Mismanagement of Natural Resource Rents and the Niger Delta Crisis
By Victor E. Dike

Although Nigeria is fraught with myriad problems and challenges, the Niger Delta crisis, which has been simmering for years, is holding the nation’s feet to the fire. The crisis is getting messier by the day, but the leaders, instead of tackling the problem are throwing blames around as to whose fault it has been for not resolving the crisis. But experts in social conflict management¹appear to agree that poor management of natural resource rents is one of the main factors that lead to social conflicts in developing nations. This article, which focuses on the Niger Delta crisis and the overall economic health of the nation, argues that poor management of natural resource rents is one of the principal causes of the Niger Delta crisis.

The militia groups that are blowing up oil flow stations and abducting foreign workers in the Niger Delta region have been complaining that the natural resource rents are being mismanaged.² They have also been complaining about the 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. Instead of the so-called leaders who are only politicians by profession to listen to them, they are dancing the beat of different drummers. The people who have endured a long history of economic and social injustice are now “tired of being at the bottom.”³

As this author has noted elsewhere the Niger Delta crisis is a serious issue that requires committed and courageous leadership to resolve. The militants, particularly, the Movement for the Emancipation of the Niger Delta, have in the past threatened some rocket attacks⁴ yet, Chief Obasanjo does not seem to care. He has lined up some sycophants that are philosophically attuned with his autocratic tendencies to laud the success of his policies in the Niger Delta. The government should make serious efforts in finding a lasting solution to the Niger Delta crisis rather than waste time and resources creating ineffective commissions and “wordsmithing” resolutions that could not resolve the problem.

Recently, the Niger Delta militants renewed their attacks and stormed the Nun River Flow Station of the Shell Petroleum Development Company (SPDC) at Oporoma; and some soldiers were reportedly killed and oil workers held hostage. The Oporoma invasion occurred after a dispute over unpaid money, totaling N120 million by the SPDC to the local community. And another group invaded the terminal of the Nigerian Agip Oil Company at Twon-Brass, Bayelsa State and took about four expatriates hostage. Meanwhile, about 60 oil workers and some security personnel have reportedly been held hostage over financial dispute with Shell Corporation since October 2006.⁵

As if to say that they are defending life in the face of death, one of the leaders of the Movement of the Emancipation of the Niger Delta (MEND) is threatening to introduce “suicide bombers” to re-enforce their struggle and demands, which include, among others self-determination and the development of the Niger Delta. Introducing this new dimension into the struggle the MEND has hinted that it would be looking beyond oil workers and concentrate its attack on politicians and top government officials – “governors and council chairmen of the region” – whose selfish interests have continued to frustrate efforts to improve the living standard of the people of the Niger Delta.⁶ This group, as earlier noted, has been complaining that the handsome amount the federal government has pumped into Niger Delta since 1999 yet the region “still lacks basic infrastructure” because of corruption among the governors and the council chairmen in the region.⁷ Is peace impossible in the Niger Delta region?

The grievances of the militants seem to agree with the findings by experts that mismanagement of natural resource rents spurs regional conflicts and therefore demands collective action should be taken around the principles of how natural resource rents are being managed. Natural resource rents tend to be associated with ‘grand corruption’ and provide opportunities for ‘extortion rackets’ for the militants to finance and sustain their actions.⁸

This writer has been unable to discern the difference between a military regime and the Chief Obasanjo civilian administration. The ‘maximum ruler’ had earlier shrugged off objections to the use of force as a means of settling the Niger Delta crisis, but seems to have realized that calling the ‘freedom fighters’ “terrorists”⁹ and bombing the people that need federal assistance, wouldn’t stop the crisis. The people of Niger Delta have been suffering from environmental degradation and pollution through oil spillage and gas flaring. There are other “tales of agony” from the area that this writer does not deem necessary to repeat in this short article.

Many of the so-called political leaders in Nigeria are in desperate haste to be rich, and in the process, they become the agents of injustice. If Nigerians were politically mature the Niger Delta crisis would become a ‘political tomb’ of the ruling party that is routing to rule Nigeria again despite its abysmal performance since 1999.

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. Thus the Oil Mineral Producing Areas Development Commission setup in 1992, but replaced by the Niger Delta Development Commission in 2000, has not made any noticeable efforts in resolving the crisis in the region.¹⁰

The militant groups have at some point threatened to secede from Nigeria because the natural resource rents generated in their area are being embezzled by those who manage them. The people of the Niger Delta are left at the mercy of the unscrupulous individuals in power as the natural resource rents do not ‘flow transparently into the budgets’ and ‘public expenditures’¹¹of the states in the area. And this fuels the anger of the militants that want to use any means possible to take control of the resources in the region.

