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1 .The Coordinator Mathematics Programme and Head Mathematical Modeling Group
National Mathematical Centre, Abuja.
2. AN ECONOMIST AND FORMER SECRETARY NATIONAL MATHEMATICALCENTRE,ABUJA.
National Mathematical Centre, Abuja, Nigeria
Energy the Backbone of Economic and
Technological Development
A Support for President Alhaji Umaru YAdua,GCFR Human and financial Development
Programme
Assoc. Prof. B. O. Oyelami and Dr. L . Dambo[September 7, 2008]
Submitted to Alhaji Umaru YAdua ,GCFR The President of Federal Republic of Nigeria in Support of His
Programme to find solution to Energy and Power Problems and Technological Development of Nigeria.
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Contents
Preambles on Energy ....................................................................................................... 3Nigeria Energy crisis and prospects ............................................................... 4Problem of epileptic power supply in Nigeria ................................................ 7Some solutions PHCN problems ..................................................................... 9MASTER PLAN ON HOW TO GENERATE ELECTRICITY .................................. 12ELECTRICITY DISTRIBUTION ......................................................................... 14GENERATION OF ELECTRICITYLONG TIME MEASURE ............................... 15Petroleum Palavers: .................................................................................... 16The Way Forward: ....................................................................................... 17Issue of Pipeline Vandalism ......................................................................... 19
Suggested Environmental protection strategies requiring the Government Attention: 20PROBLEM OF FARMING WHEN THE LAND IS POISONED BY OIL SPILLAGES ............. 22
Solution to Militarism .................................................................................. 23Preambles on Economic growth ................................................................................... 25How can Computational Methods be use to improve national economy? ................ 28The 21 century Challenges as affect Nigeria ................................................................ 33Education, Science and Technology .............................................................................. 34Ways Forward ................................................................................................................ 35References....................................................................................................................... 37
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Chapter
Introduction
Preambles on Energy
The classical definition of energy is that, it is the ability of anobject to do work, in physics, work simply mean an object withforce acting on it moves some distance. The work, therefore, isthe product of the distance and the force acting on it. Themodern usage of energy is thus defined as the unifying
concept of all physical science that associated with any systema capacity for work either as a result of the motion of mass inthe system, the configuration of masses or charges in thesystem, or the present of photons in the system.
Various government of the world today adopted the term energy
department to mean the ministry of fuel and power, or petroleum, power
and steel in most countries. Added to modern vocabulary are words like
energy crisis and energy policy. Energy policy embraces all activities that
got to do with oil, coal, hydro-electricity or nuclear power stations.
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The unifying idea of having together chemical energy (fossil fuel, coal, gas
and oil), nuclear fuel (uranium and plutonium) to producing electricity by
heat engine driving generators is the energy process. And in the recent
times, renewable energy is gradually find applications in the society.
The primary source of energy available to human is the suns radiation,
fossil fuel and renewable energy. Energy exists in various forms in the form
of renewable and non-renewable energies. The renewable energy are in the
form of hydropower, biomass, wind and wave power (solar); tidal `and
geothermal power (non-solar). The worlds energy consumption shows
three-quarter is from the fossil fuel, biomass accounts about one-tenth andthe rest from nuclear power, hydroelectricity and to less extent renewable
account for the rest.
The modern world today, the quest for application of science and
technology, right from the 17th century, national prosperity became closely
linked with ready access to fossil fuel. In the 20 th century, natural gas has
been adapted as a cleaner domestics and industrial fuel. The availability of
fossil fuel and natural gas are among other thing indicators to measure how
powerful the economy and political base of a nation by the end of the 20th
century. There is more likelihood this trend would continue for the second
decade of the century.
Nigeria Energy crisis and prospects
The mainstream of Nigerian economy is the petroleum, which constitutes
about ninety percent of the countrys export earner with the natural gas
and agricultural produce constituting the remaining foreign earnings.
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The price of crude oil in the international market is impulsive and
characterised by rapid rise in the price because of political instability and
global hostility in petroleum producing states. The consequence of these isthat the supplies of petroleum far outweigh the demand for petroleum and
the supply of it cannot be continuously guaranteed. The price fluctuation
has prompted the developed nations to be seeking alternate means of
energy aside the fossil oil.
The oil in the developed economy is precious than even food and the basic
need of mankind as in the poor sub-Sahara Africa. The energy crisis had
raised many questions from several quarters. In answering of the questions
some societies advocated solar powered automobiles, others productions
cars using used vegetable oils or green cars. Some scientists and engineers
are seeking to provide machines that would reduce the fuel consumptions
or have a blend of petrol with about ten percent ethanol, or produce cars
and automobiles electronically using solar or rechargeable batteries. Many
researches are going on Nano- technology to reduce energy consumptions.
