Ethanol A Solution To Nigerias Economic Problems Economics Essay

Ever since Nigeria discovered oil there have been legion jobs associated with it such as fuel scarceness. One twenty-four hours fuel will discontinue to be and an option would hold to be sought out and the solution will be ethanol. Nigeria, one of the largest states in Africa, utilizes abundant crude oil supplies, yet it is classified among the top 20 poorest states in the universe. It merely so happens that the crude oil gross revenues constitute the bulk of authorities income, but jobs such as corruptness leads to the handling of this money by politicians for personal usage. Since the 1990 ‘s, Nigeria has had a rapid debasement in its criterion of life. Seventy per centum of the population is classified as hapless, gaining less than or equal to US $ 1 a twenty-four hours.

In the rural countries where the hapless are more legion most people are subsistence husbandmans and bring forth 90 % of the state ‘s nutrient. Despite this, a big per centum the hapless are malnourished. Conditionss are expected to decline in the North where more and more debauched farming area is vanishing due to desertification ( Rural Poverty in Nigeria ) . The problem does non stop at that place. Nigeria, like much of the universe, is enduring from H2O scarceness issues. All these factors pose a formidable challenge to cut downing poorness and industrialising the state, but the Nigerian authorities is taking stairss to battle the issue of poorness.

While the remainder of the universe searches for new beginnings of energy as crude oil supplies diminish, the Western universe has turned to the production of bio-fuels as an reply for the clip being. So far Looking at the stairss the Nigerian authorities is taking, one must inquire whether Nigeria can go a leader in the emerging bio-fuels economic system. But first the issue of fuel scarceness will be exhaustively discussed in order to cast more visible radiation on the ground why ethyl alcohol would be Nigeria ‘s following best pick.

In a nut shell, in the seventies, when the oil roar began, Nigeria seemed to be a really comfortable state. Now, it has become one of the poorest states in the universe. Over the old ages, Nigeria had a batch of jumping governments on its political scene. These governments were excessively busy acquiring richer themselves, to care about wellbeing of the state. Another error of the Nigerian authorities was concentrating merely on the oil export without puting into other industries.

To further explicate, In 1971, the portion of agribusiness to GDP stood at 48.23 per cent. By 1977, it had declined to about 21 per cent. Agricultural exports, as a per centum of entire exports, which was 20.7 per cent in 1971, reduced to 5.71 per centum in 1977. The find of oil in commercial measure in the mid-1950s, coupled with the oil-boom resulting from the Arab oil trade stoppage on the USA in 1973, affected the agricultural sector adversely. The economic system became to a great extent dependent on oil. By this clip, oil gross represented about 90 per cent of foreign exchange net incomes and about 85 per cent of entire exports. While the roar afforded the authorities much needed gross, it besides created serious structural jobs in the economic system.

The agricultural sector was most lessened. Rural-urban migration increased, as people attempted to profit from the windfall from oil. Production of agricultural trade goods for export declined significantly and in bend, nutrient production became a job. Get downing from 1974, the economic system became a net importer of basic nutrients. Huge foreign exchange net incomes were utilised in importing nutrient. Nonetheless, monetary values of grocery remained high. Policies like the authorities ‘s Operation Feed the Nation ( OFN ) programme could non change by reversal the deteriorating nutrient state of affairs. Government was involved in direct nutrient production, provided subsidies to peasant husbandmans and created more trade good boards for assorted agricultural and nutrient merchandises. The growing rate of GDP was rather high, such that a growing rate of 10.5 per cent in 1976 was considered unimpressive. In bend, authorities outgo fuelled the rising prices rate. Between 1975 and 1976, the rate of rising prices reached 23 per cent. It reduced to 16 per cent in 1976 and 1977. For the same periods, unemployment rate was 4.3 per cent and 2 per cent severally. The uncomfortableness index in 1976 stood at 27.3 per cent.

The neo-Keynesian type direction of the economic system was glowering during this period. Policy shapers advised the authorities non merely to ship on ownership and control of the dominating highs of the economic system like the crude oil and excavation sectors, but besides to be straight involved in banking, insurance, uncluttering and forwarding, among others. With the announcement of the Nigerian Enterprises Promotion Decree in 1972, Government became straight involved in virtually all facets of the economic system, particularly as foreign exchange was thought to be no longer a restraint to development.

This epoch had its jobs. Crude accretion intensified. Corruption, larceny, existent estate guess, outright plundering ‘ of authorities exchequer and other deceitful patterns prevailed. The State, on its ain, intensified the creative activity of a concern category that depended entirely on authorities contracts instead than on production. The spread between the rich and the hapless widened well. Ad-hoc and misguided authorities policies exacerbated the job. For illustration, the 100 per cent salary addition of 1975, tagged the Udoii Salary Award, was black tor the economic system as monetary values increased by more than 100 per cent. The payment of a twelvemonth ‘s arrears of the addition in salary, farther worsened the state of affairs.

