The Natural Resources Fallacy – Punch Newspapers

WHEN discussing the restructuring of the Nigerian political system and arguing for fiscal federalism, it is assumed that all states or regions have resources that governors can fall back on rather than going headlong to Abuja. Resource control has also been at the center of unrest in one region of the country. This resource debate goes beyond Nigeria, as speakers question that Africa remains poor despite having more than 30% of the world’s mineral and natural resources. They claim that Africa is being raped or drained of its resources.

However, a resource remains inanimate until an inventor finds a use for it. Copper in Zambia, uranium in Niger or coltan in the Congo would have been of little value to the peoples of these countries without the inventors. Ditto for the Niger Deltans, most of whom would have remained satisfied fishermen to this day. The parable of Jesus comes easily to mind, the talents (read resources) were taken from the steward, who kept them in the ground, and given to the stewards who multiplied theirs. Africans give their primary resources to those who know how to value them, whether it is copper ore for electrical wiring or uranium for electricity, it is biblical. In the case of Nigeria, we donate our crude oil to others and collect premium motor gasoline from them.

The intuitive thought is that being endowed with resources automatically translates into societal wealth. We cling to these views despite what real life tells us that mineral resources do not equal societal wealth in this new world. We have the term “resource curse”, but we choose resources. We have heard that winning the resource lottery puts nations into poverty, but we choose resource endowment as the reason to restructure the political system into regions.

Those who pass on the cliche of regional resources replacing federation account allocation never give details of how tin in Jos or bitumen in Ondo or gold in Osun and Zamfara states will suffice . Nigeria had a federal ministry of solid minerals for 37 years, but how many industries has it spawned?

The resource endowment also attracts conflicts of which Nigeria has had its fair share, the Niger Delta crisis and most recently the crisis in Zamfara State. We are aware of the blood diamonds of Sierra Leone and the perpetual conflicts over minerals in the Democratic Republic of Congo. In addition, we have the degradation of the environment and the poisoning of inhabitants by contaminants that enter the food chain or the water table.

We have misapplied David Ricardo’s Theory of Comparative Advantage which determined how Nigeria engages in international trade, basing our trade on our natural resources only. The West had a perceived advantage in growing cocoa, so we exported cocoa beans and built Cocoa House. The North had a peanut advantage, so peanut pyramids gave us Ahmadu Bello University. The East had the advantage in palm kernel and oil palm and Nigeria was number one and number two respectively. But, how come Cadbury Nigeria sources cocoa products from India? I don’t see India’s comparative advantage over Nigeria. What comparative advantage does Singapore have for having multiples of Nigeria’s installed refining capacity? Indeed, smart nations had abandoned this theory as we took it hook, line and sinker. From this we see that having a resource is not an advantage, other things come into play. An important question is: is it exploitable? Is there a growing international market that Nigeria needs to break into? It took Nigeria longer to monetize its gas than it took to monetize oil. We have the second largest bitumen deposit, but we are not able to monetize it.

To help understand the fallacy of natural resources as a source of societal wealth, I will take us back to a December 16, 2010 article in The PUNCH by a former First Republic Minister of Education, who also served as Minister of Justice under the Second Republic. , the late Chief Richard Akinjide, SAN. The article identified three categories of assets that contribute to societal wealth: natural assets, our bone of contention here; productive assets, i.e. the productive capital that accumulates over time (Lagos State is the fifth largest economy in Africa although it is not resource-rich); and intangible assets represented by the quality of a society’s human resources and the value of the institutions created and managed by local HR.

He wrote that unlike the other two assets, HR can be either an asset or a liability. HR from some countries received a high positive result while HR from Nigeria received a negative result of 71%! It is to this responsibility that an intelligent governor of a region must agree and turn. This is the asset that Lee Kuan Yew used to make Singapore what it is today. If the people of Osun state turn to their gold, I wish them the best, but gold hasn’t done much for Ghana. If the natives of Ondo State are looking at their bitumen, I also wish them good luck. The United States has used its positive HR to do many things, including landing men on the moon. Our negative HR has made crude oil an albatross around our necks. He forbade us to monetize our bitumen deposits and use them for the construction of our roads. Unfortunately, Nigeria imports bitumen for its roads.

I repeat, it is the enterprising governor who will make the difference in a region or a state. I observed this game in Ogun State. For much of its existence, Ogun State was a civil servant state, then came an enterprising governor and within a few years, Ogun State became the most industrialized state in the federation. His successor-by-commission lost that position to a neighboring state by firing a major state investor. Ogun State also lost the proposed Catholic University in Nigeria to another state.

Why can’t Nigeria import copper ore from Zambia, or iron ore and bauxite from Guinea to run strategic industries from Nigeria? Our industries must not be based solely on local raw materials. Mind-boggling is the lack of response to this very telling article, a lesson in itself. For more than ten years, this diagnostic article has been passed over in silence and the pathos continues to ravage the country. Our human resources continue to weaken the country by destroying more than half of our natural assets. Indeed, natural assets count for nothing without a positive human resource. And, if the day to restructure the political system ever comes, and it will, we will discover to our chagrin that without restructuring our minds to elevate our human capital, we will be putting old wine into new wineskins.

Another cliche to transform Nigeria is that we should pay more attention to developing our human capital. This is after increasing our universities to nearly two hundred, along with several other polytechnics and monotechnics. If it is the inadequacy of the HCD, how come the products of our universities are sought after all over the world?

As Chief Akinjide pointed out, the Nigerian economy neither absorbs nor satisfies the aspirations of Nigerian emigrants, so they seek pasture elsewhere. How come we think producing more university graduates will lead to the transformation of Nigeria? Except we view our academically enhanced human resources as not for Nigeria. After all, the diasporas have increased our remittances to almost match what we earn in petrodollars. Isn’t that another level of human trafficking, shipping our human resources like we did during slavery for a few more dollars?

There is a clamor for the population to empower themselves with voter cards and change the current guard, it is not enough. Voters must be well informed not to vote for a populist rather than a pragmatist. The voting public is part of the negative human resource, which can be swept away by a soft-spoken demagogue who promises a stronger naira when we need a depreciating naira.

What we need most are philosopher kings, who will help turn our liabilities into great assets, and business leaders, who understand these dynamics. Currently, those who aspire to lead us enjoy the paraphernalia of offices and community gifting projects as if funded by them and not by federal allocations. Let us advocate the restructuring of the mind rather than the political restructuring.

Dr Jaiyesimi writes from Sagamu and can be reached via [email protected]

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