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BEFORE OIL RUNS DRY: OPTIONS FOR THE DEVELOPMENT OF THE SOUTHWEST OF NIGERIA

J. ’Kayode Fayemi, PhD.

Former Governor of Ekiti State, Nigeria

At the Public Lecture Organised by Afenifere Renewal Group

(Ogun State Chapter)

Abeokuta, Ogun State, Nigeria Thursday, January 22, 2015

Protocols For several decades, policy makers, experts and observers have warned that Nigeria’s continued dependence on oil as its main economic resource was bound to jeopardize her long term economic growth and development. International financial institutions, development partners and knowledgeable experts at home were all in agreement that our overreliance on crude oil was an unsustainable strategic weakness. Between 1973 and 1978, during the oil boom, oil revenue rose quickly to more than 90 percent of Nigeria’s revenue. This increase was matched by an increase in public expenditure which quadrupled between 1973 and 1975.1 Prior to the war, regions had run tax-based economies and enabled growth by leveraging comparative advantage largely in agriculture. The new centrality of oil wealth altered everything. The verdict of history is that Nigeria remorselessly squandered her oil boom turning an opportunity to become an economic superpower into an age of extravagant waste almost unparalleled in the annals of developing countries. By the early 1980s, Nigeria was gravely indebted, having borrowed against future oil revenues. The government was effectively bankrupt. Subsequent oil booms were rendered inconsequential by the scale of official corruption for which Nigeria had by then become legendary. In the field of development studies, Nigeria is one of the archetypal poster children for what has been called the Dutch disease or the resource curse. It has been proven that resource- rich economies tend to grow more slowly than other poor countries. This phenomenon is called the ‘Dutch disease’, is the name scholars gave to the difficulties that befell the Netherlands after its discovery of gas in the North Sea. It is also known as ‘the curse of oil’. When a nation discovers oil reserves in her territory, the sudden avalanche of petrodollars causes the neglect of sectors like agriculture

1 Claude Ake, Democracy and Development in Africa (Spectrum Books 2001)

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and manufacturing thus leaving oil to dominate the economy. With so much money being made without exertion, the urge to create wealth and value diminishes as everyone focuses their attention on how to get a piece of the national cake. Oil wealth brings along with it the illusion of an infinitely abundant resource and with this also comes a culture of fiscal irresponsibility, official extravagance and outright theft. In 2006, the World Bank disclosed that Nigerian officials had stolen more than $300 billion of the country’s wealth over the past 40 years.2 This amounts to a sum equivalent to 300 years of British aid for the entire continent of Africa.3 It also amounts to six times the American help given to rebuild post-war Europe under the Marshall Plan.4 The Economic and Financial Crimes Commission (EFCC) estimates that over $2.5 billion or N300 billion is embezzled annually from public coffers.5 In 2008, the EFCC and the Independent Corrupt Practices and Other Related Offences Commission (ICPC) announced that they had recovered over N600 billion of stolen public funds since their creation by President Olusegun Obasanjo.6 These figures, while astonishing, also now lack shock value. They are symbolic of the routinization of graft in a context in which public funds are perceived both to be infinite and to belong to no one because they cannot be related to any tangible productive endeavour. Corruption as we know it is the logical outcome of a system designed to distribute oil rents as patronage and which defines public office in terms of access nearly unregulated access to these rents. According to conservative estimates, between $4 billion and $8 billion is stolen from public coffers annually.7 The Day of Reckoning is here We are no longer facing a future in which crude oil either ceases to be a strategic resource or one in which our status as a producer becomes irrelevant to our prospects for economic advancement within the international economic environment. That Day of Judgment long predicted by observers has already come upon us. Already, we are no longer Sub-Saharan Africa’s sole energy power house. New players like Ghana, Kenya and Liberia have emerged to add to the competition in the market. The most significant megatrend that is radically shaping the dynamics of the global energy economy is taking beyond the shores in Africa in the United States.