The exchange rate government encouraged imports. The economic system was to a great extent dependent on imports ; about everything was imported, from toothpicks to toothpaste dispensers. There was no serious effort to put the windfall from oil in feasible undertakings. Except for the immense outgos on instruction and building of double passenger car main roads in some parts of the state, Nigeria would hold had nil to demo from the oil roar epoch. The industrial sector besides depended on imported inputs, machinery and natural stuffs. Hence, the alleged fabrication and excavation industries ( utilizing 1972 as the basal twelvemonth ) , which indicate singular additions, appear misdirecting. The fabrication sector increased by 82.2 per cent between 1972 and 1976 and by about 94 per cent between 1972 and 1977.

The additions must be interpreted with cautiousness, if industrialization is seen to connote the procedure of developing the capacity of that state to maestro and locate, within its boundary lines, the whole industrial production procedure, viz. production of natural stuffs, production of intermediate merchandises for other industries ; fiction of the machines and tools required for the industry of the coveted merchandises and of other machines and tools, accomplishments to pull off mills and to organize production procedures. Worsening oil grosss, disequilibrium in the balance of payments, turning unemployment, increasing rate of rising prices and political instability, all confirmed that demand-induced policies were no longer effectual. By 1978, a state which had thought that foreign exchange was non a restraint on development went borrowing on the Euro-dollar market.

Despite the oil roar, the private sector remained weak. The bing macroeconomic policies continued to promote ingestion instead than production. The economic system was devouring what she was non bring forthing. The asceticism steps introduced by the military disposal under General Olusegun Obasanjo were ephemeral because structural jobs were non addressed. GDP, which grew at 10.5 per cent in 1976 declined by 5.7 per cent in 1978 and grew by merely 5.9 per cent in 1979. Consequently, the economic system entered the recessive stage, necessitating farther stabilization steps to change by reversal the glooming state of affairs.

But the hereafter of Nigeria does so look bright with ethyl alcohol being a good pick for an alternate Africa ‘s largest oil manufacturer and OPEC member Nigeria is going progressively interested in bio-fuels to run into its turning demand for fuels and to supply employment to its mostly rural population. Contrary to the oil sector, which has caused civil struggle, perpetuates poorness, corruptness, and deep societal inequalities, thrives on foreign capital and has destroyed full ecosystems in the state, the development of a local bio-fuels industry presents an chance for a brighter development way. Nigeria has copiousness of natural resources to bring forth green fuels expeditiously, sustainably and in a cost-efficient manner. Particularly the starch-rich tuber harvest manioc, of which Nigeria grows more than any other state, is seen as holding a major potency for the production of first-generation ethyl alcohol, cellulosic bio-fuels and bio-products like renewable plastics.

Harmonizing to the secretary of the Nigeria Cassava Growers Association ( NCGA ) , Mr. Isaac Sunday Ojonugwa, cassava-based ethyl alcohol could salvage Nigeria up to $ 6.1 billion by 2012 by replacing imports of kerosine and gasolene. He added that the development of a cassava-driven bio-economy would be a important fillip for the state, as the huge bulk of its rural population can take part in the industry. Earlier estimations and proclamations on the different industrial manioc programs that exist for the state put the figure of new possible occupations between one to three million.

About 70 per cent of Nigeria ‘s population are husbandmans, with 60 per cent of people in this most thickly settled of African states populating below the poorness line. Worsening farm trade good monetary values over the past old ages have kept these 1000000s of people into poorness. The bio-economy, high oil monetary values and the fight of ethyl alcohol now offer them a alone chance for development. Bio-fuels can contend wretchedness like no other industrial sector.

Harmonizing to the International Center for Tropical Agriculture ( CIAT ) , one of the CGIAR establishments, a cassava-based ethyl alcohol industry could, with a combined attempt from the scientific discipline and policy community, establish a rural Renaissance that would profit the poorest people across Asia and Sub-Saharan Africa. Likewise, the UN ‘s FAO and the International Fund for Agricultural Development ( IFAD ) think Nigeria could be ripe for a ‘cassava industrial revolution ‘ giving huge new market and employment chances.

Even though Nigeria is a major petroleum oil manufacturer, the state imports over half of its refined oil merchandises because its ain refinery capacity ca n’t run into domestic demand. Producing bio-fuels in a decentralized manner can alleviate this emphasis. Ultra-high oil monetary values have made cassava-based ethanol extremely competitory. Thai research workers have shown the bio-fuel can be produced cost competitively when oil is over $ 60 per barrel. For this ground, the members of the Nigeria Cassava Growers Association think they are keeping the hereafter in their custodies:

Nigerian-made renewable manioc based ethyl alcohol will straight displace the sum of gasoline and kerosine we need to import offering our state critically the needed independency and security from foreign beginnings of energy. – Mr. Isaac Sunday Ojonugwa, NCGA secretary

Cassava is a tropical root harvest that yields a big sum of easy extractable amylum. It grows good with comparatively low sums of inputs and withstands emphasiss like drouth. For this ground, it has become a basic nutrient basic for most people in West-Africa. Traditionally, communities grew extra manioc on fringy dirts as a tactic to forestall dearth. The harvest can remain in the land for several old ages – in instance of a nutrient crisis were to emerge, husbandmans would trust on these ‘reserves ‘ .