One of the main causes of Niger Delta crisis includes greed and selfishness, deprivation and poverty ¹² and social injustice. The simple meaning of social justice, according to experts, is that the same contribution equals the same benefit as a person’s benefit should be proportional to his or her contribution.¹³ Ensuring social equality and equity in treatment is an ingredient for a people’s peaceful co-existence and “socioeconomic development” as this creates a “healthy, harmonious, reliable social psychological atmosphere that will stimulate economic development.”¹³ The issue of social injustice does not concern the region alone; the entire nation is slowly becoming politically and economically very unstable because of social injustice. The Niger Delta is contributing immensely to the economic well-being of Nigeria and should not get destruction, in return! Thus without social justice there may be no peace in the Niger Delta and economic growth and development will continue to elude the region.

The Niger Delta crisis 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 as the region that is home to Nigeria ’s oil wealth remains the most impoverished in the nation. They lack basic infrastructure -good network of roads, health care facilities, good schools and portable water. What a paradox! The recent sad images of the poor quality of life in the creeks shown to the world on CNN (and documented in the newspapers) show that the oil wealth is not being used to develop the area.

The cost of the crisis in the Niger Delta has been enormous as the federal government recently revealed that about N169 trillion has been lost by the country to gas flaring incidences in the last 40 years with about N3.5 billion of agricultural produce is lost annually.¹⁴

The recent hostage taking sent a shock wave in the global oil market and the price of oil skyrocketed. Political instability is injurious to any economy, as it induces capital flight and scares off investors, etc.^15,16,17 Capital flight has a multiplier effect on any economy as it impedes business investment, economic growth and productivity, spurs inflation and unemployment and negatively affects the living standards of the people. When investors begin to perceive the Niger Delta 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. Thus if the crisis is allowed to continue it will affect Nigeria ’s income and, in extension, national budget, because oil contributes more than 70% of its income. Thus the government should resolve the Niger Delta crisis to ensure that the Nigerian economy is not bruised any further!

The Niger delta crisis is not only a national problem as the business world has long seen Nigeria as a non-stable economy and a sinkhole that could swallow their investment. More importantly, it is a global problem because a substantial portion of the world’s oil supply, which is an important material input in the production of goods and services, originates from the region and any serious disturbances in the area would disrupt the flow of oil and would impact negatively on the world economy. The political leaders should work harder for peace in the Niger Delta because “without peace, growth is impossible.”¹⁸

And the Niger Delta crisis has created a weird booming business of hostage taking for money and the storming of banks. For instance, a gang of militants stormed (and are still storming banks) and financial institutions in Port Harcourt and its environs and made away with some millions of Naira¹⁹ and the world was told that the freed hostages were without strings attached. But everybody knows that the federal government was lying as it dished out some millions before gaining their release. It is likely that such a game will continue! And gaining the release of hostages could become an avenue for corrupt government officials to loot the treasury as they could claim that they used the money for ‘paying for the release’ of hostages. Thus “hostage taking” could “become a lucrative business providing a means of spending money without proper accountability.”²⁰ Any further delay in resolving the crisis could exacerbate the hostage-taking incidence and disruption of oil exploration and distribution. The situation could spiral out of control and degenerate into a “civil war” as economic and social factors have been noted as the underlying conditions for civil war ²¹ and regional conflicts.²²The militias fighting for ethnic self-determination in the region could be waiting for such a thing to happen!

The federal government should device innovative ways to tackle the problems so as to alleviate the people’s suffering and anger instead of shifting blames. The government was recently quoted as saying that the multi-national oil corporations in the area are responsible for the Niger Delta crisis. The federal, state, and local governments are to blame for not growing the local economy and for not providing the youths the needed skills to secure good employment for a brighter future. Thus the government should grow the economy to reduce unemployment, poverty and social violence in the region. In relation to this, the government should build schools and hospitals and equip them with modern technologies and staff and teachers and motivate them to educate the youth and provide basic health services to the people. More importantly, the government should put appropriate policies in place to monitor the natural resource rents for proper use and control environment degradation in the area. The government, the environmental activists and other stakeholders in the region should come together and give hope to the hapless citizens of the region by ensuring that the resources that are allocated for social development are properly used.  

