“A business ecosystem is just like the natural ecosystem; first, needs to be understood, then, needs to be well planned, and also needs to be thoughtfully renewed as well.”
Pearl Zhu
What would life on earth be like without lightning strikes, or without flying insects? Most persons are likely to see no significant use for these two, except maybe they sit in a science class and learn that lightning is an important player in the nitrogen cycle, which affects viability of plants (ignore artificial fertilisers and hydroponics), and also learn that insects are critical for pollinating plants to produce fruits (aka food). You see, life functions in many aspects like an ecosystem where different players need to be in the game, else we get stunted growth at best, or bedlam at worst.
I recently had an enlightening discourse with two senior lawyers actively involved in the Nigerian petroleum industry. As we analysed the industry, we homed in on a major constraint—the seeming inability of Nigerian companies to do anything worthwhile in the industry without significant foreign inputs. Think of it this way. If the international oil companies were to suddenly serve us breakfast, would we be able to go ahead with any “consequential” exploration or production activity?
In the last decade, one oil major systematically packed up and pulled back from its onshore entanglements, preferring the relatively calmer turbulence of offshore operations. Its onshore assets were sold to several indigenous companies. Today, can we say that the total output of these companies combined is more than or even equal to what the oil major was producing in its time? We merely went from one CEO and Board to several entities with a larger cumulative operating cost, yet fewer barrels leaving the moist earth.
Like a male goat braying at the scent of a female in heat, the oil majors trooped into Nigeria as crude oil deposits were found in commercial soft money quantities. But they did not come alone. They brought along a supporting cast of financiers, oil servicing firms, traders, shippers, insurers, etc. This ecosystem was the real value proposition. They brought their money and technology to suck “our” petroleum resources. Unfortunately, decades later, we neither have our own technology, nor the money to bring in technology. Decades later, we have the Federal Government struggling to raise a mere US$7 billion, when Harvard University has an endowment more than seven times this amount. Decades later, we are struggling to return to two million barrels per day, whereas Iran, with a myriad of international sanctions, can spit out over three million barrels, and the Odogwu triad of Saudi Arabia, Russia, and the United States pump out over ten million barrels per day.
If you wanted to raise a mere US$2 billion, there is no Nigerian bank that can singlehandedly put forward that money. Even a syndicate of local banks may struggle to put the sum together without risking structural distress. Compare this to Binance, the cryptocurrency firm recently agreeing to pay US$4.3 billion as fine for alleged misbehaviour. Now this is not a bashing of Nigeria, but merely to show how we have failed to prepare for today. By now, our banks should have grown into global powerhouses. Instead, we were satisfied with being fed dollars by foreign entities without asking how we could become the guys with the money like the Saudis and Qataris have become.
Today, many assets are non-producing, or unable to produce near their reservoir capabilities because the operators cannot raise funds. Since the bulk of industry funding comes from outside, the Nigerian industry stays at the mercy of global financiers trotting around in fossil-powered private jets while requiring us to green-up our operations. On the technological front, the story remains the same. There is barely any homegrown technology. Much of what we use necessarily has to be imported.
At this point, one should be asking, “what’s the way forward?”. As some would say, the best time to prepare for the future was yesterday; the next best time is today. The fact is that the petroleum industry cannot be isolated from the wobbles of the larger Nigerian economy. There needs to be a deliberate move to nurture a thriving ecosystem that can support the petroleum industry. If we are able to support this industry, then, the same support would cover other less capital and technology intensive industries. But doing this means we need political and industry leaders to think beyond four years, beyond making quick bucks. We need to realise that cronyism hardly yields efficient operations. And we do not really need to reinvent any wheel. There are enough examples around the world of countries that were like us but rewrote their stories. We just need the discipline to “copy special”— tailoring strategies to suit the Nigerian context, and where our context is too retrogressive, the willpower to reshape the context. If we start today, slowly but surely, we will have a thriving, self-supporting ecosystem in less than twenty years.
Image Credit: schedulereader.com
Jilomes 