Why Dubai Laughs At The World…
I laughed to my heart’s content last week. My exhilaration was not inspired by any act of humour visited on me. The closest description I could ascribe to my impulse was, in fact, tragic comedy! As the global oil price continued its decline precariously towards levels previously thought to be impossible, there was palpable panic in the capitals of the world’s major oil producing countries including, of course, Abuja!
Yesterday’s lifting of most of the economic sanctions on Iran is sure to have further complicated the fears of the major oil producing countries. In a matter of a few months, if not weeks, Iranian crude will begin to flow into the already glutted oil market with easily predictable outcome on one-track economies such as those of Nigeria and a few others.
When the oil benchmark dropped below the dreaded 30 dollars per barrel, panic swiftly replaced apprehension among members of the contraption we have become accustomed to calling OPEC - the acronym for the Organization of Oil Producing and Exporting Countries.
From Caracas to Riyadh, and even Luanda, not to mention Abuja; there was visible concern as to how far the decline will go and its expected impact on the respective economies of the oil producing nations. There are now genuine fears that the oil could actually sell for as low as 20 dollars per barrel before the end of the year. That will really put a massive spanner in the works for most of the unwary OPEC members like Nigeria.
When OPEC first convened a meeting to deal with the crisis at its commencement, Saudi Arabia managed to convince other members against cuts in production to achieve price stabilization. They argued that it was in the advantage of OPEC members to allow the market to stabilize on its own momentum. Their confidence was hinged on the hope that the American producers of Shale oil could not afford to allow the price to drop below 50 dollars per barrel which the Saudis reasoned to be their actual cost of production. Now we know better.
Not only have the American amended their laws to allow for the export of the product, the move also coincided with the slow-down in the growth of the Western economies as much as that of the China – a major consumer. With Iran’s resumption of production, the situation is set to be further compounded!
But in the midst of all the fears and uncertainties, one country seems unperturbed. That country is the United Arab Emirates (UAE); only a desert outpost a matter of three decades ago, and which the whole world now commonly refers to as Dubai. . In the midst of all the chaos, the leaders and technocrats who run the Emirates, stood proud and composed as they prepared to host the World Future Energy Summit.
The unprecedented collapse of the oil market did not catch them snoring. Their demeanour actually mocked the grim situation at hand. As a few of the OPEC countries began making frantic calls to our Minister of state for Petroleum who also doubles as the OPEC President to suggest the convening of an emergency meeting to discuss the crises, Dubai remained unperturbed. It did not surprise me that they immediately slammed the calls for the emergency meeting.
A single word is enough to capture their exuberant confidence. It is called vision; especially that of its founding fathers. And Dubai’s present leaders have not betrayed the vision. In so many respects, is fitting that President Muhammadu Buhari is among the Heads of governments attending the three day summit.
PMB will discover, in case he is not already aware, that Dubai’s economy does not thrive on oil production alone but was, in fact, conceived to be highly diversified as a deliberate strategy. Incredibly, presently, oil and gas, accounts for only three percent of Dubai’s forex income. The retail sector accounts for 22%; tourism 18%, manufacturing and industry 20%. Professional and government services generates 14%; construction 13%, while financial services rakes in 10%.
In the context of such dynamics, Dubai has little reasons to fear the highly volatile oil market even if it is in a free-fall. They planned for it. Their economy was structured from inception to virtually deny the existence of oil as they planned to make their country a destination of choice for the rest of the world. Dubai currently has a colossal 1.2 trillion dollars in its Sovereign Wealth Fund (SWF)! That is second only to China which has 1.5 trillion. Norway comes a distant third with just over 800 billion dollars. Nigeria also briefly toyed with the idea of a SWF before it was apparently stolen into extinction.
Today, the whole world wants a piece of Dubai, including, quite unfortunately, serial treasury looters from Nigeria. Nearly all the world’s major brands are stationed there. Its International Medical City is set to divert thousands of medical tourists from India. Dubai has even managed to attract the Formula 1 motor circuit to enhance its visibility to add to the series of cricket, golf, and rugby tournaments it routinely hosts. If any major oil producing country is structured to survive the oil glut Dubai it is, and they are not hiding it!
By contrast, Nigeria is reeling from one crisis to the other. Two days ago, some idiots in the Niger Delta commencement the bombing of major oil facilities in the region allegedly to protest the indictment of one of their ex-leaders Government Tompolo who has refused to appear in court to respond to the charges against him. But how are they likely to behave if one day the crude oil which obviously inspires their arrogance becomes worthless as our present predicament suggests it could?
The only silver lining I see in the situation the nation finds itself is that for the very first time, it compels our leaders to put on their thinking caps. Without the easy money from oil to steal it is a harder road to travel, no doubt, but the voyage will engender accountability since it will be predicated on sweat and our collective productivity.
When the government is compelled to rely more on effective and more robust taxation the citizenry; and when productive activities are driven by agriculture and the collective sweat of all, it becomes harder for a few to loot their commonwealth without consequences. The lean times could actually enhance the interest of the citizens in the activities of their leaders. But the ultimate gain is that it will lead to the massive diversification of our economy on a scale we have never experienced since independence.
Welcome to hard times. Nigerians have genuine reasons for apprehension as the economic dynamics continue to unfold. All the permutations have been consistent in suggesting that the year 2016 will be though, but then, so are Nigerians when they are individually and collectively challenged. I will be counting on their legendary resilience and uncommon enterprise to beat the odds, as usual.
God loves this country, but we remain our own greatest enemies.