Furthermore, all the suggested methods state above would amount to
changing the existing machineries that would be too expensive, hence there
is the need to exploit energy as a determining factor for technological
development and has usher in a new dawn for research and development of
energy alternatives.
Nigeria is nation whose economy is monolithic dependent oil , perhaps, in
the next forty years or so fossil oil and natural gas may not be marketable;
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our oil reserve must have depleted then that it can no longer provided
foreign revenue. We must invest on Research and Development for
alternative revenue and exploit other means of energy; otherwise, we are
sleeping under a roof with fire on it.
There is rapid need for utilisation of refined oil in the country. It has become
a tradition that the pump price of petrol (PMS) is the determining factors for
wage and price increase for good and service; higher the pump price higher
the price of goods and services.
The need for refined oil in Nigeria is on increase, the population of
automobiles on increased, the epileptic power supply has also usher in rapid
increase in the use of petrol and diesel fuel for generation of electricity from
generators and plants. The atmosphere is constantly and intermittently
polluted with poisonous wastes from exhausts.
There are also wastes due to flaring of gases and waste in the refineries
these may led green house, global warming and entropy traps. Waste
deposited on the environment contains carbon monoxide (CO), carbon
dioxides (CO2), and some heavy metals like lead and so on that are
dangerous to health in the long run.
The corrosion of pipelines or pipelines vandalism causes oil spillages,degradation of soil and killing of marine animals in the Niger-Delta area of
the country. There is characterised food insecurity and lack pure drinkable
water in the area whenever there is oil spillage.
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Problem of epileptic power supply in Nigeria
The continuous reduction in power supply has made many
businesses in the country from small scale to large ones to begrounded. The Power Holding Company of Nigeria (PHCN),lastyear, through its public Affairs Unit informed the country thatgeneration dropped again by almost 60 percent from over3,000 MW to below 1,500MW.The blame were placed on ShellPetroleum Development Company (SPDC) and Agipindependent Power Plant (IPP) at Okpai for shutting down theirplants because of routine maintenance. The Egbin ThermalStation has problem too, two of its turbines exploded.
The dream of the previous administration that assured Nigerians that, by
the end of 2007 power generation will increase up to 10,000MW.Even
though, 11 new power stations are being constructed, the vision is being
beclouded by equipment failures and maintenances problem.
Nigeria is globally regarded to be the third emerging market (economy) in
the world. The country is the largest democracy in black Africa andconstitutes one-third of the African population. Our land is blessed with
abundant natural resources. Our crude oil is second to the British oil and
contains low sulphur content. We give glory to God.
Electricity is the mitochondrion of industrialisation and yet power supply in
the country is sorrowful and making us to be no near the destination of
developed nations in the world.
The problems associated to the power supply by PHCN are attributable to
the following:
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Lack of sufficient generation of electricity from the hydropowerstations in Shiroro, Kanji, Egbin Thermal Stations and some other
feeder stations.
The distribution of the electricity using the existing infrastructure facilities that is already in deplorable conditions. Most facilities are
outdated and had been overstressed beyond the life expectancy
periods and, therefore, need be overhauled.
Socio-psychological problem that got to do with the altitudes of PHCNworkers to customers. The workers do not live up to customers
expectations, hence, not customer friendly by not complying with the
Golden Rule in the SERVICOM spirit.
All the above problems need to be solved in order to have steady power
supply.
The most vital one is, perhaps, the attitude of the PHCN to the public is of
paramount importance .The organisation does not have mathematical
formulae for calculating the amount of tariff lost if no power is supplied in
some interval of time or the economic lost impinged on the customers. For
example, for power to drop to 1500MW from 3000MW the company is
losing over 1.44 billion naira daily. The consumers, on the other hand, are
losing all most 12.56 billion naira per day.
Furthermore, as a profit making company, how could it have been
operating for years without sense of remorse to replace their dilapidated
facilities? How could the Federal Government of Nigeria (FGN) be a
shareholder in PHCN without dividend declared to FGN. Rather, FGN keep
on seeking funds that have no appreciable improvement in the services
rendered by the company.
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Some solutions PHCN problems
The first and immediate solution is to break the monopoly ofPHCN through the current privatisation scheme; The EnergyCommission of Nigeria (ECN) should be empowered to play
the regulatory role just like the NCC to oversee the activities ofall the Energy producing companies in Nigeria. Enforce bestpractice and maintain standards. Sanction any of them thatproduce substandard products or lack prescribed good qualityof service as PHCN is at moment doing. The ElectricityRegulation Commission of Nigeria seems not to be living up toit responsibilities these days hence ECN should be chargedwith oversight function of electricity regulation.
Furthermore, ECN and the Standard Organisation of Nigeria (SON) should
make sure the facilities in use by the PHCN in term of power generation and
distribution conform to international or Nigerian laid standards and failure
to comply attract penalty or sanction.
