Oil- A Curse or Blessing: The Niger Delta Case

The importance of petroleum oil has spanned well over 3 decades, significantly dictating Nigeria’s economic growth. By 1970, petroleum exports had assumed up to 58.1percent of the country’s export value. Oil revenues jumped from 1.3billion naira in 1973 to 3.9billion naira in 1974. After a slight drop in the late 1970, they rose back to a peak of 4.9billion naira in 1980. Unit 1983, real revenues then dropped to less than half their value (2.0billion naira). The oil price had slackened, but even more importantly, Nigerian production quantities almost halved due to insufficient previous exploration.³⁵ However, after the bust in the 1980s, production resumed at previous levels of around or above 2 Million barrels per day throughout the 1990s. Petroleum’s share of exports was 96.9 percent in 1980, 93.6 percent in 1990 and 95 percent in 2001.^36.37. Oil exploration introduced an entirely new element into the structure of the Nigerian state- namely; internal predatory elite that identified the new commodity as God- send and saw itself as unaccountable to the communities that produces it. It also introduced a new dimension into government financing characterized by an accelerated de-emphasizing of internally generated revenue, both of these, as is argued below, have serious implications for good government as well as accountability in public spending and is at the root of inability or unwillingness to overcome the “curse” aspects of oil exploration in Nigeria, in general. ³⁸

Today, there are about 606 oil fields on the Nigeria Niger Delta, of which 360 or 60% of them are onshore and 246 or 40% are off- share.

Moffat and Olof observe that despite the abundant natural resources, the region potential for sustainable development remains unfulfilled while crisis there is exacerbated by environmental degradation. The situation today remains same. Some critics would even argue that it has worsened.³⁹

Studies have shown that the environmental base of oil producing areas has been seriously depleted as a result of oil production activities. Anyakwe Nsirimovu, for instance, notes:

For example, during exploration, drill cuttings, drilling mud and fluids are used for stimulating production. The major constituents of drill cuttings such as barytes and bentonitic clays when dumped on the ground prevent local plant growth until natural processes develop a new top soil. In the water, these materials disperse and sink and may kill local bottom-living plants and animals by burying them… In addition to the pollutants Introduced into the environment from exploration and exploitation operations, and refinery wastes also have characteristics which constitute potential land, water and air pollutants… Further, flaring of natural gas has also been identified by several studies to damage the environment.⁴⁰

It is instructive to note that in 1983 the inspectorate Division of the Nigerian National Petroleum Corporation (NNPC) accepted that environmental problems were caused by the activities of oil Companies in the Niger Delta.  The Inspectorate for instance, spoke of “the slow poisoning of the waters and the destruction of vegetation and agricultural land by spills which occur during petroleum operation and went on to observe that since the inception of the oil industry in Nigeria, there has been no concerned effort on the part of the Government, let alone the oil operations, to control the environmental problems associated within the industry.”^.41

Oil spillage has been a major source of environmental degradation in the Niger Delta.  It was also resulted in loss of lives and property for example there was oil –spill fire in Kalabileama Community in Nembe Local Government Area of Bayelsa State on September 17, 2003 on the Brass Ogoda pipeline belonging to Agip Oil Company which resulted  in the death of seven people. The spill was huge and was about the foot thick in certain places.  The fire might have been caused by a lamp carried by a fisherman at night. A similar oil spill fire explosion had sometime in 2000 killed eight persons and damaged over one hundred hectares of mangrove forest.⁴²

Pipeline vandalization, a consequence of youth restiveness has been on the increase in the Niger Delta from seven cases in 1993, it rose to 33 cases in 1996 and 57 cases in 1998. There was a dramatic increase of 497 reported cases of pipeline vandalization in 2000.⁴³

Some consequences of pipeline vandalization are deforestation, destruction of vegetation, pollution and loss of revenue.  Nigeria lost an estimated N4.4 billion in 400 pipeline damages in oil producing states between January and August 2000. Loss of lives has also been a tragic consequence of pipeline vandalization. In 1998, about 1000 lives a were lost in Jesse village and in 1999 over 12 persons died in Ekakpamre in Ughelli Local Government Area, both in Delta State, 60 persons in Atlas Cover Jetty in Lagos and 300 persons in Egborode village in Okpe Local Government Area of Delta State.⁴⁴

