Category Archives: Oil Theory

BBC reports that bodies of Nigerian police found after an ambush in the Niger Delta

April 10, 2013

A view of the Niger Delta (file image)

Nigeria’s Deadly Delta

“Nigeria’s security forces have recovered the bodies of 11 of the 12 policemen killed after an ambush in the oil-rich Niger Delta on Friday, police have said.

Some of the bodies had been mutilated and burnt beyond recognition, AFP news agency quoted witnesses as saying.

Last week, a militant group said it would it resume attacks after its leader, Henry Okah, was jailed for a bombing campaign in 2010.

However, many people are poor, fueling resentment towards the national government and oil companies.

At the weekend, the Movement for the Emancipation of the Niger Delta (MEND) said it had ambushed a police boat in the creeks and waterways of Bayelsa state, killing the policemen.

Police spokesman Alex Akhigbe said 11 bodies had been recovered, while one was still unaccounted for.

The bodies were transported by boat to the regional capital, Yenagoa, while relatives waited at a morgue, Nigeria’s Vanguard newspaper reports.

At the weekend, police denied the attack was linked to the jailing of Okah.

They said it involved a dispute among militants over amnesty payments given by the government.

Police boats were escorting an ex-militant to a funeral when one of the boats broke down and became a “soft target” for gunmen, a police spokesman said.

MEND had been fighting to gain a greater share of the oil wealth from its part of southern Nigeria, but had been inactive since a 2009 amnesty was put in place.

Okah, its leader, was sentenced to 24 years in prison last month for masterminding bomb attacks in the capital of Abuja in 2010.

Nigeria is Africa’s largest oil producer.”*

*Note: By accounts with which I am familiar, Angola may now be Africa’s largest oil producer.

Remarks on social services in the Niger Delta

A newborn in the Niger Delta

A newborn in the Niger Delta

 

An NGO researcher just conducted an interview with me regarding the state of service delivery, i.e. social and government services, in the Niger Delta. Below are a few of the transcribed questions and answers.

 

1. How would you describe the current state of service delivery[1] for most communities in the Niger Delta? 

Service delivery is non-existent in most areas, and sporadic or haphazard in the remaining ones.  I think that part of the reason communities so often look to oil companies to offer social services and build basic infrastructure is that the state has been so wholly unable to do any of these things since independence.  It is as if communities have given up on their own government ever acting as a government should, which requires providing basic services to its population. As is common in countries with rampant corruption, projects often begin but then are abandoned because funds disappeared or there was a change in management of that project. In the Niger Delta there are half-finished bridges, classrooms without roofs, and empty hospitals that don’t even have electricity. Additionally, a lack of human capital and maintenance of services mean that as soon as any project is finished, it will only be a matter of time until it is useless because no one can perform maintenance.  It seems that almost as soon as a road is finished, poor construction materials mean that it needs to be fixed again but there is mechanism in which to have that road repaired. This lack of maintenance is an issue that only capacity-building can address.

2. Whose responsibility do you believe it is to improve service delivery in the region, e.g. government agencies like MNDA or the NDDC, or oil companies operating in the region?

It is responsibility of government agencies to improve social services.  The basis of democracy is that citizens pay taxes to their government, vote for their leaders, and then those leaders use those taxes in a responsible manner to provide necessary collective goods that improve everyone’s lives.  Because the Nigerian government can rely on oil profits rather than taxes, and corruption makes elections less meaningful, there is no accountability of state actors towards the citizenry. Part of this government duty is to monitor the behavior of private economic actors like oil companies. Although I believe staunchly in corporate responsibility, it is impossible for a corporation to fully monitor itself; by definition monitoring must come from an outside party, like a government agency.

3. What impact do you think the current state of service delivery has on peace and conflict in the Niger Delta region? 

Lack of service delivery has increased rates of poverty and negatively impacted quality of life, which gives people “nothing to lose” when it comes to engaging in violence.  It also creates a dynamic in which too many people are competing for scant social services and resources, leading to increased tensions. Poverty and lack of services drives rural dwellers into cities like Port Harcourt and Yenagoa, where they may come into conflict with residents already living there, be forced into crime out of necessity, and and don’t have kinship or community networks that would otherwise mitigate their propensity for violence.