2 Okey Ndibe, “A Nation of Big Divine Thieves,” The Guardian, October 25, 2006

3 Okey Ndibe, “The Answer Lies at Home,” The Guardian, July 7, 2005 4 Ibid 5 “Nigeria’s Choking Growth,” Nigeria Today, August/September 2008 6 “EFCC,ICPC: We Have Recovered N600 billion Loot,” Thisday, March 12, 2008

7 “Corruption in Nigeria: Dragon Slayers Wanted,” The Economist, December 3, 2011

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In the US, recent revolutionary breakthroughs in drilling technology have opened access to enough new oil and gas reserves and have dramatically decreased American dependence on foreign oil. Oil production in the US has recovered from its more than three decade-long decline and imports from OPEC countries have fallen by more than 20 percent since 2010. American natural gas reserves and production have significantly increased and have triggered a 75 percent fall in prices since 2008. The International Energy Agency forecasts that the United States could become the world’s largest oil producer by 2020 and may be energy self-sufficient by 2035.8 The US Energy Information Agency forecasts that by 2014, US oil imports will drop to 6 million barrels per day from what it currently consumes. By 2013, he US, a major importer of Nigerian crude, had already reduced the importation of Nigerian oil to 300, 000 barrels from 1.1 million.9 In 2014 that figure declined to zero. In August 2014, the US achieved its highest level of monthly oil production since 1986. It has overtaken Saudi Arabia and Russia to become the world’s main oil-producing nation. American energy self-sufficiency has serious implications for oil-rich African suppliers like Nigeria. A world in which new technologies unleash a dynamic of resource abundance rather than resource scarcity will result in less power concentrated in the hands of a few suppliers. Advances in unconventional gas extraction technology will enable an energy importer like China to exploit the significant deposits of shale gas in its interior provinces. Should these deposits prove even more plentiful than expected, China could conceivably lose interest in the low-end, high-risk clients that are currently its energy suppliers. The biggest consumers for our oil are the resource-hungry giants of Asia – China and India. Slowing growth in these emerging markets is expected to continue to impact their demand for oil. The changing realities of the global energy environment are already evident. In the summer of 2014, oil prices plunged to their lowest level in a year. Remarkably, this drastic decrease occurred in a time of severe international crisis – wars in the Middle East and Ukraine and severe sanctions on Russia, Europe’s major energy producer. Ordinarily, crude oil prices should have been surging upwards but this was not the case.10 As a major oil exporter, Nigeria has traditionally benefitted from periods of international geopolitical upheaval. It was the 1973 Yom Kippur War that triggered Nigeria’s first oil boom. The 1970s were characterized worldwide by high oil prices, double-digit rates of inflation, economic recession and political instability. What this means is that the energy revolution in the US is now beginning to alter how the global energy market responds to international instability. At the same time, a stagnating global economy is not generating as much demand for energy as was the case in the years

8 Ian Bremmer & Kenneth A. Hersh, “When America Stops Importing Energy,” The New York Times, May 22, 2013 9 “America Reduces Oil Imports,” Africa Today, May - July 2013

10Moises Naim, “Beyond ISIS and Ukraine: What Else Happened this Summer,” The Atlantic, September 16, 2014

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that preceded the 2008 global financial crisis. This emergent trend has been described as “a clear manifestation of an incipient and potentially transformative energy order.”11 The Season of Austerity The naira is suffering its sharpest decline in three years. This decline is a consequence of the decrease in our external reserves and the sharpest drop in crude oil prices since 2008 in response to which foreign investors are divesting from the country. Oil prices are dipped below the 2014 budgetary benchmark ($77.50) and have subsequently fallen below the proposed 2015 benchmark of $78, placing our revenue projections in jeopardy. Even allowing for whatever buffers can be provided by the Excess Crude Account and the Sovereign Wealth Fund, there is turbulence ahead. Already, the 2015 budget is out of sync. Since the oil benchmark price of $65 has further declined to average of $45.00. Aftermath market price Nigeria’s projected oil revenue in 2015 will be down to USD 40bn compared with USD82bn in 2014. The Federal Government has been defaulting on its statutory fiscal obligations to states for over a year prompting talk of a fiscal crisis which the government denied. In any case, states have had to cover the shortfall in federal allocations by borrowing from banks thus raising the debt profiles of their states. At the moment, at least 22 states have been unable to pay their civil servants with some owing their staff for several months. The increase in the debt profile and in recurrent expenditure has placed several of these states in highly vulnerable and unsustainable fiscal situations. With the obvious exception of Lagos, no state has the capacity to withstand the shock of decreased federal allocations. This leaves the economy extremely vulnerable and makes the case for increase in non-oil revenue imperative. The Case for Restructuring the Political Economy Our incipient economic crisis triggered by declining oil revenues calls into question our entire governance model and political economy which revolves round the distribution of oil rents. The elite consensus and the political architecture that have informed how Nigeria works (or does not work as the case may be) have long been overdue for review. The current crisis offers us an opportunity to do just that and to restart the stalled conversation about the necessity of a truly productive federal order and create a new template for organizing the republic. In order to begin this conversation from the proper point, we must entertain a brief historical excursion that examines how we got to where we are. During the First Republic, regional federalism was the order of the day. Nigeria was divided into three (then subsequently four) regions each with a great degree of autonomy to

