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Niger Delta Crisis and the Nigerian Economy ByVictor E. Dike
Recently, the Niger Delta crisis that has been simmering for years assumed a dangerous dimension. The militia groups blew up some oil flow stations, abducted some foreign workers and disrupted oil business in the area. The Niger Delta has been complaining about environmental damage from oil exploration and rising unemployment and poverty in the region, but the successive governments and the multi-national oil corporations have been insensitive to the plight of the people. The people have endured a long history of economic and social injustice and they are now “tired of being at the bottom.”1 This article focuses on the impacts of the Niger Delta crisis on the polity.
The Niger Delta crisis is a serious matter that requires serious policy and committed and courageous leadership to resolve. The Movement for the Emancipation of the Niger Delta has threatened some rocket attacks.2 Chief Obasanjo does not seem to care, because his life is not at stake. He has lined up sycophants that are philosophically attuned with his autocratic policies to laud the success of his policies in the Niger Delta. OBJ should do the right thing and find a lasting solution to the crisis, rather than waste time and resources creating ineffective commissions and “wordsmithing”3 resolutions that could not solve the problem. Nobody knows when the federal government got the “Terrorism Rights” to bomb and kill innocent civilians in the Niger Delta.
This writer has not been able to discern the difference between a military regime and the current civilian administration. Chief Obasanjo had earlier shrugged off objections to the use of force as a means to the crisis, but seems to have realized that talking tough and calling the ‘freedom fighters’ “terrorists”4 and bombing the people that need federal assistance, would be do it. Regard for rule of law and due process is the way to go!
As mentioned earlier, the people of Niger Delta have been suffering from environmental degradation and pollution through oil spillage and gas flaring. There are many other “Tales of Agony” strewn the landscape that this writer does not deem necessary to repeat in this short article. The Commissions established by the government (Oil Mineral Producing Areas Development Commission (OMPADEC) in 1992, replaced by the Niger Delta Development Commission (NDDC) in 2000) have not made any noticeable socioeconomic impacts in the region.5The present civilian administration must keep its promises because the people are tired of failed promises. It should be serious with the crisis and work to diminish the people’s pain, suffering, and anger and bring the society to the Village Square of unity.
The crisis in the Niger Delta is not complex by itself. But the approach to resolving it makes it complex and dangerous. The people are not asking for anything out of the ordinary. The region that is home to Nigeria’s oil wealth remains the most impoverished community in the nation. What a paradox! Reports note that they lack basic infrastructure -good network of roads, health care facilities, good schools and portable water. The recent sad images of the poor quality of life in the creeks shown to the world on CNN (and in the newspapers) show that the oil wealth is not being used to develop the area. The successive governments have collected billions of dollars from the land over the decades, but little (if any) has been invested in the area to improve the people’s living conditions. Is there anything wrong in investing some money that are realized from the oil extracted from the region to improve the people’s living conditions?
The main causes of Niger Delta crisis include greed and selfishness, deprivation and poverty6, and “social injustice.” The simple meaning of social justice, according to experts, is that the same contribution equals the same benefit. A person’s “benefit" equals his or her “contribution.”7And no community should be given more when it contributes less or be given less when it contributes more! That is the crux of the matter in the Niger Delta crisis! The Niger Delta is contributing a lot to the economic well being of Nigeria and it is getting nothing, but destruction, in return. Without social justice there will be no peace in the Niger Delta and socioeconomic development will continue to elude the region. Social justice, as experts say, is an important ingredient for “socioeconomic development.” It creates “create a healthy, harmonious, reliable social psychological atmosphere that will stimulate economic development.”7 And because of social injustice the entire nation is slowly becoming politically and economically very unstable.
The recent hostage taking sent a shock wave in the global oil market and the price of oil skyrocketed. Political instability is injurious to an economy, as it induces capital flight, etc. That was the case in the 1994 “political instability” in Mexico when Luis Donaldo Colosio (presidential candidate of the ruling Partido Revolucionario Institucional)8 was assassination and the world financial market went shivering. And rumble in the banking sector in Asia (Thailand, South Korea and Indonesia) in 1997, spurred capital flight from the nations.9 Businesses and individuals began to perceive these nations as non-stable societies and started to move their investment to more secure societies. And when the Russian government defaulted on its loan, international businesspersons took off running with their money.10
Capital flight has multiplier effect on an economy. It impedes business investment, economic growth and productivity, spurs inflation and unemployment and negatively affects the living standards of the people. A nation’s living standards are tied to its productivity. Political instability also affects a nation’s national income. When investors and individuals in the society begin to perceive the crisis as a serious threat to their investment and savings, they will sell off their assets and buy assets in other politically secure and stable societies. If the crisis is allowed to continue for a long time it will affect Nigeria’s income, and in extension, it national budget, because oil contributes about 70% of its income. It will also lead to scarcity of goods and services, etc. The government should, therefore, avoid political developments that could trigger capital flight.
