Twenty-four hours after Barack Obama became the 44th President of the United States of America, the Governor of the Central Bank of Nigeria (CBN), Professor Chukwuma Soludo, has warned that the energy policy of the new administration may spell doom for the Nigerian economy. 
He said Obama’s proposed vigorous search for alternative energy to drive the world's largest economy poses “great dangers” for Nigeria whose economy is highly dependent on revenue from oil.

Nigeria is the fifth largest exporter of crude oil to the US. 

Soludo said although the global economic recession which began in the United States had started to take its toll on Nigeria in terms of the crash in the price of crude oil, declining revenue, depleting foreign reserves and pressure on the exchange rate, Nigerian banks remained “robust enough to withstand the shock waves hitting the economy”.

Soludo, who gave these explanations at an interaction with the House of Representa-tives Committee on Banking and Currency, said the impact of the global economic and financial crisis would have hit Nigeria harder if the central bank had not initiated the consolidation of the banking sector two years ago.

He spoke to an obviously sceptical audience as most of the lawmakers kept prodding behind the economic policies of the apex bank.

He, however, said the Nigerian government must take urgent measures to diversify the economy especially towards agriculture since the crash in the price of crude oil in the international market may worsen if the search for alternative sources of energy begins to bear fruit.

Soludo said with the limited foreign trade finances being witnessed by Nigerian banks, credit lines may dry up for some banks and Nigeria may return to the scenario in the early 1980s  when government at all levels was broke and unable to pay salaries. 

According to Soludo, the recent downturn witnessed in the Nigerian capital market as a result of the divestment by foreign investors may subsequently lead to possible second round effects on the balance sheets of some banks and decreasing profitability, “but the banks are not significantly under threat and are not likely to witness large scale losses.

"With the Obama government proposing to invest heavily on alternative energy sources, there is a permanent threat to oil as mainstay of the Nigerian economy. Unless we take urgent steps to address the situation by also finding an alternative to oil as the mainstay of our economy, we might be back to the similar crisis we witnessed in 1982 when  the price of oil crashed, government revenue declined and it became difficult for government  at all levels to pay salaries. There was also the abandoned projects syndrome, increased import of almost anything until government was forced to place a ban on foreign currency trafficking because it was being abused," he said.

Owing to the falling commodity prices abroad as well as declining freight costs, Soludo explained, Nigerian businesses may find increasing appetite for foreign and imported goods which will threaten the domestic industrial productive base.

Other threats include the fact that the declining oil price might be worsened by the militancy in the Niger Delta with its attendant shut-in of oil production and possible political pressure to spend the "excess crude" earnings.

He said although Nigeria's foreign reserves currently stood at $52billion, the Nigerian economy like other economies of the world would be exposed to more risks if the United States dollar which serves as the global reserve currency begins to experience “spiral inflation” and triggers off a global currency crisis.

But Soludo's testimony before the lawmakers was not all gloom as he announced that  unlike in 1982, the Nigerian economy, though not insulated from the global crisis, was  better prepared to withstand the shock.

He said with the debt relief effectively saving about $4billion in annual debt service payments, a banking sector consolidation that has increased competitiveness, robust external reserve, a liberalised  and private sector-led economy, an active capital market as well as better fiscal and monetary policy regimes, the country has great opportunities to scale the hurdles posed by the global recession.

“The challenge we have is to get agriculture to boom. We have huge growth reserve to be exploited - about sixty per cent of arable land for agriculture remains fallow; solid minerals and gas are yet to be fully harnessed. Nigeria may continue to attract Foreign Direct Investments (FDIs) particularly in the oil and gas sector and portfolio inflows due to high returns on investment.

“Lower world prices will benefit Nigeria because of her large imports. This time, we should target strategic capital investment in sectors where input prices are depressed globally with lower freight costs.  Our banks are Nigeria's multinational companies and have become increasing dominant source of financing for the economy giving more credit to the private sector than the Federal Government and also supporting the state governments. Banks constitute the engine of the economy for the near term which must be guarded," he said.

