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Nigeria Is Suffering From Severe Dutch Disease

Sept 17, 2012 – Nigeria Is Suffering From Severe Dutch Disease

Before 1959, the Dutch country of Netherlands, then known as Holland, was well known for its industrialization, with its products exported to many countries. The country raised its foreign reserve with money earned from exportation.

The discovery of oil in 1957 however brought a twist in the fortunes of the country. Its rulers turned all their attention to crude oil, crippling all its major industries in the process. Its foreign reserve that rose before then dropped sharply. The country learned the hard way that there was no alternative to economic diversification. That action gave birth to the expression: The Dutch Disease.

Regrettably, though, many nations have not learned from the sad consequence of Dutch Disease, in fact, some, especially Nigeria, have deliberately ignored the lesson of the Dutch Disease by its over dependent on money made from oil exportation.

Before oil was discovered in Oloibiri in modern day Bayelsa State, Nigeria was renowned for its cocoa from the west, cotton and groundnut from the north, coal from the east, palm oil and rubber from the Midwestern states. Proceeds from cocoa was used to develop the western states of Nigeria. Till date, the Cocoa House in Ibadan, Oyo state and the then Western broadcasting corporation television, the very first television station in Africa, are all reminders of those good old days. The groundnut pyramids of old Kano also reminds one of groundnut exportation.

The oil windfall of the 70s also brought an end to Nigeria’s revenue diversification effort. Nigeria focused on oil, crippled agriculture, textile industries and other sources of revenue generation, with grave consequences, and ended up turning crude oil from natural blessing to curse.

This set the stage for a two-day zonal advocacy workshop on economic diversification and enhanced revenue generation with a view to making the south-south zone thrive without oil. The workshop was held at Asaba, capital of Delta state between 10 September and 11 September.

Host governor, Dr. Emmanuel Uduaghan, Godswill Akpabio of Akwa-Ibom and Adams Oshiomhole (represented by his deputy, Pius Odubu,) of Edo, emphasised the need to diversify the nation’s economy from oil revenue and the need to allow the various regions of the country to develop at their own pace in line with the principles of true federalism.

The trio argued for the increase in the derivation revenue. They hinged this on the need to urgently address the degradation caused by oil exploration in the Niger Delta region, adding that the present 13 percent derivation formula was grossly insignificant compared with the environmental challenges confronting the region due to the activities of oil companies.

“We still believe that 50 percent derivation should come to the region because of a lot of environmental degradation and poverty in the area. We need to mitigate the effect of oil exploration on our people, we need to clean up the seas and ensure that there are no more environmental damages. This involves a lot of fund and what is coming now is insignificant and 50 percent will be considerate. We want to appeal to our brothers advocating the removal of the on-shore/off-shore dichotomy that that is a no go area, the matter has been laid to rest for good,” Uduaghan said.

Governor Oshiomhole said Nigeria must begin to look back at the yester-years when agricultural produce formed the main source of revenue for development.

“It is imperative that action plans to regenerate the oil palm, rubber, as well as cocoa plantations are initiated immediately. Sufficient attention must also be paid to the solid mineral deposit that nature has bestowed on us,” he said.

Governor Uduaghan further harped on the need for creating wealth outside oil by using funds from oil revenue to develop other sources of wealth, with the ultimate goal of empowering the people by job creation. According to him, to attract foreign investments calls for provision of enabling infrastructure, namely, power, urbanization and good road network, transportation (sea ports, airports), ICT, etc, which he said were critical to industrialization, which he said was a priority to Delta state.

Noting that Nigeria was suffering from a severe form of Dutch Disease, Governor Akpabio warned against total dependence on oil revenue sharing but to develop a broad-based revenue generation strategy. He therefore urged the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) to come up with policies that would allow each region to develop at its own pace by exploring other sources of revenue outside oil.

“We have resources that are untapped but because of our monolithic economy and over-reliance on oil wealth, we have failed to explore other areas. When there is a reduction in the benchmark for oil, our resources dwindle because we don’t have any other source of income. This clearly reflects the urgent need for us to diversify our economy and broaden our revenue base. The extent of decline in the manufacturing and other sectors has revealed a level which must be addressed urgently.”

He alluded to the fact that some states have so much relied on federal allocation of which about 97 percent is derived from oil in the Niger Delta region that they failed to notice the natural deposits in their states.

“We only noticed recently that there are oil deposits in Sokoto state because neighbouring countries like Chad and Niger have started exploring the resources in Nigeria’s territory. In the 1960s when agriculture used to be the mainstay of the nation’s economy, we hear of the groundnut pyramid in the north and cocoa house in the west.

“I think we should start looking at those things each state can do to avoid going to Abuja every month for allocation. We are supposed to develop our infrastructures and make the state economically viable such that we generate revenue and pay tax to the federal government. We should focus on things that would unite this country and not that which will divide us in a country that has so many challenges. I support 50 percent derivation,” Akpabio submitted.

In his view, just as the Niger Delta region produces the highest fund for the nation, it also faces the greatest challenges. It shares the wealth with other regions but bears problems alone, insisting that other parts of the country must look inwards to tap into the natural resources that abound in their respective areas.

“We are willing to do whatever it takes to keep the nation as one, but what we are saying is that the goose that lays the golden egg should not be forgotten. Blood is thicker than crude oil. Let’s look beyond crude oil, and you will discover diamond in the horizon,” he said.

For the rapid development of the country, Akpabio suggested the adoption of United Arab Emirate’s revenue attraction method with an annual average of 2 million visitors, by making Nigeria accessible to foreign investors.

To make the ‘Dubai Model’ work, Akwa Ibom state has looked beyond oil by investing so much money in infrastructure to attract investor.

Chairman of RMAFC, Elias Mbam said the workshop was to sensitise both federal, state and local governments and other stakeholders on the urgent and compelling need to diversify their respective sources of revenue in order to meet the increasing expenditure requirements of governance and development.

“It was also envisaged that by organising these workshops on zonal basis, states in each geopolitical zone would explore their peculiar potentials, share experiences on how to exploit and develop the various resources endowments available in their respective state and local government councils in generating more revenue.”(PM reports)



  1. Rose

    September 18, 2012 at 11:06 AM

    Every country has his or her own diseases

  2. Rose

    September 18, 2012 at 11:07 AM

    Nigeria is a blessed country, God loves them so much

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