Nigeria is paying a huge price for failing to develop its petrochemical industry. The country currently spends about N2 trillion annually to import petrochemicals, which are largely derivatives of oil refining processes. If we had adequately developed our capacity to produce these critical industrial products, they would have been abundantly available in the country and we would not need to commit huge funds to their importation.
Sadly, we have neglected this industry to our own peril. As a result, our foam, plastic, paint, textile and other companies which depend on petrochemicals resort to importing them at a huge cost to the economy. It is in the light of this, among many other weaknesses and lost opportunities in our economy, that the present pressure on the naira is to be understood. The situation is also largely responsible for our remaining an under-developed nation.
According to a former president of the Polymer Institute of Nigeria, Chief Kunle Ogunade, about 80 per cent of the various polymers used in the country today are imported. This is certainly not good for any country that hopes to join the comity of developed nations. It is, indeed, shameful that we failed to develop the capacity to produce petrochemicals that are so fundamental to industrial growth.
If we take the textile industry as an example, the sector was one of the largest employers of labour in the not too distant past, with Lagos and Kano as its major industrial hubs. Nigeria lost that advantage due to the prohibitive cost of local production and our inability to hold our own against foreign competition. If the huge amounts expended on importation of petrochemical products for the textile industry alone were retained in our economy, perhaps, the many jobs lost in the sector could have been saved and a great deal of value added to our industrial capacity.
The same thing applies in virtually all the sectors that depend on petrochemical products. The politics of fertilizer importation, for instance, had for a long time troubled our agricultural sector. Trillions of naira had, in the past, reportedly been spent importing the product, to the surprise of local farmers who hardly got them at the right time and in the right quantities. The fertilizer business, simply put, had been one big racket over the years until the immediate past Minister of Agriculture, Dr. Akinwunmi Adesina, sanitised the supply of the product and made it more accessible to farmers.
The ultimate goal, however, is to be able to develop our local capacity to produce fertilizers, for which we will need to develop the petrochemical industry. This is a very huge task and the Ministry of Petroleum Resources should take the lead. The challenge is to increase our local refining capacity as quickly and efficiently as possible. Given the perennial reversals in the fortunes of the nation’s four refineries, a firm decision has to be taken on their full privatisation and commercialisation. In order to optimally harness the vast potentials in the industry, private investors should be brought in. There should be due regard for good corporate governance and due process, with the rules of engagement clearly spelt out and strictly adhered to.
When this is done, the nation can fully harness its oil and gas resources. From various reliable accounts, about 14 byproducts result from oil refining processes. These petrochemical derivatives could be used in our industries, so that the resources currently being frittered away to fund their importation would be saved and used in other areas of need. The nation’s scarce foreign exchange would be conserved and the many businesses which use the products would spring back to life and create jobs. The number of people that our foam, textiles, plastics, pharmaceuticals, paint and fertilizer companies can employ would increase drastically.
It is only when Nigeria maximizes the potentials of locally producing petrochemicals that its march to industrialisation can be said to be fully underway. With the petrochemical industry fully on course, much of the nation’s annual budgets can be funded without resorting to heavy borrowing.