Land ownership vs oil endowment

Land ownership vs. oil endowment/oil production in Nigeria.

I still cannot associate Prof. Sam Aluko of the sixties and Prof. Sam Aluko of the nineties, and now twenties. When I read his postulation that "there are no oil-producing states, only oil endowed states; oil-endowed states do not contribute anything to oil production," I blinked a few times to be sure I was reading correctly. And when I read again and confirmed that what I read was actually there in black and white, I wiped a few coursing cold sweat off my face and swallowed hard a few times. I took some accounting courses in my undergraduate studies, and one of my children is an accountant. So, I engaged my daughter in a dialogue on production costs, owners equity and land as a factor of production. She told me emphatically that land was an asset and a non-depreciable one at that. She told me that no industrial feasibility studies can be complete without taking into consideration the land factor. Then she brought out her text book and showed me several financial statements on production where land was consistently was a factor. For the avoidance of doubt, I quote here from the accounting book in question: Accounting: The basics of business decisions, 8th ed. p. 384.(1990) by Robert F. Meigs and Walter B. Meigs. It says: "Tangible Plant Assets - The term tangible denotes physical substance, as exemplified by land, a building, or a machine. The only plant asset not subject to depreciation is land, which has an unlimited term of existence." So, if an individual owns the land on which a production activity is carried on, he has an equity share in the production. We have often been told of "owner's equity," and land is an important owner's equity. So, to say that the owner of the land is not contributing to production is incorrect.

Prof. Aluko is a distinguished economic scholar. Guaranteed. Economics, Business Administration, Accounting, and Management Science share a lot in common. Is it possible that Prof. Aluko has forgotten the factors that are taken into account in the process of "production?" In case he has forgotten, and I do not intend to associate myself with President Obasanjo's "senile" remarks about him, or Bush Sr.'s "voodoo economics," reference to Ronald Reagan, I wish, however, to remind him here that land is a major factor in the acquisition of an industry. And in calculating production cost, land is always a constant factor.

Is our respected professor trying to discount the legitimate ownership of land on which oil exploration is carried out to the particular state? I hope he realizes that petroleum is not plucked from the air, that it is found under the soil owned by a people. His upside down statistics, as it seems, simply confirm the famous two-handed inexact science of economics. He did not extrapolate his logic or should I say magic of "oil production" and "oil endowed" to other countries. These nations are always referred to as oil producing nations, because the sum total of production takes into account such indices as land, capital, labor, machinery, etc. In this wild volley, he posits that those areas where oil is produced do not contribute anything to the production. This is very interesting, as this surprising "new production theory and practice" can upset all known management, economic, accounting, and distribution theories on production known to man to date.

For the avoidance of doubt, "land ownership" is superior to "oil endowment" or "oil production," because without access to land, no activity is possible.

Not long ago, Dr. Okadigbo carelessly referred to the agitation for sovereign national conference as "idle talk," and our own respected Odumegwu Ojukwu said that no government can relinquish its sovereignty to the people.

I have lived long enough to watch them recant those false pronouncements, after some of us pointed out to them that sovereignty resides in the people, not the government. Prof. Aluko certainly knows that oil has been the main foreign exchange earner for Nigeria for more than four decades now. It is the cash cow of this country and other oil exporting countries. No matter how he juggles his own brand of econometrics, or works out his own fuzzy math, all balanced sheets in this country reflect the primacy of oil as Nigeria's economic lifeline.

I am aware that one can lie with statistics, but certainly not in the brazen case of something as crystal clear as oil revenue vis-à-vis agriculture and customs and tariff. I hope that the record which Prof. Mobilaji Aluko (the other Aluko), is referring to in his follow-up analysis does not exist in reality. If it does, I would like for it to be published, because something sinister which the country is not aware of may be going on. Certainly, any financial statement which shows that oil revenue for Nigeria was less than that of agriculture or customs and tariff, is decidedly cooked. And, those who are doing the cooking may have an agenda. I get goose flesh thinking of such a possibility.

How many jobs has agriculture or customs created for the country? Quality jobs, that is. All these army generals and their civilian collaborators who have stashed away billions of dollars of public money in their foreign accounts, did they get the money from agriculture and customs? And, if oil was something to sneeze at as we are being hoodwinked to believe, why all the hulla-baloo on resource control, "oil is the cause of civil war," fight for control of petroleum ministry and the bit? Why no such frenzy on agriculture or customs? Our people say, what you can lie about to a blind man, is that there is no oil in the soup, not that there is no salt or pepper.

In law, possession is 75% ownership. He who owns the land owns what is under it, so decrees the Lord. Unfortunately what has given rise to this kind of intellectual gymnastics and dishonesty is the fact that the east has been so fractured, and they hate each other, with the result that anybody can afford to pontificate over their affairs, where they dare not in the west or the north. Today we talk of one North, one West, but several Easts, all this to divide and rule a "conquered" people. In the United States where there is a federal structure of government, he who owns the land owns the resources under it. And, so to our dear respected professor, land ownership is superior to production, and since he who owns the land is also endowed with the resources under it, he has the power to decide whether there will be production or not, or who and who does or does not produce. In the West of Nigeria, when oil is found, they simply do not allow anybody else to carry out drilling other than the indigenes of the west. And they do not wait for anybody to tell them about "oil endowed" or "oil production" and how oil is a lesser foreign exchange earner or lesser GNP or GDP. The way things are going in Nigeria, I'll not be surprised if one day somebody wakes up one morning and tells us that East is now West and West is now North. And they'll cite "statistics" to prove it. After all, what is Nigeria's population figure? Do you know? How long is this pulling the wool across the eyes of the East going to go on?

June 2002