Book Review: A nation corrupted by oil?

BOOK REVIEW: A NATION CORRUPTED BY OIL?

By Yushau A. Shuaib

Why is Nigeria tagged as one of the most corrupt nations in the world? How comes the discovery of oil constrains our economic growth and political progress? What motivates the restiveness of youths and agitations of elders over resource control? Who are those responsible for our backwardness even when we are so blessed with human and material resources? Where could we have been as a nation if we don't have oil? When are we likely to begin to judiciously manage our resources in the best interest of the country? In the above paragraph are questions often asked about Nigeria 's destiny. One can see the Whys, Whats, Wheres, Whens, Whats and Hows of our problem as a nation. It still remains a mystery, though, on how to find answers to the myriad of problems bedeviling the nation without reference being made to oil. Is our crude oil, the manna from heaven, a curse really?

Recently, two new books, authored by Nigerians and published in Nigeria , attempt to answer these puzzling questions. While "Corruption and Economic Development" written by a journalist, Mr. Akin Olaniyan, examines how Nigeria was under developed by its elite, "Maximizing the Benefits of Nigeria's Oil Wealth," authored by Mr. John Udeh, an economic analyst, examines the problems of oil revenue management in Nigeria including the roles of multinational oil companies, and their host country. What make the books highly authoritative is that the authors are distinguished personalities who have garnered wide experiences and have direct access to privileged and probably classified information by nature of their working experiences. While Mr. Akin Olaniyan is one of the brightest financial journalists as Deputy Editor of the Punch and presently Group Business Editor of Daily Independent, Mr. John Udeh apart from consulting for World Bank, lately served a five-year term as a Federal Commissioner of the Revenue Mobilization Allocation and Fiscal Commission, Abuja .

Mr Ode's 232-page book traces the historical background of the Nigerian Oil and Gas Sector to 1908 when a German company NBC started mineral exploration till 1957 when Shell was able to produce about 5000 barrel of crude oil per day for export. By the time Nigeria gained her independence oil production had reached 170, 000 barrels per day. The Nigeria National Oil Company, which later metamorphosed to NNPC, was established in 1971 with the key objectives of becoming active in the petroleum industry. The Nigeria upstream sub-sector has been dominated by greedy multinationals that use, sometimes, a fraudulent joint venture arrangement to rip the country of billions of dollars.

On strategic oil and gas reserve, NNPC in 2003 disclosed that proven oil mineral reserves amount to about 33 billion barrels, while proven natural gas reserve is estimated at 160 trillion cubic feet. On the operation of downstream sub-sector, the author notes that despite NNPC's strategically located refineries, petroleum products distribution in Nigeria have been very unstable and problematic. While direct government involvement in the downstream sub-sector was to satisfy domestic demand, strengthen self-reliance and avoid shortages in supply, poor economic policies made it impossible for demands to be met through domestic supply.

The problems of the upstream and downstream sub-sector are multi-faceted. The author states that they include poor funding, secrecy that surrounds the oil exploration and marketing, the nature of Joint Venture Contract (JVC), where shareholding is approximately in the ratio of 40:60 in favour of the countries but very insignificant compare to other oil nations, lack of indigenasation and integration of the oil sector and community disturbances/conflicts which are related to environment pollution, displacement and inadequate compensations and poor fiscal policies.

In pragmatic analyses, he quantifies the total revenue that Nigeria has earned from oil since its discovery and showed how it has been used or misused by various regimes since independence. He proposes some practical strategies that could be applied to ensure justice and equity in oil politics as well as reverse the increasing social and economic hardship, which Nigerians are currently experiencing. Udeh devoutes well-researched chapters on fiscal federalism, Revenue Allocation, external debt burden, strategies for maximizing oil wealth, imperatives of economic diversification and policy recommendations.