On the way forward, the CBN governor said that the apex bank would remain committed to stable exchange rate regime and monitor developments in the capital market as a stable exchange rate would continue to be a major shock absorber for the economy to maintain its internal and external balance.
Meanwhile, President Umaru Musa Yar’ Adua has joined the world to congratulate the new US President.

Yar’Adua spoke through the Minister of Foreign Affairs, Chief Ojo Maduekwe, who led the Nigerian delegation to Obama’s inauguration.
At the inaugural ball organised by Washington, DC-based NGO, “Africa Aspire,” President Yar’Adua, praised the “inclusiveness, solidarity and generosity” of the American system, which produced the first African-American president of the country.

The minister told the audience that the people of Nigeria and Africa rejoice with America on this historic swearing-in ceremony.

“We are proud that America gave this opportunity to the son of an African immigrant. We want to say in the same spirit that Africa supports Obama to succeed. His success is ours,  Africa has taken a turn for the better,” he declared.

http://www.thisdayonline.com/nview.php?id=133654

can't we also look for alternatives in this age and time? Must we always depend on oil?

our Government has already started thinking of an alternative means of income, there is serious pressure on Nigerian custom to intensify checks on vehicles roaming interstate borders without custom duty certificates government is looking at making income from this exercise, so guys ensure u carry ur custom papers while traveling from state to state or else ur car will be collected from you.

Aydeggy:

our Government has already started thinking of an alternative means of income, there is serious pressure on Nigerian custom to intensify checks on vehicles roaming interstate borders without custom duty certificates government is looking at making income from this exercise, so guys ensure u carry ur custom papers while traveling from state to state or else ur car will be collected from you.

for real? are you serious? and how much will they generate? get serious pls.

Yeh, i thoguht the same way as soon as he annouced it, But trust Nigerian leaders not to ever reason rather they will say Olunmaje, its not our portion, while they will keep stealing.
Soon, the oil money will stop flowing and eye go clear us, maybe then people will start wsing thier head

one day oil will finish. if it doesnt a cheaper alternative will crop up. scientists have been spending numerous years in labs just for this purpose. dont say it cant be done, cos it can. we need to diversify, that is the only way we wont be left behind. I agree with Soludo on this point

Maybe we can now go back to Agriculture. Oil was the worst thing that ever happened to Nigeria. Besides, how much threat can it be. . . it's not like we ever enjoyed the spoils of being the 5th exporters.

Make we follow Obasanjo to his farm.
Agriculture should be the answer.

Aydeggy:

our Government has already started thinking of an alternative means of income, there is serious pressure on Nigerian custom to intensify checks on vehicles roaming interstate borders without custom duty certificates government is looking at making income from this exercise, so guys ensure u carry ur custom papers while traveling from state to state or else ur car will be collected from you.

WTF?
I mean, are you joking?
are you OK?

The current/past governments are buffons. While the whole world is searching for alternatives to everything, they are concentrating on oil. must they need someone to tell them? What about agriculture? Oh God, please help us .

finally, some people at the top are beginning to worry.
but my concern is, are they worried about us, the masses or that there wont be much for them to steal again?

More than 13 months ago I wrote an article titled "The President's position on alternative energy - not in our own best interest" when it was reported that developed nations were conspiring to seek for alternatives to crude oil as the main energy source.

It is funny that some people in the government are just waking up to this reality.

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The president's position on alternative energy - not in our own best interest
26th, Dec 2007 - 08:47:45
At a recent meeting of OPEC member states it was reported that Nigeria's President Umaru Musa Yar'adua stated that the developed nations may be conspiring to push for alternative sources of energy and as such would negatively affect the economy of oil producing and exporting states since they are the ones benefiting from the high oil prices right now.

While I agree that crude oil will remain a major source of energy for quite some time it will be dangerous for anyone to assume that alternatives cannot replace crude oil supply because those who do not want to adjust, prepare or acknowledge change may be consumed by the change itself.