11 Ibid

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organize their affairs as they saw fit. The regions enjoyed fiscal autonomy, constructing their social economies based on the taxation of the economic activities carried out within their territories. They had control over the nature and forms of their development and how they could explore latent and evident potentials in their environment to maximize on the most effective ways to deliver the goods of governance to their people. The regions had their own constitutions, had total control over and regulated issues relating to education, agriculture, healthcare, taxation, and other significant aspects of their existence. Yet they subscribed to a central authority that held the exclusive right to make decisions pertaining to defence and a few other select issues. The regions were in charge of the resources that they generated, could develop at their own pace and according to the manner that they deemed fit, while contributing a percentage of their revenue towards the keeping of the centre afloat. A new order commenced in 1966 with the first military intervention that terminated the First Republic. Under the military, governance was centralized, the regions were abolished and their tax-based social economies along with them. What emerged then was a militaristic-unitary state built atop the ruins of the old regional federalism and a new economy based on the proceeds of selling crude oil on the world market. Where regional authorities had previously harnessed their internal resources and the energies of their people to propel development, there arose a federal military government which shared the revenues from crude oil sales to states which were now administered not as autonomous federating units but as subsidiary and subordinate departments. The primacy of the federal government would be decisively established over the course of decades to the extent that local and regional autonomy became virtually politically incorrect. Provoked by the internecine anarchy and violent political conflict that characterized the First Republic’s last days, the military resolved no federating unit should ever be strong enough to threaten national unity. Accordingly, the military literally dismantled most of the First Republic’s federal structures and adopted a new revenue allocation formula. The power to manage all natural resource (oil, gas, solid minerals) was vested exclusively in the Federal Government. Rights over revenues changed. The regions were divided into states which became the new allocative units for sharing the nation’s wealth. Consequently, the more ‘states’ any group could get, the higher their collective ‘share’ of the national cake. The fiscal viability of the states themselves was not an issue. The verdict confronting now confronting us is that this form of oil-dependent unitarism has reached its expiry date. Today, we are faced with the crippling limitations of our “feeding bottle federalism.” An obscure and remote federal authority cannot purport to provide these benefits for all the population. It simply lacks the capacity and the reach to do so effectively in a country as heterogeneous and geographically expansive as Nigeria. The scale of demands are simply too great. We cannot manage and address the aspirations and concerns of over 167 million

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people from Abuja. This is one of the reasons why developmental efforts authored by the federal government, despite the huge sums committed to them by successive administrations have failed. Real development emanates from the people’s perceptions of their own problems and their willingness to take responsibility for solving them. For development policies to work, the people have to take ownership of them and drive their execution. For this to be the case, the development goals have to be generated right at the grassroots by the citizenry and tally with their own needs and aspirations. It is a process that flows from the bottom to the top. The imperative is the restructuring of the Nigerian state in line with the core principles of decentralization – Subsidiarity, Fiscal Federalism and Cooperative Federalism; which provide for governance matters to be handled by the smallest, lowest or least centralized authority capable of addressing the matter effectively. In other words, in the Nigeria of the future, the central government should have a subsidiary function, performing only tasks which cannot be effectively performed at a more immediate or local level. The various levels of government would thus interact cooperatively to solve common problems. The Necessity of Economic Diversification A case can certainly be made that oil wealth has made us lazy and unimaginative given the bountiful resources with which Nigeria is blessed. Consider solid minerals and agriculture, two sectors brimming with potential but which have suffered great neglect because of the obsession with oil. In fact, agriculture is already this country’s biggest employer and could become even more significant if more effort is devoted to it. It could help address the problem of unemployment. Solid minerals are equally largely untouched. However, the biggest resource we have is demographic. We have a youthful working age population that needs to have their energies unleashed. The challenge is to take this population and turn it into human capital to drive development. Zero-natural resource economies such as Japan have been able to successfully harness their human capital with great economic advancement to show for it. Already, the informal sectors as well as youth-led economic sectors such as Nollywood have proven that the Nigerian youth need little incentive from government to thrive. We can all therefore imagine what a functional power sector can do in stimulating creativity and industry at the grassroots. The successful reform of the power sector holds the key to unlocking the potential inherent in our country’s youth bulge. On the other hand, our failure to direct the energies of our teeming youth appropriately would keep them undermined and vulnerable to the inducement of being used as fodder in the cannon of fundamentalists who seek to destabilize our great country. No country can prosper by being a net exporter of natural resources. Nigeria, like all mono-resource export economies is extremely vulnerable to fluctuations in world commodity prices. However wealthy oil has made us now, we must understand that it is a finite