Inter-ethnic and inter clan conflicts have also increased with oil exploration in recent years.  From the early 1990 there has been a cycle of protests and conflicts in the Niger Delta notably in Bayelsa, Delta and Rivers. Youth restiveness was for most point the major factor in these protests.^45,46 Some estimates suggest that these protests have cut onshore production by a third in 2001/03.  A new dimension was introduced recently with the  protest and occupation of Chevron – Texaco oil terminal at escravos by Itsekiri women from Ugborodo Community  in Delta State from July 8 – 18 – 2002.  The occupation ended when the company acceded to some of the demands by the women which included hiring of youths, building of schools and provision of electricity and water supply in the community.⁴⁷

According to Human Right Watch, ⁴⁸ the presence of oil companies in the Niger Delta exacerbates communal tensions of the type seen across Nigeria. The weakness of conflicts resolution structures means that many disputes in Nigeria and the Niger Delta in particular are settled violently instead of through peaceful means. In Nigeria generally the level of state corruption means that Government positions are highly sought. In the Niger Delta, the states are higher, including even at the local government levels, because of the amount of money that flow to the region from both the Federal Government and Oil Companies. For example, allocations to oil-producing states have increased markedly since 1999, rising from 12 percent to 25 percent of the amount paid out to states from the Federation Account in 2001from the second half of 1999.

Neighbouring Communities clash over claim of ownership of areas where oil drilling takes places. For example, the Kalabari / Bille conflict in Rivers States in late 2000 and early 2001, among the Ijaws but who belong to different clans, was dispute over the shell flow stations.⁴⁹

Governance and the political process seem to have also been weakened by the presence of oil resources. Eifert et al, drawing on analytical tools from political science, identified five political groupings to which oil-exporting countries may be classified. These are mature democracies, fractional democracies, Paternalistic autocracies, Predatory autocracies and reformist autocracies. These groupings reflect qualitative distinction in the stability of political frame works, the legitimation of authority, and the role of state institutions in distributing or utilizing oil revenue fairly.⁵⁰

The grouping most conducive to stable institutions and which allows for a fair distribution and utilization of oil revenue is that of mature democracies. This grouping is characterized by political stability and institutional accountability which encourages policy– makers to think in the long term as economic performance becomes central to competition for political power. Bureaucracies are competent and existing relatively insulated professional judicial systems foster depersonalized functions of markets and stability of rules. Policy decisions are generally based on transparent information while property rights are clearly defined. These features give citizens the opportunity to provide a critical counter balance to the influence of interests benefiting from government policies. Norway, Alaska State in the USA and Alberta Province in Canada are examples of countries in this grouping. For example, Barnet and Osowski⁵¹ have equally noted that Norway has a prudent financial position, a very high government saving rates, a rising foreign assets base (to spread benefits of oil over time) and is resisting potential damage to the non-oil tradable sector from Dutch disease. It is important, however, to note that these institutions were operational before oil revenues became large.

Under fractional democracies, political parties are weak and are formed around charismatic leaders. Electoral institutions are fragile. Political support derives from systems of patronage. The short-horizon politics of competition for power and state-allocated resources give rise to unstable policy regimes of non-transparent mechanisms for allocating oil earnings. Economic returns to State investments are often low because political strategies allow for the provision of goods to narrow interests. Bureaucracies, Political elites and the Military often succeed in embarking state spending for their use. Income distribution is consequently unequal. Social consensus and cohesion are elusive. Ecuador, Colombia and Venezuela are example of such fractional democraticies.

Paternalistic autocracies and reformist autocracies are regime types which, though lack a broad democratic base of power, have been developmental in outlook. Development programmes implemented over the past three decades have recorded some considerable success in terms of being welfare enhancing. Examples of countries in these categories are Saudi Arabia, Kuwait, Small Gulf States and Indonesia, respectively.

Predatory autocracies are not based on broad democratic or public support Military Power and the support of a narrow-minded elite are the basis for authority. State power faces few constraints or counterbalance influence. The exploitation of public and private resources for the gain of the elite is embedded in institutionalized practices. Such regimes are non-transparent and corrupt under such a scenario, delivers little benefits to the population at large. Nigeria under successive military rules since 1966 has been cited as an example of this regimes type⁵².