Energy and power drive the economy of so many nations especially the developed nations. Non oil producers and unfortunately some oil producing and even oil exporting nations like Nigeria must buy crude oil at the international prices which is at least $100.00 per barrel.

Power plants especially gas fired ones, factories, industries, automobiles all require one form of fuel or the other to run and for now the bulk of the energy requirement is met by crude oil.

But things are changing, albeit slowly but surely. Distributed systems are becoming common place in some parts of the world today, individuals can generate their own electricity by using solar panels or wind turbines. As more and more people generate their own power the revenue of power generation companies will reduce and the need to generate energy that may not be purchased will reduce as well.

In other words, distributed energy generation systems are enough to case a major change in the way people demand energy from power generating companies which have a direct bearing on the cost of crude oil vis a vis the economy of nations that depend on crude oil revenue to survive.

Do not forget the fact that if individuals can generate their own electricity, companies with more financial base can as well.

Automobiles are yet another major consumer of oil whether in the form of fuel (PMS) or diesel. Even though the use alternative source of fuel for automobile is not common here in Nigeria we must realize that in some countries today bio ethanol is already being used by individuals and government programs like mass transit systems like what Brasil is doing today.

Hybrid cars are already on the roads today and many automobile makers are thinking in the direction of manufacturing cars that would utilize alternative sources of energy.

If I generate electricity using solar panels or wind turbine and my car runs on bio ethanol (used vegetable oil plus methanol and caustic soda are enough to produce cheap fuel for diesel engines) then I may as well not give a damn what PHCN charges per kilowatt of electricity consumed or what the price of fuel or diesel is at the petrol station.

If gradually people embrace these alternative sources of energy what becomes of our crude oil that we depend on for our survival? What will happen when the demand for crude oil reduces? Many argue that the demand will always increase due to population increase and industrialization though.

Unfortunately, those that are seriously seeking alternative sources of energy are the same people that will spend time and money on research, they will do all they can to find alternatives that make economic sense.

Put differently, we are not in any position to decide whether they will depend on us or not, we simply have to hope and pray they do or we begin now to weigh our options because the change or shift in the current energy regime may come sooner than expected or anticipated.

Considering the abundant quantity of renewable energy sources like wind and sun in this part of the world it is still surprising that we are not at the forefront of research into these viable alternative sources of energy even if only to guarantee steady power supply to Nigerians.

By the way, why are we making so much money from crude oil today and yet the majority of Nigerians are living in poverty? It seems we have a way of rubbishing all known economic theories and postulations.

If Nigerians cannot benefit from the current high price of crude oil today, is it when the price crashes or when the world must have found alternatives that we will benefit?

The only constant thing in life is change and we must either prepare for it or be consumed by it.

In the past the media was controlled by governments, information used to be properly vetted and filtered by governments, today just about anyone can set up an information system by owning a website or a blog and immediately begin to publish information thanks to the power of the internet. Today, governments are even forced to react to issues raised by individuals who publish information that would never have seen the light of the day in the past.

If the people in Nitel were told some 10 years ago that one day mobile phones will be in the hands of practically every Nigerian and that people would be able to communicate without running wires from their homes or offices to telephone boxes or poles across the streets I am sure they would have laughed off the idea, today we know better.

Though patriotism may make one dismiss anything that appears not to be in our own interest we must remember that there is a thin line separating reality and perception of reality. It is very possible to replace crude oil as a major source of energy, the earlier we believed this the better for us.
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http://afamnnaji.com/blog_view.php?myview_id=49

na2day?

since the 70s, in the aftermath of the oil crisis,  the US has been 'pursuing alternative energy sources'

the long and short of it, as far as i'm oncerned is thatthe worlds greatest energy hogs are just kidding themselves - especially since american oil service companies generate significant revenue from exploitation/extraction  of fossil fuels in countries other than america.

