The International Monetary Fund (IMF) recently urged oil and gas- producing nations in Africa, including Nigeria, to immediately begin to direct their revenues to infrastructure and education rather than on “white elephants”. This is a timely and cautionary advice that should be heeded.
The IMF’s director for Africa, Ms Antoinette Sayeh, who dropped the advice based on a projected Economic outlook of oil-producing countries in Africa, stated that the oil and gas sector of the economy would not create as many jobs as other sectors.
Instead, she said, if the revenues from oil were directed to education and transport links, they would help create more jobs than the oil sector is providing at present. Besides, the IMF representative counseled African nations with huge revenues from oil not to hesitate to save for the ‘rainy day’ through such safety nets as the Sovereign Wealth Fund (SWF).
The IMF advised against investment on gigantic projects whose cost of maintenance outstrips their usefulness to the people. The advice to oil-producing nations in Africa is unmistakably direct. “It is not enough just to maximize your revenues and then to spend them on white elephants, you should use them wisely and save some of the wealth for future generations as well”.
This is an advice that many African governments, including Nigeria, have paid little attention to, or ignored completely, to their own peril. Which is perhaps why IMF has expressed concern that though some of the world’s fastest growing economies are emerging from Africa, such prospects have been blighted by lack of decent jobs, especially for youths, high level of inflation and poverty. All of these, the Fund said, could come with frightening consequences as is currently the case in many parts of Europe and Arab nations where social discontents have fueled protests against governments’ policies.
The Fund particularly singled out Nigeria, Guinea, Malawi and Ethiopia where it says tempers could easily flare up if governments in power fail to initiate policies using revenues from their natural resources like oil that will help tackle future emergencies.
We agree with the observations from the IMF. It is painfully true that many oil-producing nations in Africa, and indeed, Nigeria, have not taken advantage of the oil wealth to invest in critical sectors that will have multiplier effects on their socio-economic development and the human capacity of the citizens. Therefore, the IMF warning calls for prudent management of revenue from oil and gas.
This warning has become even more urgent, coming few days after the two global financial institutions – IMF and World Bank- raised an alarm over what they called “humanitarian emergency” in the West Africa’s Sahel region where over 19 million people are dying of starvation.
The two institutions had in a joint statement after a recent meeting in Tokyo, Japan, noted that they were “troubled by the acute humanitarian emergency in food security and food price volatility” across a swathe of West Africa’s Sahel region. This region includes Nigeria, Burkina Faso, Cameroon, Chad, The Gambia, Mali, Mauritania, Niger and Senegal. Our government should take cognizance of what is happening in the global economy and exercise fiscal discipline in the management of our oil wealth.
In effect, what IMF is saying is that government should prioritize projects that have direct value to the development of the country and the citizens rather than embarking on mega projects that have little immediate value. Regrettably, governments at both the Federal and state levels have often embarked on grandiose projects whose cost would have been better invested in more meaningful areas that will impact directly on the welfare of the people and accelerate the economic development of the country.
It is refreshing though that the Federal Government has voted a lion’s share of next year’s budget to education. But this will be meaningful only if the funds are released in time and targets met. Also, diversification of our economy has become imperative. Tremendous volatility in international oil prices means that government should prudently manage the oil revenue. Looking for alternative is now expedient.