Invite foreign investors to the power sector. The scope of operation of the
investors should be limited to six geopolitical zones of Nigeria. They should
be allowed to set-up their independent power stations where they would
they would generate, distribute and market electricity to consumers in their
sphere of operation.
The PHCN should serve as a backbone of electricity for the nation for 10
years and be completely privatised .For energy providing company in
Nigeria it should be made compulsory that Business Continuity Plans must
be drawn and submitted to the Cooperate Affairs, ECN and any of the
government agencies responsible for Environment Impact assessment (EIA)
and disease management and Central Bank of Nigeria (CBN).
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The Business Continuity Plan should contain the following components:
Business Impact Analysis (BIA): This would contain thepotential treat to the business and the potential impact of
those treats and the strategic way of overcoming them thecontinuity plans is necessary to protect the business from
manmade and natural disasters.
Risk Assessment: Continuity planning frequently begins byconducting a risk assessment. The purpose of a risk
assessment is to understand the potential risk to the
business so that you can work to mitigate them. The risk
can be broadly classified into environmental or naturaldisaster or threats (Weather, fire, earth tremour etc).
Security (both physical and electronic), human and
technology-related risks (hardware or software failures)
BIA also seeks to determine quickly how each business function
requires recovery and the relative importance of the business
Fig.1: Business Continuity plan (BIA)
Recovery time objective (RTO) is the objective that acorporation sets for its critical business processes and thesystem to be up and running following a disaster-understandingof how must revenue is lost overtime during a disaster.
Recovery Time Recovery Scope Recovery Point
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Risk Reduction Plan: Estimating of risk that got to do with equipment
failure and lost during a disaster with the view of reducing the incidence.
Emergency Response: Refers to the set of activities that occur immediately
following the event of a disaster. There activities relate to the immediatedangers, life-safety issues, not the restoration of business operation.
In power sector, in Nigeria, the failure to fulfill the aspiration of the
Government and the people of Federal Republic of Nigeria by PHCN and
NNPC may be due not having good business continuity plans. If they do, it
appears it does not capture the risk that surrounded the business and that it
why we are where we are today. In future Nigeria must make periodic
auditing of BIA plans of companies in energy sector by the corporate affairs
and ECN for effective and sustainable business continuity purpose.
Revenue
Potential Revenue
Cost
Time
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The PHCN should serve as a backbone of electricity for the nation for
10 years and be completely privatized in 10 years time when the
independent power stations must been fully set-up and fully operational.
Furthermore, this means that some resources would be provided to
overhaul the facilities for generation of electricity. We are glad that 11 new
power stations are under construction. There is urgent need to upgrade the
transmission and distribution facilities to modern ones as fast as possible.
Both ECN and SON be allowed to strictly regulate the activities of PHCH and
quality assured services be required from PHCN in the spirit of SERVICON.
The Consumer Parliament (CP) is introduced on monthly bases to
deliberate the performance of PHCN and map out which way forward. SON,
ECN and the Consumer Protection Agency (CPA) should jointly organize the
CP.
The independent electricity companies would be allowed to grow
from zone to zones if the previous service rendered were satisfactory and
the capita base of the company can allow them to spread to other zone(s) in
the long run.
MASTER PLAN ON HOW TO GENERATE ELECTRICITY
In the six geopolitical zones the generation of electricity in Nigeria
should be as follows
Hydro Power;
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Renewable Energy through the wind, solar, tidal and combustion ofcoal;
Fossil fuel, natural gas; Nuclear means, this should however, be for future project and be
devoid of all politics of nuclear safety and weapon palavers;
Combustion of fuel ethanol and biodiesel.The map in the appendix 1 shows the propose power generation matrix in
Nigeria.
The independent power stations in the zones can choose any of their
energy generating sources and site their station in the zone. It is advisable
to have combination of the energy sources especially to avoid seasonal
fluctuation in supply of Electricity. For example, hydro electricity depends on
the volume of water, which normally falls in the dry season. The thermal
station that generates electricity through the gas may be incapacitated
whenever the gas supply is not available because of pipe vandalism in the
Niger Delta or some other reasons. The combination of both the renewable
and non-renewable energies should be exploited for generation of electricity
according to availability in the zones of operations.
The independent power companies should also made arrangementwith other ones to supply electricity if their facilities brake down or being
undergo maintenance.
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ELECTRICITY DISTRIBUTION
The PHCN should be made to overhaul their facilities with modern
and more reliable technology based ones and all analog equipment to be
replaced with digital ones.
The present meter system is replaced by pre-paid meter system(PMS). All payment should be made designated banks.
The overhead wiring system in use should be replaced withunderground wiring system-using amour Cable installation system
between now and eight years.
Vital equipment like transformers should be replaced with ones withrelays capable to adjust to voltage changes. Other facilities should be
changed from obsolete technology based one to modern state-of-art
facility.
