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editorial
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Tuesday, 19 April, 2016
Nigerian Tribune
Thriving in the post-oil era
N March 31, 2016, the 30-year-old son of King Salman and second-in-line to the Saudi throne, Prince Mohammed bin Salman, set out his vision for a sovereign investment fund, as part of the preparation for a post-oil era. The $2 trillion wealth fund will be created by selling off state petroleum company, Aramco’s assets by 2018 or even a year earlier in a dramatic plan to transform the country’s economy, which relies heavily on the oil industry. This fund more than doubles Norway’s sovereign wealth fund, regarded as the largest in the world. The mega fund will be enough money to buy the four largest US companies, Apple, Google’s parent company Alphabet, Microsoft and Berkshire Hathaway. The sale of Aramco and transference of its shares to the Public Investment Fund technically make investments the source of Saudi Arabia’s government revenue, in place of oil. Several factors marked the beginning of the end of the oil era. In 2015, a Paris agreement on climate change was reached, with 195 countries setting themselves on a low-carbon path through economy-wide plans. This agreement will be developed and strengthened every year because climate chaos continues to build. While 2015 was the warmest year of the warmest decade since humans started recording temperatures, the forecast for 2016 is even grimmer. The number of climate refugees is swelling and everywhere, popular movements against pollution and irresponsible use of the earth’s resources are gaining momentum. Solar power and other forms of clean energy continue to be more widely used as sources of energy. New clean energy power plants are being built in the United States, China, India, as well as in the developing economies of Africa and Latin America. For example, India, with a current electricity grid capacity of less than 300 gigawatts (GW), is on its way to building 100 GW of solar power by 2022 from its 5 GW, double the current solar capacity of China. Meanwhile, cheaper battery technology will continue to drive clean energy costs down, while changing the way people think about energy. Indeed, the world is on the threshold of a revolution in the way modern society fuels itself. Technological innovations in the field of transportation further accelerate this march to the post-oil era. Scientists all over the globe are working to develop sustainable new energy sources to reduce dependence on dwindling fossil fuel supplies. Some sustainable energy sources, such as solar energy, are mature marketplaces, with 60 years of research behind them. Others, such as antimatter, are more experimental. The science of antimatter is still in its infancy but scientists claim that mixing just half a gram of antimatter with half a gram of matter would create the same energy generated by the Hiroshima bomb. Energy-converting tiles are installed on smart football pitches, such that youngsters playing on
such a football pitch power the neighbourhood’s street lights with every step. Their movements across the astro turf are converted from kinetic energy into electricity by hundreds of hidden energycapturing tiles built by London-based Pavegen. Pavegen has built one of such smart football pitches field at the Federal College of Education, Lagos. Furthermore, biomass-based fuels such as ethanol and biodiesel, which emit less carbon dioxide per unit of energy, are also already being produced. In Brazil, ethanol made from sugarcane constitutes some 40 percent of transport fuel. In the US, roughly 20 percent of the corn crop is being converted to ethanol. Much of this is blended with gasoline at a 10 percent level in reformulated cleaner-burning gasoline. The use of biomass-based fuels will steadily grow. Researchers are exploring more radical propulsion systems and fuels, especially those that have the potential for low life-cycle carbon dioxide emissions. Innovations will significantly improve gasoline engines, achieve more efficient transmissions, and low-emission diesels. Nigeria must therefore begin to refocus its economy for the postoil era. The time has come to move away from the preoccupation with the recovery of the oil market to thriving in the post-oil era. For many years, policy makers have been preoccupied with the issue of diversifying the economy away from the dependence on oil. Yet, no significant achievement has been made. The reality is that oil will become less and less in demand. Like the stone age era, the carbon asset bubble is deflating. The Federal Government must take the initiative of guiding the country through the transition to the post-oil era. It must set up a body right away, perhaps through the Federal Ministry of Trade, to review the situation and chart a course for the country in the post-oil era. The task for this body, comprising investment experts, will be to study investment opportunities around the world in the processing of primary products, which Nigeria produces, into manufactured items and make the feasibility studies available to Nigerians. The target should be to make at least 500 business feasibility studies available annually to interested Nigerians to consider and act on. We are aware that many Nigerians possess funds which lie idle or are wasted on frivolities because they lack the knowledge of profitable productive ventures to invest in. Instead of focusing on the exportation of primary products whose prices are beyond the country’s control, policy makers need to help Nigerians and the country at large to take advantage of the opportunities offered by the post-oil era. The green economy is gradually emerging as a major producer of jobs. Nigeria must shift its human capital development plan in that direction. A restructuring of the entire economy has become urgently imperative.
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