Nigeria

Nigeria: Tale of Oil Curse

Mahmud Malami-Sadiq

Recently, in the wake of the plummeted oil price at the international market (with all the accompanied consequences of that steeped fall in the price per barrel on our fragile oil economy), there has been resurgence of a sober national discourse bordering on weather oil is a blessing to Nigeria, or just another juggernaut. The salient question hanging in the minds of many Nigerians is: what has so far happened in the nation's political economy that the abundant oil treasure has not been able to affect the nation in positive ways?

From the sun-baked Arabian Desert to the humid Niger Delta, from the Ecuador's rain forest to the Azerbaijan's breezy waters, "brilliant future" was jubilantly anticipated when oil was initially discovered. When Nigeria's first barrels of that black liquid were extracted from the prototype oil wells, Nigerians, especially the creek-dwellers who lived atop and around oil, were ecstatic out of expectations of a sweet pendulum of fate that oil would seemingly bring about.

Now, for over half a century since the nation's first ready-for-export oil was loaded onto a hefty vessel and shipped to its destination, hundreds of billions of dollars in oil revenue have gushed in to the country as our collective takings, which should have been expended only for the betterment of the nation: the petrodollars should have been employed for stepping up our standard of living, and for building a united, strong and prosperous nation that we would all be proud of. All the euphoria that had accompanied the discovery of oil in the delta was predicated on those positive socioeconomic prognostications.

But, today, even a casual observer of state of the nation would, at hindsight, conclude that we were, rather, no better than daydreamers; because those tantalising expectations have been shattered by a heavy storm of misfortune that we have, not inadvertently, created for ourselves, out of greed and cluelessness. In spite of all the stupendous amounts of monies accrued from the sales of oil, the nation has, according to the latest statistics, been pegged in the UNDP's Low Human Development category, languishing well below Nepal, Pakistan and Kenya in terms of standard of living, life expectancy and educational attainment. Moreover, even in the wake of its rebased GDP gimmick which has, rather cosmetically, been ranked above South Africa's, Nigeria has continued to lag far behind South Africa when wellbeing of citizens and infrastructural development are the yardstick.

As oil money continues to flow in to the country in staggering amounts, our education and health care systems collapse, agricultural and manufacturing sectors atrophy, unemployment and insecurity soar, transparency and accountability diminish-the list is endless. This is a classical example of what development economists dub resource curse: an ugly trajectory of fate where a mountain of fortune transmutes in to a valley of misfortune!

A study of ninety-five resource rich countries conducted by the US's National Bureau of Economic Research postulated, though not in absolute term, that countries dependent on export of natural resources- like oil and natural gas-oftentimes experience corruption, poverty and conflict. The truth is that , of all the oil rich nations, very few ones like Canada and, perhaps, the Russian Federation-owing to their strong institutions-have developments commensurate with the petrodollars accrued them. But, on the contrary, the story of Nigeria is one of the most saddening tales of oil curse in the world.

Nigeria's oil wealth has been squandered by a network of kleptocratic and prodigal rulers and their collaborators among oilmen, resulting in a nasty paradox of fabulously rich few and excruciatingly poor majority. A very nauseating reports estimated that more than $400 billion in oil revenue had either been stolen or frittered away, and that about 80% of oil revenue had gone to only 1% of the population in the past decades of Nigeria's oil history. This is not surprising considering the fact that the country's oil industry has been a safe haven for looters largely because the underground treasure is state-owned, managed by a multi-faceted national oil company called the NNPC whose unilateral and complex operations are, to a large extent, esoteric. This structural opacity makes stealing and other corrupt practices often indiscernible even by the most probing citizens. This is why the NNPC must be restructured-not scrapped-at the very outset of any genuine crusade against institutionalised heist in the industry. And, thank God, now with the recent appointment of a highly professional, Dr. Emmanuel Kachikwu, as the helmsman of the agency by the president, a first step in the right direction toward bringing decency in to the oil industry has been taken.

This financial squander is not the only way through which the nation's oil wealth is plundered; an equally sordid but more subtle way of bankrupting the country is through an organized theft of the precious liquid itself, by tapping in to pipelines; an illegal activity called oil bunkering. The only difference between this ignoble activity and corruption are the doers; the former being perpetrated by obnoxious citizens while the later by lousy officialdom. It has been reliably established that between 10-15% of Nigerian's daily production is being lost through oil bunkering. This is, indeed, a colossal loss especially when the price of oil is as high as $147 per barrel, as it was in 2008.

This lure of oil has consequentially hoodwinked us in to abandoning a manufacturing-based economy which is more stable, more sustainable, more transparent, and far more employer of labor; for a highly volatile, monolithic economy. And, now, see the effect: instability in the economy, crashing of the Naira, and unemployment, among other things. The fact is that though there is a hyped economic growth(as our recalculated GDP has indicated), but the country has continued to fall short of many economic benchmarks such as per capita income level and unemployment rate.

Another disturbing reality of mineral dependence is conflict and warfare. An economist Paul Collier's research on 160 countries and 73 civil wars established a strong correlation between resource dependence and conflict; that countries with zero resource export have 1% tendency of conflict in the period of five years, and while countries with "high" resource export(at least 30% of national income) have 23% risk. Now, what about a country whose more than 90% of its national income comes from oil export? It is better not to imagine the scenario.

Though there may be other factors, but this resource-related conflict is usually triggered by citizens' feeling of being economically exploited and alienated. The Niger Delta bloody crisis has already epitomized this hypothesis. And, also, it has been factually argued that even the Nigeria's Civil War and Boko-Haram insurgency, though largely acknowledged to have been fought(and still being fought as in the case of Boko-Haram) over religion and ethnicity, are a grotesque history of oil Nigeria.

But, we can take solace in the fact that this resource phenomenon is not unavoidable or irreversible. With proper planning and effective implementation of non oil-oriented national economic agenda, and with strong institutions, open government and active civil society, Nigeria would be able to get rid of this "rot" that oil has brought upon us. And this is the task before President Muhammadu Buhari.