Massive reshuffle of the management of PHCN be made, staff maynot be relief of appointment except incompetent ones. But could be
transfer from ones zone to another.
The regulatory commission like Energy Commission of Nigeria and thestandard known accountancy body be appointed and ratified by the
office of Accountant General of Federal (AGF) to monitor the financial
transaction of the company.
The initial baseline target for generation of electricity should be50,000MW. This would address the problems of rapid urbanization of
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rural areas in Nigeria and rapid development of industrial process to
provide job opportunities and to supply excess power supply to the
neighbouring ECOWAS countries.
GENERATION OF ELECTRICITYLONG TIME MEASURE
Nigeria needs Energy for technological progress is no gain saying.
Current employment for petroleum-derived fuel cannot provide foreign
exchange on crude oil and gas. We must make use of the vast deposited
coal to generate electricity for the nation and as export earner. Although
some people will argue the combustion coal is environmental unfriendly.
The country must not allow it vast deposit to be wasted.
The utilization of Nigerian coal will provide the much needed employment
and set the stage of our development. The use of pulverized coal can be
used to power turbines for generation of electricity. Scientists have
suggested that the prospect of coal is very bright, though unsettled the
proven reserves runs into several centuries, predicted at current
consumption rate of 200 400 years. Nigeria has a reserve that would serve
for some years. Coals are useful in the production of toners and probably
solar panels; hence in this IT driven world the potential of coal is bright.
The other renewable sources of Energy come in many forms: wind,
solar, hydro, tides and waves, geothermal and other present a theoretical
potential, which is unlimited. Other forms of new and renewable energy are
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negligible significantly in the modern world, but for developing nation like
Nigeria; it may be useful to solve the energy crisis of the nation.
Tidal power scheme, notably in France, geothermal power (using the
earth crust to generate electricity station in Iceland, the US and Philippians,
Few wind power used to generate electricity, pump water and other uses).
The photovoltaic cells are used in several developing countries,
Nigeria be generating electricity in areas with abundance of sunshine and
invite foreign companies to set-up companies to produce solar cells and
panels at cheaper cost. Prospect of generation of electricity through nuclear
means is bright and gamma radiation technology can be put in place to
preserve food items and other perishable agricultural products, but political
and military implications of nuclear energy must be avoided.
For all types of energy generation, environmental impact assessment
and business continuity plans must be drawn and enforced on the
companies which set-up and operate power stations in the country.
The environmental hygienic laws must be put in place to avoid
pollution of the environment and adequate provision of facilities to
arresting environmental hazards caused as a result of powers generation
and distributions etc.
Petroleum Palavers:
Pricing and availability of petroleum products are the major problems that
needed to be solved. At the moment, the four refineries in Nigeria are down
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because of lack of supply of crude for distillation. This may be due to
pipeline vandalism by the militants in the Niger-Delta or some miscreants in
the countryside or even due to corrosion of the pipelines.
This is a serious cause of concern that Nigeria an oil producing nation
cannot refine oil in the country. The oil is procured at current international
market price. This price is not acceptable to many Nigerians because of
wages of workers is not international wages and many people are below
the poverty line. Thus, the government has to subsidized petroleum, which
in effect is against the spirit of IMF and World Bank. Increase in pump price
often have overall hike in prices of goods and services in the country. In the
past, government used to subsidized agricultural and manufactured goods
(through import tax exemption or relief) to stifle the effect of inflation, but
the west is against Nigeria subsidizing agriculture, and hike in petrol pump
price often accompanied bitterness between the government of the labour.
The aftermath of this is that the government of the day will gradually
become unpopular among the masses that elected her.
The Way Forward:
More refineries need be set-up in the country especially offshore onesthat would be fully protected by the Navy. Barges to the bays and from
bay to ports can used to convey the refined oil. These would solve
problem of vandalism.
More licenses should be granted to private operators of refineries,from small to large-scale refineries. The NNPC be made to supply crude
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to them at price that the end product petrol and diesel would be
affordable to people without stress.
Healthy competition should be encouraged among the independentoperators of refineries.
Importation of the refined oil should be discouraged except fromstrategic reasons to conserve the oil reserve level of the nation. Another
reason may be due to the refineries are down or are Under Turn Round
Maintenance (TAM).
Each refinery should set-up power generating plant to be powered bygas that should be having been wasted through flaring. The power-
generating unit can supply electricity to environment or independent
power provider in the area of refinery is sited.
In order to reduce deforestation and erosion, the use of fire woodsand charcoal can be reduced by making cooking gas cheaper than
kerosene and make available and affordable to all.
Nigeria should reduce fuel importation as said above, or else webecome a nation like America that goes about seeking petroleum. We
now seeking refined oil are unhealthy for nation rated as eighth largest
petroleum producing nations in the world.