Successful transition from the present democratic experiment to true democratic consolidation and the implementation of true federalism could provide a lasting solution to the Niger Delta crisis. Although the Niger Delta crisis is Nigeria ’s problem that should be tackled by internally sourced solutions, the international community should put more pressure on the government to meet the demands of the people. However, the people should recognize their contribution to the crisis and help themselves by ensuring that the region is governed by non-corrupt leaders who take their sufferings at heart and work selflessly to develop the region. And the government should set proper guideline to monitor the expenditure of the allocations to leaders to ensure that they are properly utilized. A lasting antidote to the crisis would be to give the region (together with other regions in Nigeria ) the “freedom” to control their resources and pay appropriate taxes to the federal government. How could the regions develop if they lack the freedom to control their destiny? As Amartya Sen notes “unfreedoms” leave the people with little choice to exercise “their reasoned agency” as “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.”²³ Unless the discontent that leads to the Niger Delta crisis is resolved the crisis could worsen and trigger off serious panic in the financial sector that could spur capital flight and finally cripple the economy that is barely limping! As an analyst noted ‘more things than death need grieving.’ Let’s hope that the 2007 elections would usher in new and better-focused and less-corrupt leaders who could properly manage their natural resource rents and develop the region to resolve the Niger Delta crisis.

Notes and References

 

1. Paul Collier and Anke Hoeffler; “Conflicts;” in Biorn Lomborg (editor), Global Crises, Global Solutions (Cambgridge University Press, 2004); Also see Lane A. and P.R. Tornell “The Voracity effect” (American Economic Review, 89, 22-46, 1999) and Sachs, J.D. and A.M. Warner; “Natural resource abundance and economic growth” in G.M. Meier and J.E. Rauch (des.), Leading issues in economic development (Oxford University Press, Oxford, 2000)

2. Punch: “Militants kill two soldiers, kidnap three oil workers in Bayelsa” (December 16, 2006)  

3. Credited to Martin Luther King Jr.

4. The Observer ( London ) “Rebels Seize Oil Workers in Nigeria ” (Feb 19, 2006); also see The Guardian ( London ) “Nigerian Militants Step up Sabotage of oil Installations,” (Feb 21, 2006)

5. Punch: “Militants kill two soldiers, kidnap three oil workers in Bayelsa” (December 16, 2006). 

6. Punch (Ibid.). 

7. Daily Sun: “Suicide Bombers” (December 16, 2006). 

8. Paul Collier and Anke Hoeffler (Ibid)
9. Vanguard: “No to Terrorism in N-Delta-Obasanjo” (January 27, 2006). See also ThisDay: “Obasanjo Links Niger Delta Violence to Terrorism” (January 27, 2006)
10. Oil of Poverty in Niger Delta (African Network for Environmental and Economic Justice (ANEEJ; 2004)
11. Paul Collier and Anke Hoeffler (Ibid)
12. Samuel Oyadongha: “Gov Jonathan Blames N-Delta Crisis On Povertty” (Vanguard, January 27, 2006)
13. Peter Boothroyd and Pham Xuan Nam (eds.): Socioeconomic Renovation in Viet Nam : The Origin, Evolution, and Impact of Doi Moi (IDRC/ISEAS, 2000)
14. Vanguard: “ Nigeria loses N169 trn to gas flaring in 40 years *Loses 3.045 trn barrels of oil; ” December 15, 2006)
15. Gary L. Springer and Jorge L. Molina: The Mexican financial crisis: Genesis, Impact, and Implications, Journal of International Studies and World Affairs (Summer 1995).
16. 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).
17. 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).
18. Jeffrey Sachs: See Economist (June 29, 1996), pp.19-21.
19. John Iwori: “Another Oil Firm Robbed, N40m Carted Away” (ThisDay, January 28, 2006)
20. The Punch: “Militants blow up another oil boat” (Feb 22, 2006)
21. Mats Berdal and David Malone (eds.) Greed and Grievance: Economic Agendas in Civil Wars IDRC/ Rienner, 2000).
22. Paul Collier and Anke Hoeffler (Ibid)
23. Amartya Sen: Development As Freedom (Oxford University Press, 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, 2^nd edition (New York, Shanghai, Lincoln: iUniverse, Inc., Nov-2006).

Robot  Villager

# 1 This article, which focuses on the Niger Delta crisis and the overall economic health of the nati...Read the full article. Posted by Robot| 18.12.2006 23:35