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resource. Its exploitation for sale is a primary economic activity that is subject to the laws of diminishing returns because natural resources are exhaustible or can be rendered irrelevant by innovation. Manufacturing is the key. We have to resuscitate our industries. The path of growth lies with value-added economic activities of manufacturing. Diversity and Decentralization as two Sides of the Same Coin The need to diversify our economy and the necessity of decentralizing the governance are coterminous imperatives. Indeed, one cannot occur without the other. We cannot diversify the economy without decentralizing governance. In the emergent post-oil-centered dispensation, a regime of fiscal federalism which devolves economic power to states and municipalities is now imperative. States have to depend on internally sourced revenue and taxable productive endeavour as against federal largesse. We must see that our prime economic resource is neither oil nor solid minerals but human capital – productive citizens whose entrepreneurial endeavours create wealth and whose taxes fund governance. The principal task of the government is to create an enabling environment that permits citizens to actualize their economic and entrepreneurial potential. Thus, fiscal federalism incentivizes smart governance because unlike the current order in which state governors are judged by their ability to distribute patronage, a new order which offers scant resources for patronage immediately levies a demand on local elites to supply the developmental deliverables that make life meaningful. Fiscal federalism, by its very nature, incentivizes productivity and de-emphasizes patronage. By the same token, a tax-paying citizenry whose hard earned funds oil the machinery of public administration will necessarily motivated to adequately interrogate that administration, to ascertain how their taxes are being spent and to hold politicians accountable. In sum, economic diversification and political decentralization will have the effect of strengthening our democracy. Since 1999, it has become increasingly clear that a number of our national developmental objectives now fall within the purview of states rather than the federal government. What we need now is for this recognition to become institutionalized through the devolution of powers and resources from the centre. As states are unshackled from federal control, they will become freer to engage in regional and inter-state collaborations to meet the scale of the demand on the ground. We may not be able to re-establish the regional architecture of the First Republic today. State governments and local governments as presently constituted have existed long enough to have developed institutional and political lives of their own. Abolishing or reconfiguring them in order to recreate the regional dynamic of the First Republic will be politically onerous. But this does not mean that we cannot create forms of regional cooperation among political leaders, civil society actors and stakeholders to chart a path forward. Moreover, a confluence of economic, social and political pressures may make the

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transition towards regionalization a fait accompli. Economically unviable states will cease to exist by merging with others to form new regions and consequently regional hubs that will multiply the economy’s centres of gravity. The Case for the Southwest Region: Options, Potentials and Prospects The regional agenda in the Southwest seeks to enable the process of political, legal, economic, social and cultural cooperation among states, as a way of rapidly boosting their growth and development. It is conceived as facilitating the execution of projects across participating states in areas of mutual benefit and comparative advantage in a manner that re-enacts the development paradigm of the old Western region. Regionalism in the states of South-Western Nigeria is about developing as an economic bloc through a costs effective approach to creating infrastructure, industrialization, commerce, the environment and agriculture. It is development as freedom and the essential basis of creating life more abundant. For regional integration as a development strategy to be effective and actionable, there is the necessity of an essential reform of governance in the Southwest towards a more performance-based model that locates people at the centre of the programmes and agenda of the government. As such, governance not only has to be inclusive and accountable, but its impacts and achievements have to be measurable in order for its legitimacy to be guaranteed.