Removal of subsidy on petrol will, no doubt, cause the country tohave more money in foreign reserve. But continuous adjustment and
hike in the pump price of petrol will make the government unpopular
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among the masses. A government supposes do what the masses want
not what the leader of affairs of the nation want.
Issue of Pipeline VandalismMost of the NNPC pipelines where laid more then twenty years ago, they
may have been corroded and the life expectancy of the pipes may have
been exceeded and need to be changed.
Job opportunity need to be provided for rural dwellers in the vicinitywhere the pipes passed through, e.g. Niger-Delta areas, Lagos areas,
and other areas across the country. The youth need to be employed not
to be accomplished in pipeline vandalism and black marketing.
NNPC need to employ modern technique for surveillances of thepipeline system e.g. use of the satellite, which is already in place. They
need helicopters equipped with infrared ray areal photographic cameras
to take pictures and even see the vandals in the dark. Villagers can alsobe employed to do the physical surveillance like the GSM operators do to
the facilities. They can as well deploy security men along the pipeline.
The Nigerian Railway cooperation used to in the past to inspect the rails
and locomotives conditions.
Maintain peace at the Niger-Delta in order not to brew-up potentialgorillas fighters in the region.
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Most have a good business continuity programme which containsarticulate environmental impact assessment for each area where their
installations are made.
Through the environmental problems in power sector, people through the
bye-product of petroleum waste are endangered their lives and that of
biomass in the biosphere. This is done through production of toxic products
in form of gasoline, poisonous hydrocarbon, solvents, pesticides,
insecticides, heavy metals, like aluminum, lead and mercury which possess
serious dangers to peoples health.
In American social philosopher Lewis Munford, sixty-four years ago in
his Autography Technique and Civilization called for a humane technology
and society that denied growth by limiting consumption. By Lewis theory,
we need a society devoid on flaring of hydrocarbons fuel, environment
hazard orchestrated by bizarre unsolicited for ecological problems.
Without prejudice to the existing laws on environmental protection
and laws in the Niger-Delta, the petroleum producing areas need all the
necessary technologies that would make their environment habitable.
Suggested Environmental protection strategies
requiring the Government Attention: Environmental monitoring and warning system for easy
detection of CO2, other poisonous gases and oil spillages and their
application for improved climates and environmental data.
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Adoption of renewable and fossil fuel as Energy source toprotect the soil and reduce atmosphere CO2 but without scarifying our
current fossil oil production rate.
Protection of Arable land improvement of water managementand maintenance of adequate food production for areas prone to oil
spillage and areas where refineries are sited.
Bio-manipulation for the exploitation of adequate life byencouraging people in the Niger-Delta region to go fishing in deep water
by provision of boats and jetties on loans to them. The fishing should be
within the Nigerian maritime boundary. The loans are payable through
fish supply which can be used by a company to be set-up in the area to
produce canned fish. The company would provide job opportunities for
the youth in the area.
Set-up water treatment plants using modern separatingtechnique that would produce clean water from polluted water that
resulted from oil spillages in the Niger-Delta areas. The water treatment
plants should be sited in strategic places assessable to the riverside
dwellers.
Big reservoirs should be erect to store the processed water,tankers and boats etc, should be used to distribute the water to the
people in the riverside and other polluted land areas.
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PROBLEM OF FARMING WHEN THE LAND IS
POISONED BY OIL SPILLAGES
The oil companies operating in the Niger-Delta should be made to have
record of farmland and landowners in the areas where crude oil is explored.
They should also have oil spillage insurance for their installations. The
money got from the issuance (undertakers) should be paid directly to the
farmers and landowners based on the available record. The emergency
response plan of the company should be implemented immediately. The
department of Environmental Impact Assessment Unit of the ministry of
petroleum and Central Bank of Nigeria can supervise the process.
Mump-up the spillages and make sure no fire outbreak occurs. Encourage States Governments to build silos for storing food
for people affected by oil spillage and fire disaster. Mobile clinic
equipped with drugs should be provided to affected people urgently.
There should be a database of professionals needed for searchand rescue during Disaster and should be activated and use immediately
for every disaster that occur in the area.
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Solution to Militarism
The states government should be comprehensive list of theneeds of the people in the area and provide the needs with FGN also
support.
Provide job opportunities or social warfare scheme for theunemployed and the old people in the area, the scheme can be oversees
by religious and community based organizations.
Provide all the social amenities for the people by the stategovernment with FGN coming in areas where dimmed fit.
The oil companies should be made to support communityoriented programme by plugging back some of their profits.
There should be maximum security for the oil workers by themilitary both the army and the Navy and in some cases, the police and
other security men employed by the oil company.
There should be intelligence corps to be monitoring theactivities of the militants and curbing them before incubation.
