that more than 90% is generated from taxes; taxes on personal income (PAYE), fines, licenses and levies on business activities, road taxes and others. With income from investments being insignificant.
How do we increase this?
How do we attract companies and businesses to invest in the state?
How do we create an environment in the state for existing local businesses to grow?
How do we create industries out of the potential cash crops we have like coffee, wheat and cotton?
How do we utilize a PPP model to generate revenue from investments?
How do we benefit from the mining sector, most of which is done illegally by artisan miners?
How do we………………………………..………?
We as a people need to start asking the right questions of ourselves and our leaders because it is only in asking the right questions do we begin to position ourselves for the new thinking needed to start preparing for a world that is already in transition.
Change is coming for us whether we acknowledge it or not, and what needs to be done requires us as a State to be strategic and wholistic in approach.
Some might see this challenge as overwhelming, however as JFK, a former US president once said and I paraphrase………….”LET US BEGIN”.
Alfred Dapal Damiyal
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