The Regional Economic Outlook South-Western Nigeria is one of the fastest growing economic blocs in Nigeria, and the world, which with its unique geography, competencies and resources, is positioned as the hub to keep driving the development and growth of Nigeria into the 22nd Century. With its six core states (Ekiti, Lagos, Oyo, Ogun, Osun, and Ondo) having a combined GDP of $69.1 BN, constituting 25.3% of the national GDP (2012 estimates); a GDP per capita of $11,341; and a expanding population presently projected at 32.5 million people, representing about 20% of Nigeria’s total population, this is a region of seemingly boundless and soaring growth, comprising a third of the ten largest state economies in the country. The region’s land mass of about 80,000 square kilometers is host to over 60% of Nigeria’s industrial capacity, about 60% of the country’s banking assets and 67% of its insurance assets, while also holding two of Nigeria’s most important deep seaports – the Lagos Port Complex, Apapa and Tin Can Island. These ports, handling over 100 million tonnes of good per annum valued at close to $2 billion USD in 2012, alongside its profitable land borders account for 60% of the trading and commercial activities in Nigeria. With the constant growth of the country’s GDP at 7% in the past few years, and the GDP per

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capita at 6.3%, the most performing non-oil sectors of the economy that are largely concentrated in the South-West, besides retail trade and agriculture, include telecommunications (at 32%), building and construction (12.5%), solid minerals (12.52%), hotel and restaurants (12.5%), real estate (10.4%) and business services (9.7%). The financial services infrastructure of the region include 22 national commercial banking institutions, 20 finance companies, 20 primary mortgage institutions, 2 merchant banks, 20 micro-finance banks and 5 development finance institutions, having an extensive network of branches, and their most significant operations in the South-West. These institutions commanded money assets to the tune of N6, 394.83 billion in May 2013. When considered on its own size and merits, the economy of South-Western Nigeria is one of the fastest growing in the world, which is of comparative size to other national economies. For instance, Lagos State produces about 12% of Nigeria’s GDP, which is equivalent to almost $32bn according to the 2013 estimates, making it Africa’s 13th largest economy ahead of Tanzania. Other physical infrastructure like the energy generating plants (Egbin, Olokola, Papalanto and Omotosho, etc.) being currently revitalized and upgraded to cater for an enlarging economy; industrial estates (Ikeja, Agbara, Otta, etc.) that are linking up with the West Africa gas pipeline; and an enabling regulatory environment specifically designed to encourage businesses and investments across the six states of South-Western Nigeria, reveal the region as being poised to keep leading the growth of the country in all the productive and services sectors of the economy, beyond the extractive industry. This is possible due to the presence of a high literacy rate (over 70%) and an amply educated and skilled workforce that also constitutes a defined and growing middle class. South-Western Nigeria reveals several of the attributes of an emerging market when considered in terms of the indices of a space undergoing rapid growth and industrialization, an evolving and thriving middle class, social and political freedoms, improved standards of living, etc. – which are hallmarks of the entry into a global free-market-oriented economy. The competitive advantage of the region is leveraged on its strategic assets of a unique communality of language, customs and culture among its peoples; a demography consisting of an exceptionally youthful population; huge human and material resources including a large knowledgeable Diaspora; vast tracts of arable agricultural land, renewable water resources, and the presence of extensive mineral deposits, such as hydrocarbons, etc. Equally, Western Nigeria has great tourism potentials due to the peculiarity of its history and distinct geography, and capabilities in ICT and other skilled professions. The Southwest more than meets the test of economic viability for reconstituting itself as a region and a formidable one at that.

