Felex Share Senior Reporter
Fuel problems being experienced by Nigeria vindicate African Union chairman President Mugabe’s calls on African countries to own, value add and export refined products, economists and political analysts said yesterday.
The weeks-long crisis literally shutdown the continent’s most populous nation, with banks closing early, flights grounded and mobile phone operators warning of an imminent cessation of services.
This is despite the fact that Nigeria is Africa’s largest and the world’s 10th biggest oil producer with more than 159 oilfields and 1 481 wells in operation.
The challenge, economists said, was that Nigeria—which has six petroleum exportation terminals — exports nearly all crude oil before importing more expensive processed oil from other countries, putting the product beyond the reach of locals.
The oil sector in Nigeria accounts for over 95 percent of export earnings and about 40 percent of Government revenues, according to the International Monetary Fund.
Economic analyst, Dr Gift Mugano, said the Nigerian situation was an indication that the only way for Africa to benefit from its resources was through value-addition and beneficiation as espoused by the AU chairman.
He said the problem with most African countries was that they took the issue of value-addition politically.
“This is clear testimony of the importance of adding value to our resources,” said Dr Mugano.
“As long as we do not do that, we risk running into economic confusion like Nigeria. This issue (of value addition) is not political but an economic one, which can bring economic development to the continent. Manufacturers are taking it wrongly and the whole value chain becomes disturbed, causing inflation” he said.
“We need to add value to create jobs and boost Government revenues. If we fall short of that, we suffer from volatilities of prices on the world market. What is happening in Nigeria is a glimpse of the icebeg and we have to arrest that by taking the productive route.”
Dr Mugano said without value-addition and beneficiation, Africa would remain saddled with problems such as unemployment, poverty, lack of wealth creation and illegal migration challenges.
President Mugabe has stoodfast on the issue of resource ownership and value-addition, stressing the issue in his speech to mark Africa Day on Monday which was posted on the continental body’s website.
He said time had come for African countries to industrialise their economies and move away from the continued exportation of raw materials at very low prices for beneficiation and value addition in other countries.
Raw materials, President Mugabe said, returned to Africa as finished goods at higher prices.
Said analyst, Mr Alexander Rusero: “This Nigeria issue is an eye opener and is timely as it resonates well with the AU chairperson’s clarion call. His gospel is about beneficiation and, without that, you will see a number one exporter of a resource running short of that resource at home.
“It is time to make a giant leap forward from just preaching to practising. One of the AU organs should be tasked with checking progress made on this important issue. We have a bigger role to play especially this time when there is Agenda 2063.”
Head of Research for Econometer Global Capital, Mr Christopher Mugaga, said Nigeria had “exported value addition and beneficiation” to other countries, hence the problem it was experiencing. “Nigerian moguls have established refineries in neighbouring countries such as Gambia, Chad and Benin and they take the oil and process it before selling it back to Nigeria and that is costing the government,” said Mugaga.
“The shortages are not strange,” he said, “but we are talking of a country that is grappling with corruption in the oil sector. The whole chain is littered with corruption and this is testimony that it is difficult to implement value addition where corruption is rampant. Similar tenets are also found in our fuel sector and other areas. Graft is something that has to be weeded out before we value add our resources.”
A Harare-based economist, Mr Terrence Mukupe, said just like President Mugabe’s call, every African country should own, control and add value to its resources.
“Once you export a raw material, you lose control over it,” he said.
“This means you now have to dance according to the tune of the controller and if you do not do that, they can mess around with your economy.”
Earlier this year, the African Union adopted its economic blueprint, Agenda 2063, that bears an uncanny resemblance to Zim-Asset and which will be implemented in five ten-year plans with value-addition and beneficiation as key tenets.
Next month, the continent will adopt the first ten-year-plan under Agenda 2063 at its mid-term summit in South Africa that will further expound on the development agenda.