The Niger delta crisis is not only a national problem; it is a global problem that deserves serious attention. The world has long seen Nigeria as a non-stable economy and a sinkhole that could swallow their investment. Crude oil is an important material input in the production of goods and services. Any disturbances in the flow of oil in Nigeria (as the mid-1970s Middle East oil crisis) will impact negatively on the world economy. As we know most of the world’s oil supply originates in the oil fields of the Niger Delta (and the Middle East). The political leaders should work harder for peace in the Niger Delta, because “Without Peace, Growth is Impossible.” As Jeffrey Sachs notes, “peace is not easily [achieved or] guaranteed.”11
The crisis has created a weird booming business of hostage taking for money and storming of banks. It was recently reported that a gang of militants stormed some financial institutions in Port Harcourt (and its environs) and made away with millions of Naira.12 The world was told that the freed hostages were without strings attached. But everybody knows that the federal government was lying; it dished out some millions before they were released. It is likely that the present case will end similarly. Also, the crisis could become an avenue for the corrupt government officials to loot, by hiding behind excuse of ‘paying for hostage release’ to steal from the public. As a commentator beautifully notes, “Hostage taking has become a lucrative business providing a means of spending money without proper accountability.”13Any further delay in resolving this problem will exacerbate the ongoing hostage-taking syndrome and disruption of oil exploration and distribution. And the situation could spiral out of control into a “civil war.” Economic and social factors have been noted as the underlying conditions for civil wars in societies.14The ethnic militias fighting for ethnic self-determination could be perching on the fence waiting for such a thing to happen!
There is no guarantee that there will not occur a bloody hostage taking in the area in future because there are no known new and better policy on the ground and to forestall such possibility. The hungry and angry Nigerian police, who are presently warming up for a strike action, do not have the tools and credibility to provide the security the society needs. Most Nigerians consider them as part of the insecurity problem in the society. They could collude with the militants to wreak havoc on the society.
As noted earlier, the federal government not done anything serious to alleviate the people’s suffering and anger, other than shifting blames. Recently, the government was quoted as saying the multi-national oil corporations are responsible for the Niger Delta crisis. Everyone knows that this is not true, because the corporations are not formulating federal policies. The administration should take responsibility for their inaction and device innovative ways to tackle the problems. It should put appropriate policies in place to grow the economy to reduce the rising unemployment and poverty, environmental degradation and the violence in the Niger Delta. The governments (federal state and local) are to blame for not providing the youths the skills for a good future, which means having good choices or options in life.
The government, the environmental activists, and other major stakeholders in the region should come together and give hope to the hapless group by ensuring that the resources that are allocated for social programs and development in the area are used for the purpose. Those from whose land the oil is being extracted should be well compensated, period!
Implementing true federalism in Nigeria would provide a lasting solution to the Niger Delta crisis. The region should be given the “freedom” to control its resources and pay appropriate taxes to the federal government. How could the region develop if it lacks the freedom to control its destiny? As Amartya Sen notes "unfreedoms" leave the people with little choice to exercise “their reasoned agency.” He notes that “Freedoms are not only the primary ends of development, they are also among its primary means.” Thus development “requires the removal of major sources of unfreedom.”15 In conclusion, unless the discontent (“unfreedoms”) that leads to the crisis are resolved, and soon too, the crisis could worsen and trigger off panic in the financial sector and spur capital flight and cripple the economy that is barely limping!
Notes and References
1. See Martin Luther King Jr. 2. The Observer (London): “Rebels Seize Oil Workers in Nigeria” (Feb 19, 2006); The Guardian (London): “Nigerian Militants Step up Sabotage of oil Installations” (Feb 21, 2006). 3. “The 2005 White House Conference on Aging” (American Journal of Nursing (Jan 2006) Vol.102, No.2, p.34.
4. Vanguard:
“No to Terrorism in
N-Delta-Obasanjo” (January 27, 2006). See also ThisDay:
“Obasanjo Links Niger Delta
Violence to Terrorism” (January 27, 2006)
6.
Samuel Oyadongha: “Gov
Jonathan Blames N-Delta Crisis On Povertty” (Vanguard, January
27, 2006) 9. Richard P. Cronin: “98-74: Asian Financial Crisis: An Analysis of U.S. Foreign Policy Interests and Options” Specialist in Asian Affairs, Foreign Affairs and National Defense Division (CRS Report for Congress - Updated April 23, 1998).
10.
Abbigail J. Chiodo and Michael T. Owyang: “A Case Study of a Currency
Crisis: The Russian Default of 1998” (Federal Reserve Bank of ST. Louis
Review, Nov/Dec 2002).
12. John Iwori:
“Another Oil Firm Robbed, N40m Carted Away” (ThisDay, January 28,
2006)
14. Mats
Berdal and David Malone (eds.): Greed and Grievance: Economic Agendas in
Civil Wars IDRC/ Rienner, 2000)
(1999) Victor E. Dike
CEO, Center for Social Justice and Human Development (CSJHD) Sacramento, California, is the author of Democracy and Political Life in Nigeria (second edition, forthcoming; first edition was published by the Ahmadu Bello University Press, Zaria, Nigeria, 2001.
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