 4. Do you think that improved service delivery would increase security in the region?

Yes. Mostly obviously, it would remove violence caused by need, in other words, conflicts over obtaining basic goods.  Additionally, it would remove the incentive for rural Nigerians to move to new areas in search of such services, thus minimizing the conflict that occurs among internally displaces populations and between new urban dwellers and older ones.


[1] “Service delivery” means the quality and availability of essential services, such as health care, primary education,  and basic infrastructure such as reliable access to water, electricity, and road networks.

Further remarks on Niger Delta violence and amnesties

The second section of the interview (see post above) focused on the militancy in the Niger Delta and included the following questions and my responses:

1. In your opinion, what are the conditions that drive individuals toward militancy in the Niger Delta?

Poverty alone is not a causal mechanism for insurgency, nor does simply being a weak state cause collective violence.  In the Niger Delta it is a two-part dynamic in which poverty amidst vast oil wealth combines with weak state apparatuses to create insurgency. The former creates the incentives and the latter provides the conditions. Niger Deltans suffer from deprivation while seeing that resources, e.g. oil profits, exist that could be bettering their lot, fostering a sense of injustice. It is easy for militant leaders to galvanize this injustice and organize it along ethnic lines due to the often contentious tribal diversity of the Delta. Then, the Nigerian government does not have the capacity or sometimes the will to stop the social disorder, creating a sense of stateless that is conducive to violence.

2. Do you believe these are the same root causes for cultism and other such violent activity in the Niger Delta region?

To an extent, but I do see the insurgency as analytically different from cultism and other forms of collective violence. The particular nature of oil drives militancy, and group violence unrelated to natural resources is in many ways a separate issue. Groups with income flows from control of oil are more likely to attract opportunistic participants, make insurgents like those of MEND primarily economic actors (insurgents have not been ideologically driven for many years, if they ever were). Unlike cultism and other forms of collective violence, militancy requires clear leadership, sustained engagement, access to arms, and it must have a local population on which it can rely on for resources (Weinstein 2006). On the other hand, other collective violence campaigns unrelated to oil can arise more sporadically, use fewer or homemade weapons, and I think can have more porous membership networks.

3. What expectations do you think that the Amnesty Program created for ex-militants and their communities?

From my observations, there was little expectation among the average Niger Deltan that the Amnesty would have a lasting impact on the insurgency in the long-term, because the number of men who could pass through the program was far fewer than the number of unemployed youths attracted to militant engagement.  Militants themselves could have been hopeful for personal gains, but that was an individual aspiration.

 4. Since after the declaration of the Amnesty Program, have you seen any positive service delivery or infrastructural changes in the region?

No.  From what I understand, the Amnesty Program has provided stipends and job training for former militants, but has not affected service delivery for communities.

5.What do you think will happen in the region after the Amnesty Program ends in 2015?

When the Amnesty Program ends in 2015, insurgency will go up to its previous levels since the overall conditions that led to start of insurgency, such as rampant unemployment, have not changed. The problem with the amnesty is that creating some jobs does not stop violence. Job creation temporarily lowers rates of violence because employment pulls non-committed militants away from the movement and simply keeps more men busy so they have less time for violence, but in a region with such poverty and lawlessness there will always be more recruits to replace those who join an amnesty. Obviously if every Nigerian was gainfully employed with a good standard of living then that would presumably end the insurgency, since violence is generally inversely proportional to economic development. For me however, the sheer number of unemployed men in the Delta, surely hovering around 50%, will always outpace any increase in the number of local jobs created with any government program, so as one militant leaves the movement another one will replace him. So, theoretically non-oil jobs would probably end violence but realistically that would be improbably just based on the population number of the Delta. The Amnesty Program has always just been a temporary fix in which insurgents were paid to stop engaging in violence.

Reports | National Reports | Africa | Nigeria | Human Development Reports (HDR) | United Nations Development Programme (UNDP)

Reports | National Reports | Africa | Nigeria | Human Development Reports (HDR) | United Nations Development Programme (UNDP).