On the other hand, in his 160-page book on Corruption, Mr. Akin Olaniyan admits that the country has large potentials to give its estimated 130 million people a decent quality of life and be able to compete with the rest of the world, but regrets that in spite of huge earnings from crude oil the country is still in such a bad shape. He defines and categorizes different type of corruption to include political corruption, economic corruption, judicial corruption and moral corruption. By his definition of corruption one can see that it is not only the elites, the main focus of the book that are corrupt, but almost everybody is involved. A purported saint may at the end be adjudged as corrupt just as I may have expect the author to add justifiable corruption (if the word is appropriate) by workers who, due to unrealistic wage, must look for ways and means to treat sick parents, pay children school fees, provide food and even afford decent accommodation. What of policeman whose salary hardly takes him to office and checkpoints, while his supposed boss made billions from Only-God-Knows. Failure and inability to engage in this corruption of necessity may have sent many to their early grave.

With a firm grip of the theme of the book, Mr. Olaniyan articulately points out that there was gradual destruction of the nation's economy in the last four decade owing to leakages in the process of collection and distribution of revenue- this was necessitated by the military incursion in politics and the connivance of civilian collaborators to promote selfish hegemony and class distinction. He emphasizes the rate and level of decadency in the system through socio-economic indicators from World Bank and UNDP, tracing how the country got to the present mess.

The book is not only timely and necessary, it makes references to alleged corrupt practices hanging on ex-IGP Tafa Balogun, ex-Education Minister Osuji, ex-Senate President Adolphus Wabara, Governor Joshua Dariye, electoral malpractices amongst others. It also reports the bizarre disappearance of a ship, MT African Pride, with barrels of crude oil worth $2.5 million and top civil servants who claim to adhere to financial regulations but surreptitiously, they corruptly enriched themselves to the bewilderment of less fortunate workers. The book is not all condemnation and criticism of the ills in the Nigerian society. It highlights the government's effort to eradicate the cankerworm through the institutionalization of corrective agencies like the Independent Corrupt Practices Commission (ICPC), Economic and Financial Crimes Commission (EFCC) and Due Process Office and also proffers short and long-term solutions, which still depends on political will.

A full study of the two books may give insight into ways of resolving mysterious puzzle over the country that is so rich in oil but so poor on economic indicators. It is ironic that the more we earn from crude oil export, the more the citizens pay for domestic fuel consumption which has adverse effects on others essential commodities and cost of living. It is regrettable that with best brain, abundant fertile land, natural resources and tourist sites, the country has low level of per capital income, low level of human development, low level of investment and productivity, sparse and dilapidated infrastructure and extreme poor living condition of the people that the recent Transparency International and United Nation Development Programme's reports still categorize the country amongst the most corrupt and poorest nations on earth respectively, when we know how much we have in foreign reserve and excess crude accounts.

It is high time the stakeholders should go beyond talking about the ills of the society and address the problem from the root of the mentality of the people. This calls for the re-evaluation of the fundamental beliefs and philosophies, which determine our attitude to life and public office/ funds with a view to changing them. For instance if we must pay for fuel at international price, we should also have the same international living standard through realistic salaries, affordable social service, subsidy on critical areas and free services for less privileged in the society. These can be supported by strong fiscal policy laws that will ensure prudent financial management, transparency and accountability and put more efforts in the development of human capital.

NOTE:

This Book Review was actually published in 2005, the message, is still relevant in our contemporary society

Yushau A. Shuaib

yashuaib@yahoo.com



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Re: Book Review: A nation corrupted by oil?
Wharfsnake posted on 03-23-2007, 15:19:20 PM
Is it possible for a boat to haul $2.5 billion worth of crude oil? I hope this is a typo. If it is not a typo, then, this book is useless.
Re: Book Review: A nation corrupted by oil?
Yashuaib1 posted on 03-24-2007, 12:51:08 PM
Thanks for the observation the correction has been reflected. I went through the book again I realise the mistake is not from the book but from me, the reviewer. It is actually million instead of billion. Thanks for that timely observation. That is why I believe nobody can just enter NVS any how without receiving some bashing even from the occasional mischief. So one a to be EXTRA CAREFUL b4 posting.
YAShuaib
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