THE Nigerian economy is passing through very difficult times. The economy is at its lowest ebb, and Nigerians are indeed facing hard times. The truth is that the nation is suffering from what economists call the Dutch disease. Dutch disease is defined as the de-industrialization of a nation’s economy, which occurs when the discovery of natural resources raises the value of that nation’s currency, making manufactured goods less competitive with other nations, increasing imports and decreasing exports.
Originally coined in 1997 by the Economist, the term Dutch disease refers to the decline in the manufacturing sector of the Netherlands due to the discovery and exploitation of natural gas deposit in the 1960s. Prior to 1959 the Dutch country of Netherlands then known as Holland, was well known for its industrialization. Her products were exported to many countries of the world, and this raised its foreign reserve with money earned from exportation.
The discovery of oil in 1957, however, brought a mist in the fortunes of the country. City rulers turned all their attention to crude oil, thereby crippling all its major industries in the process. Its foreign resource 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.
Today the Dutch disease is often used to refer to the detrimental effects of the discovery of any valuable natural resource that cause decline in other sectors of a nation’s economy.
Generally, Dutch disease affects the economy of a country in two ways. The first is by causing a resource movement effects from one sector of the economy to another, and the second is by inducing a spending effect that appreciates the real exchange rate of the country’s currency.
It is unfortunate and regrettable that many nations have not learnt from the sad consequence of Dutch disease. In fact, our dear country Nigeria has deliberately ignored the lessons of the Dutch Disease by its over dependence on money made from oil exportation.
Before the discovery of oil at Oloibiri in modern day Bayelsa State, Nigeria was renowned for its agricultural products; cocoa thrived well in the west, and earnings from the export of cocoa was used to build the cocoa house and the then western broadcasting corporation television in Ibadan, Oyo State, the very first television station in Africa. In the North, cotton and groundnut were exported, and from the East and Mid-Western area of Nigeria, we had palm oil, rubber and timber respectively.
The oil windfall of the 1970s brought an end to Nigeria’s revenue diversification effort. There is no doubt , that Nigeria’s focus on oil-crippled agriculture, textile industries and other resources from revenue generation, with grave consequences and ended up turning crude oil from natural blessing to a curse.
Today, the economy of the country is in a mess because our only source of income; the black Gold is facing serious problem in terms of market price, which goes up and down depending on the decision of the Western powers.
Majority of the states can no longer meet their financial obligations to their workers as they continue to complain that increasing workers’ salaries would spell doom for them. In the process, they find simple ways to downsize their workforce. This state of the economy is coupled with the high rate of corruption in high places.
The problem is that majority of Nigerians still find it difficult to understand the economic situation in the country. To say the truth, this problem started long ago when oil was discovered in Nigeria. It was even said that a one-time Head of State of Nigeria once said that money was not the problem of Nigeria but how to spend it.
The government of President Bola Tinubu should as a matter of great urgency start the diversification of the economy. The government is making efforts but they should do more to tackle the problem of insecurity so that those into agriculture can be free to do their work without being killed by bandits.
Without the diversification of the economy and reducing corruption in high places, it will not be Uhuru now.
