How Oil Wealth is Drowning the Nigerian Economy [May. 2009]

Final Essay Albert Schrauwers Madison Hopper ANTH 3220a Greed, Globalization and the Gift: New Approaches to Economic Anthropology May 28th 2009 Final Essay Albert Schrauwers Madison Hopper ANTH 3220a Greed, Globalization and the Gift: New Approaches to Economic Anthropology May 28th 2009 How Oil Wealth is Drowning Nigeria’s Economy Nigeria’s oil wealth pumps billions of dollars into the global market and into Nigeria’s economy; but yet Nigeria is accused by global watch organizations (like transparency international) of being “one of the world’s most corrupt nations” (O'Reilly, May, 25, 2009) Nigeria’s former military ruler Sani Abacha had been accused of stealing between two to five billion dollars between 1993 and 1998. Local villages suffer from oil spills, gas flares, as well lack access to clean water, and proper infrastructure. (O'Reilly, May, 25, 2009) Several peasantry groups have risen and rebelled by engaging in oil bunkering, kidnappings, bombings and violent outbreaks of conflict. From this reality begs a question; with such a lucrative resource at the Nigerian government’s disposal why do the citizens of Nigeria still suffer from the effects of extreme poverty? As well, what elements exist in the Nigerian state that poisons the proper allocation of oil wealth and power and facilitate an environment for mass corruption and peasant revolt? This essay will seek to critically examine these questions by looking at multiple spheres surrounding, economy, politics, government, and culture and the duality created between them. This essay will also critique the questions by applying Rentier State these, the Paradox of Plenty and the Compatible Cultural Democracy thesis in an attempt to conceptualize the issues plaguing the Nigerian people and why their oil wealth has been re-defined as Nigeria’s oil curse. History – Crisis Overview The Niger Delta spans around 70,000 sq. km and comprises approximately nine states (some including Edo, Ondo, Abia, Akwa-Ibom, Rivers, Delta, Bayelsa, and Imo) (Watts, 2007) The population of the Niger Delta (Nigeria’s central site for oil extraction) is about 28 million, it contains 606 fields, 5,284 oil wells 7,000 km of pipeline 275 flow stations, four refineries and ten gas plants as of 2007. (Watts, 2007) In the Delta region “over 300 foreign hostages have been abducted in the last 15 months and close to 1,000 Nigerian workers have been detained or held hostage.” (Watts, 2007) Pipelines are broken and bunkered to be sold on the black market. That rate of pipeline sabotage had doubled from 1999 to 2004, this had lead to the spilling and stealing of between 179,000 to 396,000 metric tons of oil in that same period. (Watts, 2007) Referencing the works of Collier (2000), Watt’s (2005), Ross (2001), and Idemeudia (2006) previous conceptualization of the Niger Delta conflict have concluded that communities are in a power struggle with multinational oil companies for land rights, compensation for environmental damage, and dispute for access to oil rent with the government. (Idemudia, 2006) With this is mind the poverty fostering and conflict enabling factors can be first analyzed (in part) by analyzing the history and construction of the Nigerian state. The current Nigeria is an amalgamation of two former protectorates (North and South) (Idemudia, 2006) Chief Obafemi (Nigerian statesman) Refers to Nigeria “not as a nation, but a mere political expression.” (Idemudia, 2006) Pre-colonial Nigeria was a complex politically organized collection of independent self-governed ethnic groups of which some were the Hausaland in the north that had developed several states with walled capital cities. There was Yorubaland which was run politically through a monarch system and was predominantly located in the west. There was Igboland in central Nigeria and the delta states in the south. (Britannica, 2009) Through the colonial “scramble for Africa” process, (particular to Nigeria: British empirical rule) these ethnic groups were integrated together under one state controlled by one governing body. When the state gained its independence and the colonial insurgents had left, Nigeria was still subject to a foreign democratic political system and assimilation of western-style partisan politics. Political Legitimacy “Africa’s political problems are not about democracy per se, but about what brand of democracy is suitable for the people of this era.” (Osabu-Kle, 2000) Osabu-Kle suggests in his thesis Compatible Cultural Democracy that democracy is a means for citizens to determine the structure and fate of their state and society. Therefore the only true democracy for African people must be decided by Africans. (Osabu-Kle, 2000) In the case of the Niger Delta (as a created state of which had formerly been a collection of independent self-governed ethnic groups) now was subject to “competitive communalism, where each ethnic group competes to maximize the benefits it can derive from the Nigerian state.” (Idemudia, 2006) The state, as a foreign symbol of oppression and marginalization, lacked any political legitimacy to the African citizen. In a region encompassing over 250 different ethnic groups with over 100 languages it becomes difficult to comprehend how state society relationships can be formed. (CTV, 2007) By the time Nigeria gained its independence and was thrust into western modes of partisan political rule, the running parties were formed along ethnic