Financial Energy Review
……….. Seeks Asian Mercantile Approach………..
………by Ben Ndubuwa…….
The Managing Partner of Teno Energy Resources Limited, Dr. Timothy Okon has said that Nigeria’s dependency and neoliberal economic models impede economic growth and are pitfalls to development. This is more obvious as Nigeria lack diversified production capabilities, leading to economic vulnerability and instability.
In his key note address, Tuesday at the 13th Emmanuel Egbogah Legacy Lecture Series held in Port Harcourt with the theme “Framework for Utilizing Petroleum Wealth for Sustainable Development” Okon highlighted the persistent economic challenges faced by resource-rich countries like Nigeria, emphasizing the inverse relationship between natural resources and economic growth. This phenomenon is often attributed to the “resource curse,” where nations endowed with abundant natural resources struggle with lower economic growth rates compared to their resource-poor counterparts. “The relationship between natural resources and economic growth rates. The inverse relationship between, that is clear that those who are resource-rich tend to be poor” he said.
Okon, a former Director with NNPC criticized the historical and ongoing economic structures established during the colonial era, where Nigeria primarily produced cash crops for export and imported finished products. This model he noted has persisted into the modern era, particularly in the oil sector, where Nigeria exports crude oil but lacks the infrastructure and capacity for consistent domestic refining, relying instead on artisanal and often environmentally damaging methods.
“There are two of these theories that affect us. And it’s a throwback, again, walking backwards from what the colonial setting has said for us, which is you produce the cash crops, and you export it, and then bring back imported, finished crops. So, that structure has persisted” Okon said.
He examined two prominent economic models: the Dependency model and the Neoliberal model, often associated with the Washington Consensus. The Dependency model describes an economy heavily reliant on a single commodity, such as oil in Nigeria’s case. Meanwhile, the Neoliberal model promotes policies like subsidy removal, currency devaluation, and privatization, aiming to make exports more competitive. However, Okon argued that these policies are ill-suited for economies lacking diversified production capabilities, leading to economic vulnerability and instability.
Addressing the pitfalls of these models, Okon noted the importance of examining the mercantile approach adopted by the Asian Tigers, including South Korea and Taiwan. These countries focused on protecting their domestic markets and building competitive industries before fully opening up to international competition. The speaker emphasized that Nigeria needs to follow a similar path by developing domestic manufacturing capabilities and fostering a competitive economic environment.
The Managing Partner of Techno Energy Resources, highlighted the current challenges faced by Nigeria, such as dependency on oil revenue, which is insufficient to cover debt servicing and imports. This situation is exacerbated by a lack of investment in other sectors, leading to a fragile economic framework.
Okon, calls for Nigeria to emulate the strategic economic interventions seen in successful Asian economies. This would involve sector-by-sector interventions, fostering internal competition, and developing national champions in various industries, like the South Korean giants Hyundai and Samsung. By focusing on building internal capacity and avoiding monopolies, Nigeria can aim to establish a more sustainable and competitive economy on the global stage.
The overarching message was clear: Nigeria must move away from its current dependency on oil and adopt a more diversified and strategic approach to economic development to ensure long-term prosperity.