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There are four core areas that embody the immense economic potential of the Southwest waiting to be unlocked through diversification and decentralization. Agriculture South-Western Nigeria is being positioned as a regional development hub for a number of agricultural products found across the states constituting the region. These include the main cash crops of cocoa and palm produce – which are largely export produce, and food crops such as yam, maize, cassava, plantain/banana, millet, rice, and vegetables, fisheries and poultry. Agriculture is crucial not only because it is a mainstay of the South-West’s economy, having many people engaged in it, but also because there is very high potential domestic and industrial demand for agricultural products in centres of high population such as major Nigerian cities, which are also great market hubs. Equally, there is documented evidence of a high export market demand and value for all the products spun off South-West Nigeria’s agricultural crop value chain. As an instance of the size of the agricultural market in Nigeria, the city of Lagos is estimated as consuming over N2 billion worth of food every single day, and the demand for these products usually outstrips their supply, hence there is a great shortfall that is catered for through the importation of food. Also, in very specific terms, rice as a main staple food consumed by the greater number of Nigerians has an estimated demand of 6.0 million tonnes per year, yet what is available from local production and imports is about 2.85 million tons of the grain, revealing that there are still largely unmet needs in the local market. Still, with a high number of hungry people who are forced to consume food lacking in the required quantities of fruits, vegetables and animal protein, thereby promoting nutritional conditions that have implications for well-being, productivity and mortality, and the effects of the world food crisis, such as that which happened between 2007 and 2008, impacting on Nigeria’s import access to essential cereal grains, there is serious potentials for the growth of the agriculture business in South-West Nigeria. This is affirmed by a prevalent decline in agricultural productivity, low harvest and rising food costs. Since the commercialization of and investments in agriculture are recognized as vital to the promotion of accelerated development and sustainable growth in the South-Western States of Nigeria, and the reduction of poverty, there is the greater necessity of keying in agricultural productivity enhancing technologies, and high-quality inputs such as fertilizers, pesticides, and improved seedlings, etc. These factors of input, in themselves, constitute an enormous basis for commercial activities and enterprise. Evolving along with the foregoing is also the imperative of developing and expanding agro-processing/storage and marketing facilities, which would spin off more returns for private capital in the improved investment climate that we are creating.

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What the governments of the states of the South-West are presently doing to enable the establishment of the desired investment climate in the region includes the harmonization of the policy environment across the states – necessarily through the Development Agenda for Western Nigeria (DAWN) Commission – in order to remove institutional and structural constraints, red-tapism and bottlenecks. We are also resolved to activate a policy framework that links agriculture to manufacturing by extending the agriculture value chain to cover storage, processing and manufacturing. While our states will engage in rapid investments in modern agricultural and industrial infrastructure through joint efforts, and also encourage the provision of agricultural infrastructure through public-private partnerships, there are also plans to establish a Southwest Agriculture and Industrial Development Bank. This Bank, to be created in collaboration with international multilateral institutions, would serve as a source of finance for agriculture, industry, mining and infrastructure in the region. The creation of a favourable agricultural investment climate in the states of South-Western Nigeria is being achieved through the provision of incentives (land and infrastructure) for investors in agriculture-linked manufacturing; the offering of tax breaks/holidays to investments of huge capital outlay; financial support for farmers and the enthronement of effective and transparent regulation, pertaining to land access, input and output markets, etc. Also, there will be the fostering of an environment that facilitates the manufacturing of farming inputs such as fertilizer, and their effective distribution. Equally, the essential input of labour is already being addressed by many states in the region through the development of youths in agriculture programmes that will generate the relevant manpower for agricultural enterprise. This is being supported by the establishment of systems for training and skills acquisition in farming. Mineral Resources Despite their huge economic potentials and the widespread availability of mineral resources across the South-West in significant quantities, this aspect of the extractive industries is largely underdeveloped across the region, possibly due to the national dominance of hydrocarbons as the extraction of choice. This has left extractive activities across the six states to the initiatives of small-scale miners, who are mainly illegal and occupy unallocated mineral deposit blocks. The six states of South-Western Nigeria have substantial and economically viable quantities of mineral resources that are available for commercial exploration from investors who have the technical capability to engage in such. Osun State is a trove of considerable amounts of talc, kaolin, granite, clay, gold and feldspar, while Ekiti State is rich in the deposits of granite, kaolin, columbite, channockete, iron ore, baryte, aquamarine, gemstone,

