Oil: Curse or Blessing?

Published on 15th November 2005

It is incontrovertible that Nigeria suffers from a resource curse as we have little or nothing to show of as a country despite several years of oil exploration. Most of the proceed of our oil wealth has ended in the pockets of our leaders (gulf oil windfall and looting of the nation’s treasury by the late despotic ruler General Abacha).

Resource curse is the economic notion that countries with large endowment of natural resources perform worse than countries that are less endowed. Yet some countries with abundant natural resources do perform better than others, and some have done well. Why is the spell of the resource curse cast so unequally?

Nigeria is a heart rendering paradox. A rich country with desperately poor people. Despite its massive earning from oil, 70% of its estimated 140 million people live below the poverty line.  Attempts to explain this contradiction have repeatedly identified the resource curse as the major cause of the disconnection between the country’s wealth and people’s well being. More than 80 million Nigerians live on less than US$1 a day, with Nigeria being ranked 144 out of 146 by Transparency International Corruption Perception Index (CPI) 2004. From the rear, Nigeria came third, an improvement over the

In Nigeria, oil wealth has failed to generate development and has instead generated deep-seated corruption. The country is presently marked by strife over resource control in the South-South Geo political zone, oil workers are often kidnapped by restive youth and sometimes exchanged for cash, and this in itself has led to loss of barrels of crude oil through illegal bunkering and the youth restiveness. Our society is under attack, our morals, our values, and the essence of our being has been under a relentless umbrage from all conceivable angles, respite is far and few in between. The only point of comfort is that we are not facing an enemy filled with all manners of nuclear weapons. However, the enemy we face today is an internal enemy with lethal weapon capable of wrecking devastating consequences on our society. The collapse of the National Political Reform Conference (NPRC) was due largely to the insistence of the south zone on resource control. This zone is Nigeria’s main oil and gas producing region, they are asking the Nigerian state to allocate more revenue to the goose that lays the golden egg, to enable it transform its despoiled environment and uplift the living standard of the mass of its people who are wallowing in abject poverty. No matter how hard the plundering ruling circles would try to bury the matter of more oil revenue for the producing region, the resource control agitation has become an albatross of sorts, of Nigeria\'s national politics and a major pointer to how uncertain 2007 politics would be played out.

Yet Section 17(2) D of the 1999 constitution of Nigeria clearly states that \"exploitation of human or natural resources in any form whatsoever for reasons, other than the good of the community, shall be prevented.\" This is clear in meaning, clear in understanding, clear in intention. This section of the constitution would have been a lee way for litigation by public interest lawyers in Nigeria but for the non justifiability of the chapter two of the constitution.

A high level of corruption is prevalent in the country along with weak system of public governance. Negotiations between governmental officials and multinational companies are susceptible to bribes, special favors and other instruments of corruption. The multinational companies themselves encourage non transparent relationship. Nobody knows the exact barrel of crude oil lifted per day in Nigeria. Yet extracted resources such as oil and gas are non renewable. Every barrel of oil or meter of gas pumped out of the ground pushes the country one step closer to the time when the resources and the revenue it generates will be a thing of the past. Self promoting statements about economic growth in oil producing countries disguise the fact that the country is getting poorer and not richer unless it can convert its foreign exchange earning into a renewable source of wealth. Unless new reserves are found, our oil wealth is expected to taper very soon. 

Nigerians have not adequately benefited from the exploitation of its resources. Almost all the revenue from oil goes into the pocket of its rulers. The Niger Delta Development Commission (NDDC), Oil Mineral Producing Areas Development Commission (OMPADEC) and other agencies set up to alleviate the suffering of the people in the Niger Delta who are most hit by the oil exploration itself, has all been a failure. The head of the agencies end up siphoning allocated funds into their personal pockets. The state governors of the south states are not left out, at the recently concluded NPRC, the delegates from the northern part of the country laid strong accusation on their door step that the 13 percent derivation fund being received by them has not been properly accounted for nor can they show any tangible project the fund has been used for. A governor of a state was accused of building a hospital in South Africa and another is currently held in the United Kingdom on money laundering charges.

The government has set up various programmes to combat corruption brought about as a result of our resource wealth. They include the Independent Corrupt Practices Commission (ICPC), Economic and Financial Crimes Commission (EFCC), the Budget Monitoring and Price Intelligence Unit (BMPIU) among others. The Nigerian Extractive Industry Transparency Initiative (NEITI) is aimed at following due process and achieving transparency in payment by extractive industry of governments and government linked entities. This is patterned after the global initiatives set up by British Prime Minister, Tony Blair. For there to be real transparency, the industry and government need to actually match their words with what they do. Policy pronouncement is one thing and its actual implementation is another.

It is only in Nigeria that governors and other public service holders receive allocation and such is diverted to their personal account. Projects are not approved on the basis of suitability, but on returns it will yield to decision makers. I wonder if the state bears it in mind that the natural resources are held in trust for its citizen thus there is a need for accountability

Our oil wealth has been more of a curse than a blessing. A perilous path with perverse negative outcomes.


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