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Date Published: 05/21/10

How to Diversify the Bayelsa Economy By Richard Omagbemi


Development experts have long concluded that a strong, growing, sustainable economy is the goal of every nation for it enhances standard of living by creating wealth and jobs, encouraging the development of new knowledge and technology and ensuring a stable political climate. As expected, scholars hardly often agree as to the how.  Those of them who see the World through the prism of Adam Smith suggest that standards of living will rise when production and exchange of goods is stimulated under minimum governmental regulation in a free market economy while others believe that State control of resources as enunciated by Karl Marx is a leeway to an egalitarian society. The very essence of government is public welfare, which is not possible without building a sustainable economy.

For some time there has been a national debate as to how to handle the oil dependent economy and to grow it to achieve the aspirations of the Nigeria’s 20 20-20 plan. Researchers have always suggested diversification of the economy as key. Previous governments have tried to heed this advice in their own way. The latest efforts came from the Obasanjo administration (1999-2007) which attempted a half hearted diversification of the economy by refusing to count on political restructuring at the same time. It must have been half ‘Adam Smith’ since government hand was not unseen in the free market attempting to privatize national wealth as well. Yet there are a few things to pick up and sustain from this era, such as the Cross River State’s Tinapa tourism agenda which proved to be a key element of the State’s sustainability requirement as attested to by the latest study on this correlation carried out in the Middle East Gulf States by Booz and company 2009

After an analysis of productivity, competitiveness and relation of economic volatility resulting from concentration of economic activity, employment and economic performance, Booz discovered that there is a demonstrable link between diversity and sustainability. Diversification the study argues can “reduce a nation’s economic volatility and increase its real performance. In contrast, the study posits that poor economic diversity makes for low productivity and competitiveness”. In the same vein, “high economic concentration leads to volatile growth and fluctuating economic cycles. Volatility in concentrated economies may lead to structural unemployment and may engender systemic risks” The study recommends that nations utilize external trade export of goods and services to help reduce economic volatility.

The study recommends that economic diversity should be measurable, monitor able and seen as a critical component of sustainable economy. Here lies the hard part. Apart from this ‘uphill task’, how exactly should policy makers diversify their national or sub-national economies? Here this study agrees with many others that four broad actions can be taken depending on the context:

  • Diversify economic bases output and input distributions-stakeholders should encourage the movement of Labour and Capital into productive economic channels as well as develop new knowledge and technology. Please don’t confuse this with the IMF structural adjustment conditional ties which proved to be unsustainable in the 80’s because then development meant more of economic growth without environmental stability.
  • Nations should foster the growth of external sector by exporting a wide range of value-added goods and services.
  • Enhance productivity and competitiveness of the economic base through resources and strategic investments, while enhancing human and financial capital, technology and knowledge to enhance innovation to allow economies to create economic value from the scratch.
  • Create clear diversification strategies and mechanisms to mitigate economic volatility and spillover effects, uncertainty and perturbed business cycle transitions.

This study is relevant to what is happening to Nigeria and Bayelsa state at the national and sub-national levels of analysis. For Nigeria, the vision 20-20 recognizes the imperative of diversification towards sustainability, but in contrast to the Gulf States in the Middle East with same dependency ratio on petroleum products at least at inception, Nigeria continues to depend on oil money despite many development plans and visions since the 70s.In 2005, Abu D Dhabi a high concentration oil state drew 59% of its GDP from oil and gas while Dubai had whittled down its own to only 5%. Nigeria is still above 60%. In 1980 54% of Nigeria’s labor force worked in the Agricultural sector but by 2006 the figure has gone down to only 3%. Now there is hardly any figure to compare with. Everyone is headed for the lucrative oil sector.

It is not that there have not been clear diversification strategies like the vision 20-20, the NEEDS, and at State level the Bayelsa State Sustainable Development Strategy (BYSSDS) but these documents assume too much has been settled to be realistic in them selves not to talk of being implementable. Nothing that stands against the laws of nature can be sustainably implementable. The assumption is that you can divorce economic strategies from requisite political adjustments. The Nigerian Governors forum grappling with volatile revenue bases recently organized a seminar on taxation suggesting Nigeria should pursue a ‘tax state’ rather than remain the ‘rentier State’. How do you achieve that without political restructuring that promises to sweep you out of office? It becomes another plan that is so good on paper but without the people’s participation may not endure.