The Economist’s Take on Recent Reforms in West Africa

Bye-bye Big Men

Governance in much of Africa is visibly improving, though progress is uneven

Infrastructure meets tradition

LEAVING THE IVORIAN commercial capital, Abidjan, at 7am, you run straight into what is known as the civil-servant rush hour. The president has decreed that administrators must be at their desks by 7.30am, and most are. A Western ambassador says disbelievingly, “If you are five minutes late for a meeting, you have missed the first five minutes.” Having travelled to the office on elevated dual carriageways, civil servants leap into lifts and ride up to their desks on the upper floors of modern glass towers. Some sneakily keep an iPad or some other electronic gadget with which to while away the time.

Governance in Côte d’Ivoire is rarely as good as it looks. Bribes still solve problems faster than meetings. The opposition spitefully boycotted the most recent elections. Deep cleavages run across the political landscape. And yet the national accounts are in order, debts are coming down and new roads are being built. This is the picture in much of Africa. The allocation of power is becoming fairer and its use more competent, as in Ghana, though there is much more to do, especially in resource-rich nations like Nigeria.

African governments are beginning to accept the importance of good governance, not least for improving the lot of the poor. Rulers travelling on presidential planes strut their stuff at the World Economic Forum in Davos and declare their undying interest in “capacity-building”. Behind the jargon a remarkable change is taking place. The default means of allocating power in Africa now is to hold elections, and elections are generally becoming fairer. Sceptics rightly bemoan voter fraud and intimidation, and plenty of polls are still stolen. But the margins of victory that autocrats dare to award themselves are shrinking. Indeed, quite a few have discovered, in forced retirement, that by allowing notional democracy they have started something they cannot stop.

Until 1991 it was almost unknown for a ruling party to be peacefully ousted at the polls. Since Benin ticked up a first in that year it has happened almost three dozen times. In many countries such an event cements tentative gains, as it did in Ghana in 1992 and again in 2000. Crossing the border from Côte d’Ivoire into Ghana, the visitor immediately becomes aware that democratic expression here is unrestrained. An election is under way and supporters of the ruling party and the opposition cheerfully line one side of the road each, holding megaphones and waving banners. Opinion polls put the two main parties neck-and-neck even though the present government has achieved impressive economic growth: GDP increased by 14% in 2011.

After a few hours on the road, just past the city of Takoradi, the country’s economic turbo-charger comes into view. Pipelines run along the road and diggers make huge holes for storage tanks. A vast oilfield has been found nearby, but celebrations were muted. Ghanaians know that a resource bonanza can be dangerous and politicians may get greedy, so administrators are now being trained in handling a large influx of oil revenues. At a leafy campus with neatly trimmed grass on the outskirts of Accra, the capital, they learn about transparency, accountability and the intricacies of transfer pricing.

This stuff matters. Some of the biggest obstacles to better governance are not murderous tyrants but a lack of bureaucratic competence and a divided opposition. Ageing autocrats die eventually, but bad habits will not go away of their own accord. Robert Mugabe, Zimbabwe’s dictator, now aged 89, could be deposed if rivals, with whom he has been forced to share power since the most recent election, were better at their jobs. Still, in neighbouring Zambia opposition politicians outmanoeuvred a tired government in 2011 and took office.

Luckily, competence is on the rise in Africa. White elephants are still being created, but are now generally designed to serve larger and more inclusive groups of people. South Africa’s football stadiums built for the 2010 World Cup (pictured) are in that category, as are many new dams and airports.

Politicians and officials are learning new skills to run such projects. It is hard to quantify the change, but traipsing in and out of ministries across the continent builds up a measure of confidence. There are plenty of shortcomings and allegations of corruption, but in a fair number of African countries the bureaucracies are not far behind standards in, say, India.