Above all, maintain peace through dialogue, consultation andintegration of people together in the zone. There should be orientation
on the need for good citizenship and good value system in the zone.
The traditional rulers and the state and local governmentleaders should be oriented that powers is an instrument for improving
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the life of people not an instrument for acquiring wealth. Militarisms are
the last result of bitterness among people who are down trodden and
improvised by few selected opportune leaders. The leaders have no
concern for the poor and yet the poor must expressed their feeling
through violence and unwholesome means to express their feelings.
Militarism has never found solution to any problem but rather blood
bath. God forbid this is Nigeria; we need peace and can be achieved
through good governance and accountability to people and God the
Creator of mankind.
This is saying that even bad general had won battle but no debating
society has ever won one battle
Violence making cannot solve Niger-Delta crisis but except through
maintenance of peace, law and order. We pray that every effort the
government had put into the Niger-Delta will bring peace and progress and
will not let the militants become rebel forces.
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Chapter
The role of Computational
mathematicians in national economics
'Life is either a daring adventure or nothing. Security does not exist in
nature, nor do children of men as a whole experience it. Avoid danger is no
safer in the long run than exposure' Helen Keller, US blind & deaf educator
(1880-1968)
Preambles on Economic growth
Last year toward the end of the year 2007, President Shehu Yar 'Adua,
while commissioning the Nigerian Stock Exchange world-class electronic
trading floor in Lagos ,said "Nigeria would achieve its dream of being one of
the top 20 economies by year 2020 with the huge resource available on the
capital market"
The key thing in the Mr. President speech is that capital market is the key
to achieve vision 2020, which is one of his seven-point agenda.
Complex system specialist and mathematician David Orrell once
explained that weather, human health and economics use similar methods
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of prediction (Mathematical models).Their systems-the atmosphere, the
human body and the economy-also have similar levels of complexities. The
Black-Scholes model for pricing of options the underlying principle is similar
to the heat equation. Thus many economic problems share similar
underlying principles as some phenomena in physics, thus, in the recent
times; the discipline called Ecophysics has been developed.
The simple application of Keynesian economics to government fiscal
policy has it that output is a function of aggregate spending and one
component of aggregate demand, so Keynes' model is often applied to
conclude that increasing government spending will have the same positive
effect on output as private investment. This model gives the underlying
mathematics for determination of income.
Keynes' model, though simple, and Helen Keller's philosophy have offered
us a leeway on how to achieve the vision 2020 agenda. It is simple, invest
more in research and development, human capita, introduce innovative
policies and you will hit the target.
To have national economic growth for Nigeria, several macroeconomic
factors need to be taken care of and some of them are:
A more vibrant and well disciplined fiscal policy that would boostgross domestic product (GDP).The level of productivity of goods and
services. Very high quality of manufactured products and
agricultural produce. Introduction of skill and innovating labour into
mainstream of production in the country. Policies that encourage
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increase in saving and limiting consumptions and others of
neoclassical economic techniques that encourage creation of
national wealth must be introduced.
There is indeed the need to develop physical infrastructures likeroad, water, electricity, railway and other facilities that allow
business boom.
Increase in the revenue profile of the nation and reduction in nationaldebt and liabilities. Increase in exportation ofdomestics goods and
services. The difference between export and import of goods and
services (trade balance) should be in favour of the nation.
Availability of power and energy and utilization of the nation's solidminerals.
Diversification of economy. A monolithic economy of Nigeria with 90percent dependence on crude oil neither does nor augurs well for the
nation. Since the future of oil depend on interest and international
politics. New emerging technology in future may render the use of
hydrocarbon oil irrelevant.
Reduce unemployment and increase health per capita spendingHave open economy drive by active competitionsReward of labour with good wages as to boost productivity
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Introduction of innovation through research and developmentpractice
Encourage investment through financial markets and attractinternational investors to the nation.
Zero tolerance for corruptions, money laundering and bankruptcyfor financial institutions.
Investment to develop human capita and acquisition of latesttechnology should be pursued with vigor.
How can Computational Methods be use to improve
national economy?
The economy of nation, by and large, to become top economy ,a new
innovation must be introduce into the mainstream of the economy and new
acquisition of latest technology must be everywhere dominant in the
economy. Technology cannot be transfer but can be bought or stolen. To
steel or develop technology the nation must have pool of mathematical
scientists who know the nigh tie gritty of the technology. Therefore, the
prosperity of nation depends on latest technology you have and how
competence you can apply them.
In the recent times, the finance market is the place where funds are
shopped for investment. Many financial derivatives are traded under
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organized market system and traded over the counter. In the stock
exchange market financial derivatives like plain vanillas, Bonds and exotics
options are traded.
The volume of trade increases everyday and there is the need to analyze
the behavour or the performance of the market through indices like
volatility .drift and jumps.
We need to determine the fair price of an option and payoff for the buyer.