Let us focus on Bayelsa State, which is of strategic importance to the Nigerian economic viability. The State is also unique because it suffers disproportionately from the Nigerian oil burden. What options or diversification presents itself for Bayelsa State which records nearly 100% dependence on oil money allocation from the centre for her development activities? The difficult terrain is a situation that is all too well known and articulated in many for a. We can actually follow the above model to diversify the State’s revenue base. That is to say we can do those 4 suggestions from the said research findings but more because the political and social question must be addressed in tandem with these recommendations to be sustainable. We can diversify her economic bases output and input distribution in an environment whereby Stakeholders and government work together to invest in Agriculture-including majorly fishing because this sector is the highest employer of labor.

Diversification here translates to reduced unemployment that is assuming the people have access to their land and own the resources therein or at least can authorize the end users of their land by way of political consent or electoral integrity. When the government invests in agriculture by way of subsidies and productivity incentives to genuine farmers, it enables them pay living wages to attract farmers back to farms. The State or Stakeholders will have to establish Marketing Boards and manage an efficient micro-credit facility to enable people access capital for business.

Bayelsa State can also foster growth in the external sector. With Globalization in full swing a sub- state can become a player in international affairs. So Bayelsa needs to provide access for foreign direct investment to flow in through pursuing an enabling investment climate. Her tourism export is her unique culture her unique environment, flora and fauna which does not need to change through laborious manipulations.

Bayelsa can enhance productivity and competitiveness by investing in the growth of her human resources through skill acquisition, education, and computer literacy as well as her financial standing through good fiscal management practices to smooth liquidity fluctuations. She can also boost internally generated revenue through the usual means and also strategic investments, through credit management and even issuance of bond at times of liquidity downturn. The State can become more competitive by encouraging small and medium scale businesses through infrastructural developments, while reducing corruption in governance through adhering to due process, enacting fiscal responsibility legislation and adopting e-governance procedures.

As part of strategies to diversify the economy, the creation of a Direct Labour Agency (DLA) is in the making. The Agency among others would create job opportunities for the unemployed and under-employed youths including female adolescent, the physically challenged as well as gifted people. The DLA would also provide a temporary buffer between graduation and gainful employment and create income generating economic activities and  economic empowerment for the people.

Besides, government also seeks to engage the active segment of the Bayelsa populace, with a view to providing vocational skills for the Sustainable Development of the State. Here, the State government has planned to deliver skills training to 5,000 Bayelsans in 2010 in the areas of photography &  video production; hair dressing & cosmetology; welding and fabrication; woodwork & furniture making; horticulture and landscaping and Catering fast food business. Since government is about people, the goal of this strategy is to create job opportunities, reduce poverty and empower the people.

Recently, the Hon. Commissioner of Finance and Budget of Bayelsa State, Dr. Opuala-Charles Silva has promised the immediate implementation of the Stimulus Package as it affects the  establishment and reinvigoration of micro-credit schemes to improve peoples’ access to capital to facilitate the growth of Small and Medium Scale Enterprises. The Commissioner has attributed the prevailing youth restiveness in the Niger Delta Region to lack of job opportunities for youths and inability of small scale business operators to access credit  facilities to engage in activities that generate income.

By this action, the Bayelsa State government has demonstrated its determination to alleviate poverty through the promotion of entrepreneurship, creation of skills and economic empowerment.  Above all, the Federal Government under President Goodluck Jonathan has given its full support for fast tracking the implementation of the post-amnesty programme to complement the efforts of the State Government in her bid to improve the standard of living of Bayelsa people. The youths and ex-militants in the Niger Delta should reciprocate this kind gesture by maintaining peace in the Region. No doubt, a diversified economy would guarantee the much-needed stability in Bayelsa State and all stakeholders must contribute to the achievement of this goal. 

Richard Omagbemi, wrote from Warri  

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