What Our Oil Money Has Not Done to Nigeria
Photo A, “George Osodi, Oil Rich Niger Delta_11″ by we-make-money-not-art. Some rights reserved.
Where did all the money go?
Heidi Vogt writes, “The average Nigerian still survives on less than $2 a day, despite the country’s $20 billion rise in oil exports to the United States over the past five years.”
As if the lack of contribution from the oil money towards increasing living standards of Nigerians wasn’t enough, there is the environmental damage -
Flaring & Oil Spills
Flaring, the burning of natural gas (or “associated gas”) so as to increase crude oil production, is highly harmful to the Nigerian people and the world. Flaring releases numberous harmful gases. Flaring also happens close to where the Nigerian people live and work. Photo A above shows a Nigerian woman shifting away her tapioca produce.
Vogt writes, “When the Nigerian government told oil companies to stop flaring gas from drilling in local communities, many simply paid fines instead.”
Photo B, “Oil spill, Niger Delta” by MarcusB*. All rights reserved.
Oil spills (see Photo B) have also seriously damaged the Nigerian coastline, containminated swamps, destroyed arable land and poisoned drinking water (Nwilo & Badejo, 2001).
The Nigerian Fault?
To avoid a coloured (and popular) one-sided story, it is important to know some context and history. The previous Nigerian governments, it seems, has as much to be blamed.
Nigerian scholar Femi Taiwo argues that the discovery oil has ensured “that the post-colonial Nigerian state did not cultivate its own citizenry”.
A weak citizenry leads to a weak state. According to Adabanwi (2001), “the Nigerian state is legally required to inject part of the revenue from oil royalties into the oil-yielding communities” following a Revenue Allocation Formula. Yet, revenue received are few and only includes revenue from on-shore deposits.
Even if the money reaches the states, “local governments are often the most corrupt” (The Economist, 18 October) and very little finally trickles down to fund critical infrastructure.
The situation seems as bad today. A report had revealed the Nigerian National Petroleum Corporation “had somehow failed to remit 647 billion naira (almost $5.2 billion) expected by the treasury last month”.
Take a Balanced View
The popular stance will be to push all blame back to the oil companies. Led by the Royal Dutch Shell since 1958, Chevron (Parent of Texaco & Caltex), Exxon-Mobil, Agip and Total have substantial interest in Nigerian oil through joint ventures with Nigerian National Petroleum Corporation according to a Human Rights Group Report (1999).
I am not educated in Nigerian history nor politics. What I do know is that the Nigerian people are suffering. Oil has not brought prosperity to the nation.
My purpose for writing this is to, firstly, raise awareness on this issue. Secondly, I would like people to take a more constructive perspective. It is too easy to blame the oil companies for Nigeria’s predicament today. It is not helpful to blame the oil companies either - we have been doing so for decades.
Shell, for one, has already admitted to its practices. In a BBC report, Chairman of Shell Companies in Nigeria, Chris Finlayson said: “We recognise that our development activities in the past have been less than perfect.”
But the same report also writes that Shell has found it “difficult to operate with integrity in areas of conflict like Nigeria”.
Import Oil, Export Knowledge
I do not have a solution, but one thing seems clear - The developed world, while importing commodities from the developing world, has to export more than money and technology. The developed world has to also export management know-how, best practises, public institutions and education. And, the developed world has to do so - if not for Nigeria’s sake, then for its own sake.
For as the price of oil rise steadily, Nigerian social unrest escalates and the world’s opinion about irresponsible business practices sours, energy companies will only do worse to continue on its current course.
References
1. Nigeria: Shell of a State (2001)
2. Nigeria’s oil fires stoke claims of villagers to spoils - Seattle Times, 20 Aug 2007
3. An eerie lull in the violent Delta - The Economist, 8 Nov 2007
4. Nautral Gas Flaring - Wikipedia
5. Impacts of Oil Spills Along the Nigerian Coast - The Association for Environmental Health and Sciences
6. Reforming the oil industry - The Economist, 27 Sep 2007
7. The Price of Oil: Corporate Responsibility and Human Rights Violations in Nigeria’s Oil Producing Communities - Human Rights Watch (1999)
8. A nation in waiting - The Economist, 18 Oct 2007
9. Shell admits fuelling corruption - BBC News, 11 Jun 2004
November 18th, 2007 at 1:06 pm
I guess the bottom line is corruption of the government. No matter what the private companies do, the government will steal away a large chunk of the revenue meant for the people. I personally think that having a non-corrupted government is the very first and most essential step towards helping Nigerians for any other efforts/initiatives to work effectively.
November 18th, 2007 at 2:08 pm
Thanks Su Yuen for the comment.
I’m always very careful and restrained to suggest a “non-corrupt” government as a solution. Such governments are usually the exceptions.
It’s not an impossible task, but it may take too long at too high a price.
I would rather focus on more immediate solutions.
I think the developed world has to pay attention to where most of their resources are mostly coming from. The price of oil (and other resources) is a function of “stability” in these countries.
And I think the more fundamental way of getting it done is to ensure that knowledge flows to these places. Getting “know-how” and technology that propagates knowledge is a fantastic way.
The OLPC project (http://laptop.org) is a case in point.
The purpose of this post is to remind our folks that we need to pay attention to where oil money flowing to. Ensuring that these funds go to improving the people’s lives will only do us good.
November 23rd, 2007 at 11:30 am
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December 19th, 2007 at 8:51 pm
i guess it’s rare to see me putting up something here, but it’s one of the rare articles you wrote which i can, finally, comment something decent on.
rather than looking at somewhere so far away from home, why not try to do an analysis on the island of sumatra, near aceh where people were protesting to achieve autonomy due to the exploitation of the natural resources? i believe rather than putting an end to corruption, which is almost the evil present in all man, might as well ask the oil companies to approach the locals and have them paid directly.
it’s not the best solution, they’ll still better, in my opinion, then being too ambitious by trying to snuff out corruption.
January 28th, 2008 at 3:52 pm
Nice work. The challenge here is that there are no incentives to create awareness and accountability.
Every nation needs leaders and a strong supporting citizentry to effect changes. Bloggers also play a starting role in this.
February 15th, 2008 at 12:55 am
The problem of corruption is unfortunately not exclusive to Nigeria. It plagues most of sub-Saharan Africa in a particularly destructive manner. That’s why a lot of EU developmental aid just goes missing. It ends up into the pockets of the people in power and their cronies.
One probable reason that the oil companies are willing to pay the fines is that it’s cheaper to do so than it is to clean up their act. This could be because the Nigerian government gets plenty in royalties from the oil and gas giants, and wouldn’t want to irritate them with environmental concerns.
Normally, here’s the way things work with 1st world MNCs in the develping world: If the shareholders and customers back home find out their companies engage in unethical practices in the 3rd world, they boycott the product. The company’s value and profits drop until they clean up their act. One example of this was the boycott of Nike sweatshirts by US and EU customers because they were produced in Thailand using unethical labour practices.
Unfortunately shareholder/consumer activism is unlikely with oil and gas giants because people need oil too much to care about stuff like this. Any extra source of oil is a good thing, especially with oil prices floating around 100 USD a barrel. People back home will only make a big deal out of it if companies push their unethicality to extremes, like Shell with the Nigerian environment, or like Unacol did with slave labour in Myanmar.
Absolutely, the media, including bloggers, have a role to play in raising awareness on such issues. But with oil and gas giants specifically, it’s unlikely to make as much of a difference as with other industries. I think the long-term soultion would be to decrease our dependency on fossil fuels. It’s a necessity since fossil fuels won’t last forever and it’d help our environment too. Easier said than done of course.