well - obama is supposed to be the change agent. . .but we shall see

whither all that biofuel noise of a few years ago?
wind turbines are not particularly efficient
solar energy still costs too much installation wise

and americans energy consumption keeps on climbing. . .

anyway - we shall see

FBS, God has already helped us as a country. we are so blessed with numerous resources and man power. Our land is so productive. we dont have natural disasters like earthquakes, snow storms, volcanic eruptions etc.
all of Nigeria's woes have been all man made.
As a child i remembered NTA news in the early 80's had clips of our ground nut pyramids. Now they've all disappeared
We have the land for massive agricultural projects which will put us on the map of food exporters in the world. all we need to do is to invest seriously and HONESTLY into agriculture

Why should we believe this Soludo guy?

He once told us that this globalwhatever will not affect Nigeria, I was among the first to laf back then. Now he is talking gibrish.

Is he saying america shoud not look for cheap source of energy because we are no 5 exporter of crude oil. Not even refined product.

So help Us God!

The Government Shuold First Invest in Highly Skilled "Human Energies"

Brothas, sistas. Don't b unduly worried. D plight of d common nigerian has nothin to do wit d price of oil. Is dia any kind of suffering we havnt xperiencd b4?
God bless Nigeria.

I agree with oyb on this one.

There is absolutely nothing to be worried about - this 'energy policy' cannot have a significant effect on oil and gas consumption for at least 20 years.

Even after that, it will take considerable effort to increase renewable sources to the point where oil resources become less important.

There are 3-4 Americas (1billion people) and 2-3 Americas (900 million people) who are demanding increased energy to have the same standard of living as found in the West. Even if US demand reduces, the slack will be taken up by India and China - those countries have been driving growth for the past decade and will continue to do so for the forseeable future.

Wind and Solar sound good, but look at the actual percentages - less than 1% of global capacity.

It sounds good to 'reduce dependence on foreign oil', but it will not happen for a long, long time to come.

This might be a threat in 100 yrs from now. For the foreseeable future, the world will continue to depend on crude oil to power its industries. I agree research will further in areas of more efficient use or reduction of toxic emissions - yes.

What alternative are there anyway? Solar energy? It is workable but very expensive and may not see wide spread use until around 100 yrs from now. The solar powered cars still require fuel albeit at a reduced rate.

Did I even get the feeling Mr Obama hinted at a more responsible commercial approach/ remuneration for oil exporting countries? Was this a condemnation of the Bush method of "sell your oil or get invaded"?

may be its a signal for us to start pursuing our long term developmental projects, because we shouldnt be expecting miracle in a twinklin of an eye.

Oil or not, we should as a nation be forward looking. We ought to have taken these steps since. I agree its time to get back to agriculture. Our leaders need to demonstrate the will to get this done and not just mouth platitudes.

Obama's energy policy is a positive development. If OBAMA a man of colour can become the president of USA, THEN we as a nation must also brace up for better challenges and advancement and stop thinking always like a 3rd world country. CAN'T WE GROW TOO? WHY must our budget be messed up because oil price fell, WHY must we remain in oil production only, a venture where we do not even have a comparative advantage, per say and we are not even the major determining factor even with all the oil. WE TOO SHOULD BEGIN TO THINK LIKE OBAMA, NO MORE SMALL BLACK INHIBITED, DEFEATIST THOUGHTS.

Nigeria has vast lands that can be used for agriculture but the oily get rich quick lure of crude oil is too much for our politicians. We have a big population with loads of buying power yet our manufacturing industry dithers and stutters. This, as some people have said, is a false alarm worth paying attention to.

This is a good development if we can take up the challenge. In the first instance we have a very wonderful climate for agriculture that will give us food and cash crop that they will even need to develop alternative energy. Crops like cassava, sunflower and others too numerous to mention will thrive very well here and this will be a wonderful alternative source of income.

The best thing to be done at this point is for our government to put in place incentives that will make farming lucrative. They should encourage the youths to develop interest in farming and once again we will become the giant of the world and not only Africa alone. Whatever material they would want to use as bio fuel source, we have the capacity to produce them, which means we just have to reposition ourselves to rule the world.