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phosphate, limestone and gold. In Oyo State, there is the abundance of clay, kaolin and aquamarine, whilst the mineral resources available in Ogun State include chalk, phosphate, high quality stones and gravels for construction works. Asides petroleum, Ondo State has bitumen, kaolin clay, iron ore, granite, quartz sands, coal, and columbite. There are enormous quantities of Bitumen, sand, hydrocarbon, Kaolin, clay, construction sand, and glass sand in Lagos State. Some of these minerals have essential economic uses, such as the utilization of Kaolin in the manufacture of plastics, ceramics, textiles, fertilizers, tiles, insulator wares and pencils; columbite for special steel, electronic tubes, and the filaments in rocket and aircraft manufacture, etc. In the aggregated data of the proven reserves of these minerals in Nigerian soil, of which there is very significant presence in the South-Western region, it is shown that we have estimated reserves of the equivalent of about 27 billion barrels of Bitumen; some 20 million tonnes of Baryte; 620,000 ounces of Gold in Osun State and about 200 million ounces located along the schist belt indicated by Airborne Geophysical Survey (AGS). Also, there are estimated reserves of about 10 billion tonnes of Iron Ore, and 3 trillion tonnes of Limestone within our territorial extents. What makes the minerals investment environment in South-Western Nigeria highly attractive to entrants include the current operation of a national minerals and metals policy, making the federal government a considerate regulator and facilitator, while the private sector is the Owner/Operator. Further to this is the availability of a comprehensive Minerals and Mining Act, in addition to Mining Regulations that are in tune with universal best practices and standards. There are also large geosciences data/reports on the mineral resources of the country, complete airborne geophysical surveys, and a transparent cadastre system guaranteeing the security of mineral rights and the administration of mineral titles on a first come, first served/use it or loose it basis. The basic infrastructure to support mining operations is also available in the region. Some of the incentives designed to promote investment in mining in South-Western Nigeria comprise capital allowances of up to 95% of the qualifying capital expenditure; the waiver of customs and import duties on machinery and equipment brought in for mining operations; three to five years of tax holidays; and a possible total (100%) foreign ownership of the mining enterprise. Other business incentives in mining in the region include the free transferability of funds and the permission to retain and use earned foreign exchange. Also, there is the deductibility of environmental costs as part of overheads; an Annual Capital Cost Indexation; and the presence of a One Stop Investment Centre through the national investments council to ease the burden of business registration. Telephony and Internet

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With the deregulation of the telecommunications sector in 1992, its further liberalization through the Nigerian Communications Commission Decree No. 30 of 1998 allowing for the entry of private investors into the sector, and the Nigerian Communications Act (NCA) of 2003 defining the operations of the industry, the telecommunications industry in Nigeria has grown exponentially in the past decade. This growth has been on the backbone of a population of over 100 million people of improving affordability, and the market potentials of the industry, which would – not doubt – be considerable in the next couple of years. Telecommunications is one of the fastest growing non-oil sectors of the Nigerian economy, accounting for 8.5% of the GDP. Whilst the Nigerian Communications Act 2003 offers a progressive framework guaranteeing a safe market that protects investments, its effects have witnessed the evolution of a sector involving 119 million mobile subscribers, a teledensity of 85.25%, and private investments of over $25bn in the past 12 years. The Nigerian telecommunications market, which has been growing at about 30%, is the largest and one of the most competitive in Africa, with one of its early investors declaring full profitability less than 18 months into an investment of $700mn. The sector has created huge wealth and several thousands of jobs, directly and indirectly. In correlation with the foregoing, Nigeria’s Internet user base has grown in leaps and bounds, and the digital landscape has fundamentally evolved from a previously faltering fixed-line infrastructure, with the rise of mobile internet use on the telecommunication networks, newer Internet Service Providers who are deploying cutting edge and ground-breaking technologies, and the surge in the number of data carriers, internet exchanges and gateway operators now operative within the country. The super-growth in Internet use in Nigeria has witnessed almost 35 million subscriptions and a penetration of over 25% of the population, according to the Nigerian Communications Commission (NCC). The Commission’s Wire Nigeria (WiN) project and the State Accelerated Broadband Initiative (SABI) targeted at providing a fibre-optic broadband network in Nigeria will witness an acceleration in the access and growth of the Internet and services running on its backbone in the country, while reducing costs. With a fully liberalised market allowing for competition in all its segments and a unified licensing regime enabling operators to offer converged services, the opportunities for investments in telecommunications in the South-western states of Nigeria is massive. And, since much of the present voice and data uses in the sector is focused in urban areas, it is salient to note that this region has one of the largest concentration of cities and urban centres in Nigeria, holding a fluid population of over 30 million people – over 90% of who are likely to be to telecommunications products. Therefore, the states of South-Western Nigeria are natural hosts for investments in telecommunications. Coupled with this is the fact that the region is the location of the predominant number of industries, financial