On the basis of their analysis, Eifert et al conclude that a system of government, which generates long-horizon ability to reach consensus and allows for transparency is capable of delivering on benefits of oil wealth. Mature democratic, reformist and paternalistic regimes are cited as having such tendencies. ⁵³

That Nigeria has been a Predatory state has been noted by Ohi orhermuan and Adebanwu.^54,55 This may, therefore, explain the lack of development in the country in general and in Niger Delta in particular despite over forty-five years of oil wealth. It is further argued in this study that Nigeria since 1999 has become a fractional democracy; and this explains why in almost fourteen years of democratic governance, little evidence has been recorded of efforts to deliver benefits of oil wealth to the people of Niger Delta. This exacerbated the situations in which institutions of development in the Nigeria State were not shaped well before oil revenues became substantial. That Nigerian democracy is still fractional is captured by Attahiru Jega in these Words:

In the contemporary Nigerian scenario, the bad is characterized by the wasted opportunities of the past four years which combined to obstruct the delivery of the substantive dividends of democracy to the majority of Nigerians, Plus the creeping streaks of civilian authoritarian tendencies associated with what our journalists have called the `imperial presidency` of the Obasanjo Government. The ugly is, especially, illustrated by the mode of governance and reckless misrule, by those entrusted with public trust, at all levels of governance, as manifested by irresponsible conduct, crass lack of responsiveness to popular demands and aspirations of the people, plus the resurgence of `executive lawlessless’, as illustrated by running government and incurring expenditure without a legally sanctioned appropriation act… The Obasanjo government and his predecessor promise to make example by punishing corrupt public officials. We are yet to see that example. Would this, nay, should this be another wasted opportunity. ⁵⁶

Indeed, Nigeria’s weak political institutions are at the roots of development failure in the Niger Delta. Oil revenues have weakens governance in one notable respect. Because of their sheer volume, rents generated by oil have overwhelmed all other revenue sources, and this created a concentration in revenue pattern. Adams notes, for instance, that throughout history Governments have had to exercise caution in imposing tax realizing that subjects who cannot tolerate it beyond a certain point revolt. In other words, one virtue of taxation is that it creates good, responsive governance. ⁵⁷.

In the case of Niger Delta States, internally generated revenue accounts for less than 15 percent of state revenue. A consequence of this over – dependence on the federation account allocations is that state and local governments do not feel accountable to their citizens because they do not spend “tax payers” money. This has reduced their ability or the necessity to mobilize the stake-holders for any development projects. If tax driven spending has been common place, this would have suggestively made public spending move developmental.

Another respect in which oil has weakened political institutions in the Niger Delta is that it has created a predatory state which abhors counter pressure. Political repression has arisen and become a feature in Niger Delta since the days of Isaac Adaka Boro – a feature which later climaxed in the hanging of Ken Saro – Wiwa in 1995. It has also been a feature of Nigeria’s fractional democracy, as exemplified in the Odi town massacre in November 1999. The absence of counter pressure to cancel out rent – seeking behaviour has resulted in the emergence of non-democratically accountable executives, inefficient tax and legal authorities as well as a non-independent judiciary. ⁵⁸.

Given the existence of the non-developmental regime types and weak institutional features in Niger Delta in particular, it is little surprise that

                        Human Rights Watch Notes:

Little of the money paid by the Federal Government to State and Local Governments from the Oil revenue is actually spent on genuine development projects; there appears to be virtually no control or proper audit over spending by local and state governments.⁵⁹

An outcome of this is a catalogue of indicators of development failure. It can be observed that unemployment rates are higher in core Niger Delta States (Delta, Bayelsa and Rivers) than the national average. In Bayelsa and Rivers States the situation is much worse in the rural areas where the bulk of their populations live in riverine areas. Table 8 shows a peculiar nature of the unemployment problem in Nigeria – namely, that of youth unemployment. Unemployment rate is highest among the 15-24 age group and secondary school leavers. This explains why youth restiveness is quite pronounced in the Niger Delta Region.

Table: Ranking of major environmental problems, social issues and priorities in the Niger Delta

Source: Okoh, R.N. and Egbon P.C. (1999) Fiscal Federalism and Revenue Allocation. The Poverty of the Niger Delta in Aigbokhan B.E. (ed) Fiscal Federalism and Nigeria’s Economic Development Selected Papers of the 1999 Annual Conference of the Nigerian Economic Society, NES, Ibadan.⁶⁰

Table: Unemployment Rates by state in the Niger Delta

Source: Federal office of statistical News no. 327, August 2001, P.5 ⁶¹

Table: Unemployment rates by educational level and age group in Nigeria, December 2000

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