lines in which “the Hausa-Fulani, the Igbo, and the Yourba held regional hegemony over substantial numbers of ethnic minorities.” (Osabu-Kle, Nigeria: Oil, Coups, and Ethnic War, 2000) This would invariably affect the outcome of any election in favor of ethnic majorities; thus leaving all other ethnic groups out of political decision making processes. (Idemudia, 2006) In other words, a good African was one who rejected his former colonial oppressors in favor of his traditional kin group. Mono-crop Economic Dependence The Niger Deltas mono-crop dependence on oil wealth can be conceptualized through the works of Mahdavy, Bablawi, and Yates Rentier State Theory. This theory suggests that massive portions of foreign currency flood the government’s budget from a lucrative natural resource (such as oil) and begins generating a rentier economy. (Yates, 1996) According to Beblawi there are five characteristics of a rentier economy, first being that “a rent situation must predominate” (Yates, 1996) Secondly, “the origins of the rent must be external to the economy” (Yates, 1996) Third, “only a few are engaged in the generation of the rent” (Yates, 1996) and finally, “the government must be the principle recipient of the rent” (Yates, 1996) With all four conditions applicable to the Niger Delta the economy it becomes susceptible to “Dutch Disease” which is the process of deindustrialization in which internal economic stimulation and growth ceases because the government is receiving enough external rent to sustain itself. (Disease) This suppresses the country’s infrastructure, rendering it less competitive with other nations; in that they focus on importing rather than exporting. (Disease) Another side effect of the Dutch Disease is that it lessens the significance of taxpayers, as the government is receiving all it needs from external rent. These factors coupled with a lack of state legitimacy presents the state as a “national cake” to extract as much as possible from. This is because commandeering as much rent as one can has become the only real source for citizens to sustain their livelihoods. (Idemudia, 2006) Peasantry Revolution In the Niger Delta people traditionally engaged in subsistence farming, and fishing. (Idemudia, 2006) These agricultural activities were heavily disrupted by environmental degradation, and displacement. Citizens land entitlements were usurped to make way for multinational corporations to harvest oil sites. “Between 1976 and 1996 there were a total of 4,835 incidents of oil spill of at least 2,446,322 barrels (102.7 million US gallons)” (Idemudia, 2006)Gas flaring produces more greenhouse-gas than any other industry in Africa. Nigerian’s suffer from chronic health problems including bronchitis, rheumatic, and eye problems. (Quist-Arcton, 2009) Alongside this is a lack of job opportunities, because the rent is generated by few. (Yates, 1996) In other words, oil production is capital intensive and requires a small scaled labor force, this leave a vast majority of the population seeking for alternative modes of sustaining their livelihood. The conflict has left youths of the Niger Delta unemployed, with a government they do not recognize as a legitimate governing entity, they can’t engage in subsistence farming because the majority of the land has been occupied by oil companies, or rendered infertile , the only remaining option becomes revolution and informal capturing of resource rent. This informal capture has been by way of “oil bunkering“ and this process is possible by way of the nature of oil extraction as vast unmonitored pipe lines that are intercepted and harvested for crude oil and sold on the black market. (Idemudia, 2006) Bands of citizens form collation, or “rebel groups” that use the revenue from the oil extraction to finance rebel wars with the Nigerian government to recapture the state and claim access to the government’s oil rent. The illicit nature of oil bunkering provides opportunity for “militarist task force approval.” (Braide, 2003) This facilitates an environment for rebel vs. government conflict and is responsible for the escalation of violent outbreaks of conflict in the Niger Delta. Conclusion The blessings of oil wealth in the Niger Delta have not only proven to be a curse on Nigerian citizens, but has perpetuated, fueled and financed peasant “rebel” revolution. However, as we can see it is an integrated dynamic of incompatible governance systems, and economic shortcomings that poison the distribution of oil wealth and inhibit the Nigerian state from providing a sustainable solution for citizens to create a livelihood without engaging in “illicit” activity. Only by addressing all facets of the Nigerian state can a proper solution be provided. Bibliography Braide, K. M. 2003 "The Political Economy Of Illegal Bunkering In Nigeria" Port Harcourt, Nigeria. 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Osabu-Kle, Compatable Cultural Democracy: The Key to Development in Africa (pp. 138-139). Peterborough, Canada (Broadview Press) Quist-Arcton, O. 2009 "Gas Flaring Disrupts Life in Oil-Producing Niger Delta" (NPR) http://www.npr.org/templates/story/story.php?storyId=12175714 Watts, M. 2007 "Petro-Insurgency ot Criminal Syndicate? Conflict and Violence in the Niger Delta" (Review of African Political Economy) Vol. 114. pp. 637-660. Yates, D. 1996 "The Rentier State in Africa: Oil Rent Dependency and Neo colonialism in the republic of Gabon" (Eritrea: African World Press ) Chapter 1. 7