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services companies, media, manufacturing concerns, and other crucial drivers of the country’s economy, who rely on the use of telecommunication services in attaining their objectives. The deregulated telecommunications environment in Nigeria has opened up space for the private sector operation of and participation in the sales and installation of Terminal Equipment; the provision and operation of Public Pay-phones; and the provision and operation of Private Network Links employing cables, radio communications, or satellite systems. Also, investors are allowed to provide and operate Public Mobile Communications (Cellular Mobile telephony, Paging, and Trunked Radio); to provide and operate Community Telecommunications (Rural and Urban); and to provide and operate Value Added Network/Data Services (Internet, Voice Mail, Electronic Mail services). Private investors are equally allowed under the deregulated regime to engage in the repair and maintenance of telecommunications facilities, and Cabling (e.g. Telephone-external and internal wiring for residence, office etc.). The foregoing investment and entrepreneurial opportunities in the telecommunications sector in the South-Western states of Nigeria open up a world of business possibilities for those who are willing. Moreover, whilst the Nigerian government has established promotion initiatives that will support investments targeted at providing broadband access to groups and communities, it is also encouraging the local manufacture of fibre optics cables, switching and transmission equipment, and other electronics that support the ICT sector, since we have a market large enough to sustain these in the region and the country. Besides, the spectra of services and needs of the telecommunications sector in the South-Western States of Nigeria offer those who have the capacities to proffer business and social solutions linked to the ICT sector an array of continuous investment prospects. Nollywood and Domestic Tourism Development The Nigerian movie industry, referred to as ‘Nollywood’, is one of our region and country’s greatest cultural exports and interface with the world. It is regarded as the third largest film industry on earth, after the American Hollywood and Indian Bollywood, with great potentials for investments and expansion. Located mainly in Lagos in the South-West, which is the cultural capital of Nigeria, it generates about 2,000 titles a year and a revenue of about $300m per annum, making up a fair size of the country’s GDP. In its 20-year history, Nollywood has evolved into a multi-lingual industry with movies produced in the three major languages of Hausa, Igbo and Yoruba; and beyond its geographical matrix of production, Nollywood films are now a global phenomenon seen across the African continent, Europe and North America. As an epicentre of economic and investment potentials, Nollywood has the capacity to generate several thousands of youth-related jobs in the Small and Medium Enterprise

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(SME) category, which is what largely fed its recent grant of N3bn by the Federal Government as a catalyst for leveraging other levels of funding and expertise that would grow the sector. Areas of benefit for investments in the Nollywood film industry include those targeted at buffering its technical standards in terms of production, directing and scriptwriting inputs, or enhancing its faulty marketing and distribution network, which has been a grave source of income leakage due to piracy. As a stirring symbol of cultural globalization, investments in Nollywood could not only be on the level of its further exposure to a larger number of cinemas across the world, but also its increased availability on the digital channels of the Internet and cable TV, as a way of complimenting the efforts of online content vendors like iRokoTv and Dobox.tv. CONCLUSION From the foregoing, we may surmise the following. The case for diversifying our economy and moving away from our dependence on oil has been argued for so long that it has almost become an exhausted cliché and a mantra. But its necessity has never been more urgent. Today, a confluence of economic forces is forcing this course of action upon us. The revolutionary trends in the global energy economy are forcing us to consider the measures that we should have taken long ago. The situation demands nothing less than a radical restructuring of our political and economic order. In this paper, I have made a case for decentralization of the economy and the devolution of power and economic autonomy to newly constituted regions aggregated from states, many of which are functionally bankrupt rentier channels for the aggrandizement of local elites. I have argued that true federalism is the way forward for Nigeria. I have shown that such a reconfiguration is possible and holds untold reward in terms of greater economic growth and prosperity and I have shown how the Southwest is perfectly positioned to drive such growth as an exemplar of the virtues of regional governance. We now have to summon the political will, the sincerity of resolve and the unity of purpose to do the needful. Thank you for listening. Odu’a a gbe wa o. J. ’Kayode Fayemi, PhD. Former Governor of Ekiti State, Nigeria