This is a food for thought for our leaders and every one of us. To me personally I don't see Obama's Energy policy as a threat to our country Nigeria but rather an opportunity for us to look into ways of taking advantage of this new development nationally and individually

How can a country as rich as ours still be wholly dependent on oil when we have alternative sources of revenue? Agriculture should be on the minds of our leaders now.

Who Would Make The Most Cash @ This Critical Point Of Credit Crunch, Bailouts, e.t.t

the technology for alternative to oil is already here and its (1) HHO (2) Rechargeable battery. With Obama, the oil monopoly will be broken, because he has already taken the bold steps. Soon oil will be below $10 per barrel. Come to think of it, what have we achieved as a nation with oil, we were better when agriculture was the main stay of the economy, oil came as a curse. Hopefully when oil becomes $10, the killing in the Niger delta will stop, true union of states will begin. Individually we should all go back to farming with the aim of growing crops to feed our selves, if we start that,, we can walk up the ladder to feed our communities, states and country at large. When i was alittle boy tho my dad a banker then and  my mum a successful trader we still had 2 plots of land with which we farmed every 2weeks. In a journey of 45mins drive within lagos. Gush what was my dad thinking then?,
The most ignored way for govt to earn money is through tax, put your citizens to work and let them pay tax. That is one of the key fund raiser for the USA govt. But the govt of Nigeria are so blinded by oil that they ignore that fact that with a population of above 140million tax generation can rival oil income, and there can be no tax if you cant provide jobs for your citizens or create the reasonable environment for them to help themselves.

And whats with our hybrid youths of today?, everyone is scolding the govt they know doesnt exist, instead of them to take simple initiatives that would change the life of the nation, like Obama said, we can start reclaiming our country from the bottom up by reclaiming our communities and reshaping the minds of our youths. Where ever you are plant a food crop even if its peper or tomatoes, if u dont have a land by virtue of your location get a planting pot. Last August i planted pepers and tomatoes with 3 planting pots, because tho fun, i like my peper hot and i hardly get the hot ones in the store, i enjoyed every bit of it, after winter i'm gonna increase my planting. My dad instilled it in me and even tho i live in the USA, i still prefer getting my fingers dirty with the soil.

ha finally!!

not that i am rejoicing at the thought of Nigeria being doomed. I am infact glad that we will now have something to divert our over interest in the black Gold, good ol agriculture.

However, now that we are looking for alternatives to crude oil, the next step will be biofuel. This is the part that pisses me off! the whole idea of burning food grown from the ground to feed engines to do things we have God given ability to do but we are too lazy to do. Burning food for luxuries we can do without.

Despite thier are many other options other than biofuel e.g hydrogen, uranium, biomass, they just cant be bothered to fund these researches.

Brazil can use millions of hectares to grow sugarcane for biofuel if they like, but i dnt care how green they claim this is, If anyone starts to burn food from my motherland to fuel cars I will be the first with a matchet in my hand heading to aso rock , UN, hell i might even beef with Obama himself damn the respect I have for him

Nobody is talking about natural gas, nigeria has so many other natural resources that can be utilized. Do u know that 40% of natural gas found in nigeria is  burned daily because they dont know how to manage it. We are busy depending on some river somewhere to produce electricity when they can generate electricity at a higher efficiency from Natural gas.

I love Obama but if he is serious about increasing taxes on oil companies, then hey nigeria might be in trouble. Alternate Energy supply is not certain at this point. My fear is that someone would create the technology out of the blue and i wont be surprised. When that happens, our government would start digging for coal or gold in ur backyard

@ pain

"The Government Shuold First Invest in Highly Skilled "Human Energies" "
Amen

lol

I hope our leaders will act on this warning. Even if President Obama did not look for alternative energy for his beloved country, we ought to know that the oil deposit is not forever, it will surely get finished one day. Let's go back to Agriculture, it is a better foreign income earner.