In modern times, manioc has become a major industrial amylum harvest. Nigeria used to export the harvest to the EU for usage as an carnal provender. But a new policy at that place, which boosted subsidies for European grain husbandmans, caused the sector in Nigeria to prostration. The emerging bio-economy is now offering hopes for a resurgence in the sector.

The many possible societal, environmental and economic benefits of cassava bio-products are based on the efficiency of the manner in which the harvest generates energy-rich amylum. Scientists late produced the first comprehensive energy balance survey of maniocs based ethyl alcohol and found that it is really strong, the harvest requires a limited sum of energy inputs for it to be grown, harvested and converted into fuel, for a high energy output.

The NCGA secretary pointed to the fact that manioc can be used non merely for its amylum, but that the harvest besides yields a big sum of above-ground ligno-cellulosic biomass: chaffs and foliages. The residue-to-product ratio for manioc can be every bit high as 1, intending that for each metric ton of tuber produced, a metric ton of residuary biomass becomes available. This resource could be used as a feedstock for the production of next-generation bio-fuels in the bio-refineries of the hereafter.

Talking about the economic sciences of a cassava bio-fuel industry, Ojonugwa added that planetary ethyl alcohol production is estimated at 41 million metric tons per annum, valued at over $ 16 billion with a growing rate of 3 per cent per twelvemonth. Harmonizing to the secretary, merely about 10 per centum of planetary ethyl alcohol production is presently traded, but the statistics show that non adequate ethyl alcohol is going available to run into quickly turning international demand. The current supply shortage is estimated at 6 billion liters and is expected to turn by 5 per cent yearly. Nigeria could go a participant on this market, besides bring forthing for domestic ingestion. The secretary farther disclosed that SJH and Company, a US adviser, studied the economic sciences of manioc ethyl alcohol and found that at an approximative cost of $ 60 million for a manioc ethyl alcohol works, the value of a given local economic system would spread out by $ 110 million each twelvemonth, bring forthing an extra $ 19.6 million in income yearly for little husbandmans. He continued by stating that husbandmans who invest $ 20,000 in smaller local ethyl alcohol workss would accomplish return on investing of 13.3 per cent per twelvemonth over 10 old ages, stating that in such a scenario the local monetary value of manioc additions by an norm of 5-10 per cent metric ton, adding significantly to farm income in the general country environing the works.

Nigeria has been interested in resuscitating its industrial manioc sector for a piece now. Under the presidential term of Olusegun Obasanjo, a ‘Presidential Cassava Initiative ‘ was launched, which aimed at supplying inducements to cassava processors. Several Nigerian provinces have initiated their ain programmes, frequently in coaction with the state ‘s state-owned crude oil company and the state as a whole has been making South-South partnerships on manioc fuels and merchandises. One these is with the Cuban authorities, which is willing to portion its expertness in cassava-to-ethanol engineerings.

Meanwhile, some of the universe ‘s prima scientists are working on bettering manioc. Amongst them Norman Borlaugh, male parent of the Green Revolution, who is sequencing the harvest ‘s genome in order to engender assortments for energy. His work is portion of the bio-energy research at the U.S. Department of Energy ‘s Joint Genome Institute.

Earlier, I besides pointed to research being undertaken by research workers from the International Atomic Energy Agency, who are utilizing the latest works genteelness techniques to do manioc an even more interesting energy harvest. The tools: atomic techniques to bring on mutagenesis and obtain mutant assortments, and space-breeding, which is based on a similar procedure but so trusting on radiation from infinite that affects and transforms seeds into interesting assortments.

Finally, a major international attempt is afoot to sequence the genome of manioc, which might give the familial keys to unlocking new traits for improved output, more protein and even fresh industrial applications like the production of ethyl alcohol. The U.S. Department of Energy ‘s Joint Genome Institute is supplying funding and proficient aid for the plan.

In summarisation to all this Nigeria ‘s oil related jobs are legion and has been blighting the state of all time since the oil roar began. Making jobs such as unequal nutrient production, which in bend caused monolithic nutrient import, non merely importing of nutrient but importing of many other merchandises further increasing the outgo of the authorities, which aided the rate of rising prices. But with the debut ofthis bio-fuel programme, Nigeria can so look to a bright hereafter.