We need to understand the complex cash flow structure in the financial
market the risks involve in managing a financial portfolio3&4
.
Furthermore, all these need thorough knowledge of computational
techniques for simulating financial models .For this reason, mathematical
scientists are needed in the finance industry to help in calibrating models.
Mathematicians and Statisticians are needed to calculate the financial
risk involved in credit derivative. Credit derivatives are instrument recently
traded on the financial markets by means of which the credit risk inherent in
loan, bonds or other risk assets or market risk positions are transfer to third
parties acting as called protection. Hedging of portfolio is very important in
the financial circle these days.
Most predominant models used in the finance industry is of the
quantitative type and financial quantitative analysts are needed to analyze
the behavour of the market daily ,monthly or calculate day to day volatility
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of the market and market capitalizations using the Standard 500 Rich &
Poor index.
Quantitative analysts are high level manpower with strong background
in Mathematics, Physics, Statistics, Computer Science or Engineering. These
persons often have PhDs in the computational science with little training in
economics and accounting. The quantitative analysts manage the wealth of
the investors and determine best investment profile for cooperate
organizations and the nation.
In view of the above, Nigeria need to invest money to develop high level
manpower in financial mathematics and financial engineering to produce
quantitative analysts and financial engineers. The financial engineers are
responsible for development and managing of the software use in the
finance industry.
The finance industries worldwide are linked together through the
Application Program Interface (APIs) with frontend program like excel which
makes it possible to get information from the floor of financial market
electronically worldwide. Nigeria needs to train mathematical sciences to
become finance engineers to manage the APIs and to develop indigenous
automated trading system , support and manage our automated stock
exchange market in Lagos and Abuja, and other financial institutions like
banks, insurance companies and mortgage houses.
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In other to boost the economy we need to increase our per capita income
and one way in doing this is to empower our local manufacturers to produce
high quality products which will earn the country foreign exchange. The
country must have and maintain quality control products in standard and
aesthetics for manufactured goods in Nigeria.
Our products should compete with products from Europe and Asia. Standard
Organization of Nigeria must maintain standard just like NAFDAC does for
foods and drugs. To be honest Nigeria has no standard for manufactured
goods compare to products in the west. As for foods and drugs NAFDAC is
doing good job but much is desired to make sure all certified goods by
NAFDAC maintain quality.
Mathematicians and Statisticians are professionally trained for quality
control and could be used in the industries to maintain standard; support
researches on industrial problems and develop strategies for improving
products. The use of computer graphics can be used by computer scientists
to improve the beauty of packages for manufactured products and
agricultural produce.
John Von Neumann and Mergestain authored the treatise titled "Theory of
games and economic behaviour" the textbook gives classical approach to
game theory which can be use to develop software for companies to survive
under competitive situations. Mathematical modelers and operations
researchers would be useful in companies in mapping out strategies for
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survival under competitive situations. Companies must be made to draw-up
business continuity plans and be made to strictly adhere to the plans in case
of occurrence of mishaps.
Nigeria has potential for economic growth in area of solid minerals.
Geologists and Computer Simulators can be used on how to tap the God
given gift of the nation in order to increase the country's per capita income.
The use of geostatisticians in designing of virograms to check the
abundance and continuity of minerals for the country should be
encouraged.
In agriculture and fishery interdisciplinary approach should be
encouraged among scientists in solving marine life problems. There are a lot
of potential revenue to be generated in agriculture and fishery.
Mathematical scientists should be co-opted into ecosystem (terrestrial and
marine) research on species abundance and biodiversity.
Information and telecommunications are areas where mathematical
scientists are greatly needed. The country has achieved a lot in the last five
years with introduction of internet, cell phones and the development of the
Nigerian Sta1 with Sta2 on the pipeline. Several billion of dollars revenue
can be got from Information and telecommunications and many
mathematical scientists can be trained and be useful on traffic control and
quality of service in the telecommunication industries. Mathematical
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scientists can be employed in the production of recharge cards using
random number generators.
Workers are creators of wealth of the nation hence good wages and staff
welfare needed to be maintained in all sector of the economy. Diseases and
syndrome like Typhoid, malaria and Hiv/Aids should be tackled in the
country in order to have healthy working class for the nations.
Computational methods are essential tool for analysis of simulation data in
modern medical science, industrial mathematics and financial engineering.
For the country should take advantage of this to encourage people to
acquire the modern skills in the computational mathematics and be relevant
in the mainstream of mathematics of finance and simulation of biomedical
problems.
The 21 century Challenges as affect Nigeria
The first challenge of this century is to develop alternative source of energy
to replace the fossil oil. USA the worlds major buyer of crude oilis planning
to stop importation of crude oil in ten years time. What will become OPEC
member countries like Nigeria?
Saudi Arabia is developing King Abdul Kingdom which serves as tourist
haven for people to bring in foreign exchange to country like United Arab
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Emirate. Iran is developing nuclear power plant to generate electricity
knowing full well that fossil oil is gradually outliving its usefulness. China
and India using their vast deposits of coal to generate electricity. One the
American presidential candidate promised to build 34 nuclear power
stations if elected.
Tata institute has developed the world cheapest car; Brazilians and Chinese
developed cars using biofuel.
Another possible threatening problem is food scarcity because escalation of
petrol price. Agriculture in the West is mechanized a lot diesel is need to
power agricultural machines and most harvested crop like maize were used
to produce biofuel and had led to food scarcity and global food insecurity.
In Nigeria, the government often subsidized agriculture directly or indirectly
without actually making must impact on food production. The local farmers
who the subsidy is made for never actually enjoy the subsidy.
Education, Science and Technology
Modern research is collective and interdisciplinary in nature but in Nigeria
people are still working in isolation and latest research facilities are not
affordable by many universities and research institutes. Most researches are
not targeted to keep the pace with researches in the west. Many
researchers in Nigeria do not have support from their institutions to attend
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international conferences and workshops. How can they keep abreast with
latest development in the area of specialty?
Most Nigerian raw materials like solid minerals are still lying fallow and
need development.
In manufacturing sector our products are not of high quality nor beautiful
need enough and something be done in other to open up external market
for made in Nigeria products.
The global economy is information driven, in Nigeria there are no much
data on the compendium of researches in Nigeria. The government
spending on research and education need to be pose on the web. In the
west transactions are through credit and master cards while in Nigeria very
few bank operate e-banking in foreign currencies.
In Nigeria there appear to be no law compelling companies to have
Foundation to support indigenous researches. Though Education TrustFunds (ETF) is in place to augment funding of schools and institutions in
Nigeria.
Ways Forward
The solution to the challenging problems is developing human and financial
capita for the nation. Emperor Alexandra the great makes ancient Egypt a
haven for greatest scientists; the city Timbuktu in the ancient Mali attracted
the great intellectuals in those days; President Mao of China invested a lot
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of money to develop human capita for China. America is the world greatest
haven for intellectuals today and even spends several billion dollars on
research and development.
Nigeria needs have in place Science and Technology Think Tank who will
determine areas where human capita would be developed for the nation.
They need to determine the technology that is reining and those that would
dominate the future and so Nigerians can be trained in this direction.
Nigerian investors can be encouraged to invest on new technologies that
have potential to enrich our investors.
Nigeria need to establish the National Simulation Laboratorywhich would
house data for development of the nation and Scientists. The laboratory can
use mathematical modeling and simulation techniques to solve national
problems such as economic, population, energy, ecological, medical and
national planning problems.
The Nation needs to build capacity in information technology,
communication technology, mathematical modeling and simulation,
industrial application of mathematics and other emerging technology like
nano-technology.
Tourism need to be boosted and Nigerian tourism centers should not only
be places containing waterfalls, game reserves, rocks, amusement parks but
also house historical artifacts of the nation or black race. Cleanness of the
environment should be encouraged with many roads tarred and properly
landscaped.
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Sport is a department that can generate employment for the youth and
athletes make more money abroad these days. We need to develop sport
and make compulsory in higher institution for all students and to be offered
throughout the course .The sport course can be made to be five hour credit
units for all students and must all be passed before graduation. This
programme will help Nigerian students to be physical fit, provide potential
employment and improve our FIFA and Olympics performances in future.
The Nigerian government should support learned Societies and Associations
to offsite the cost of production of journals, help in distribute the journal
worldwide and publish the abstracts of the publications on the internet. This
will make findings of Nigerian researchers known to many people.
Finally, before we end this write-up, I will like to advice Nigerians to be on
look out for emerging ideas and new technologies for boosting economic
growths. We must adopt the ideas and the technology immediately!
God bless Nigeria as a Nation Amen
References
[1] Godfrey Obioma
Capital Market is the key to achieving Vision 2020, says Yar'Adua.
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http://businessdayonline.Com/National/1041.html.
[2] Model (economics).Wikipedia.
http://en.wikipedia.org/wiki/Model_(economics)
[3] Jacqueline Terra Moura Marins and Eduardo Saliby
Credit Risk Monte Carlos Simulation using credit metrics' model: The joint
use of importance sampling and descriptive sample. Banco Central Do
Brasil,March 2007. Working paper series 132.
[4] Umut Cetin and L.C.G. Rogers
Modeling Liquidity Effect in Discrete Time. Mathematical Finance ,Vol. 17,
No.1 (January 2007),15-29.
May God bless the Federal Republic of Nigeria!
APPENDIX 1
Key
Wind Energy
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Gas Energy
Sea wave
Hydroelectricity
Solar
Nuclear
Fuel ethanol
Biomass
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