Transport management in particular has become much better. A bus ride from Accra across three African borders in one day is instructive. Departing at sunrise, the 15-seater easily crosses into Togo where it passes well-run port installations and warehouses. An hour later it arrives in Benin. The driver ignores the outstretched hands of traffic policemen. After a few more hours the bus reaches Nigeria amid throngs of packed lorries on their way to Onitsha, Africa’s largest market. Most of the bus passengers are professionals, including several telecoms engineers who commute weekly. All four countries have sensible transit policies and trade actively with each other.

White elephants are still being created, but now generally for larger and more inclusive groups of people

What has brought about this change? Across Africa both voters and leaders are better educated than they were even half a generation ago. Many of those in power are the first in their families with a university degree. Standards of political debate have risen thanks to better schools, modern media and the return of diaspora members who bring new ideas with them.

One lesson in particular seems to have sunk in: the need for solid and durable institutions. In the past, good practice all too often lapsed quickly after a change of incumbent. Foreign advisers ram home the need for institution-building. “Everyone is nagging us about it, from TB to Mo,” says an Oxford-educated official, referring to Tony Blair, a former British prime minister who now runs an African governance initiative, and Mo Ibrahim, an Anglo-Sudanese telecoms billionaire who awards prizes for political leadership.

Size matters here. Benin is nicely democratic—it has more political parties than cities—but with a mere 9m people it carries little weight. Nigeria, on the other hand, has 160m, so along with Kenya and South Africa it sets the tone in regional meetings and institutions—and it still struggles to get things right. When the parliament’s speaker needed a bit of extra cash before leaving office in 2011 (on top of more than $1m a year he got in pay and expenses) he gave himself a $65m government loan. He was charged but later acquitted.

Nigeria is famous for corruption, yet at issue is more than thievery. Members of the elite systematically loot state coffers, then subvert the electoral system to protect themselves. Everybody knows it, and a few straight arrows in the government talk about it openly. Perhaps half the substantial (but misreported) oil revenues of Africa’s biggest oil producer go missing. Moderate estimates suggest that at least $4 billion-8 billion is stolen every year, money that could pay for schools and hospitals. One official reckons the country has lost more than $380 billion since independence in 1960. Yet not a single politician has been imprisoned for graft. The day that Nigeria works properly, the battle for Africa’s future will have been won.

One step at a time

Such an outcome is not inconceivable. Take Lagos, the commercial capital, long a byword for chaos and skulduggery. The bus from Accra inches forward on an eight-lane bridge in dense traffic. The last 30 miles take longer than the previous 300. The city is choking. Roads jam up daily. Commuters sometimes sleep in their cars. Businessmen schedule at most two out-of-office meetings a day. Built on a swamp by the Atlantic, Lagos spreads out unplanned. Two out of three residents live in wooden slums. Already home to 20m people, the city is expected to double in size within a generation. When most of the public infrastructure was built in the 1970s, the population was perhaps 2m.

But help is on the way. The governor of Lagos, Babatunde Fashola, has begun an impressive campaign to clean up the city. Yaba bus station, where the bus eventually arrives at 9pm, used to be full of pickpockets and rowdy vendors. Now there is an orderly queue for taxis. The Chinese are building a vast urban rail network. Public buses have been assigned separate lanes. When the governor heard they were being used by unauthorised vehicles, he strode out one morning and made a citizen arrest of a stunned colonel.

The governor is playing to the crowd, but why not? The transformation of Lagos is worth trumpeting. Its economy is now bigger than the whole of Kenya’s. Tax revenue has increased from $4m to $97m a month in little more than a decade. Tax rates have stayed the same but the amounts being collected have risen dramatically thanks to the deployment of private tax “farmers” who get a commission.

Better governance is creeping beyond the metropolis. When your correspondent e-mails the governor of Ekiti state in impoverished central Nigeria he gets a reply within minutes, with the entire cabinet copied in and being told to assist with a visit. After a six-hour drive north, seven interviews across the capital, Ado Ekiti, are arranged in the space of a few hours. Cabinet members are mostly foreign-educated and highly motivated and have private-sector experience. A new employment agency sends out job advertisements by text message. All secondary-school pupils are getting free laptops with solar panels. All civil servants, including teachers, are tested annually; those who fail stand to lose their job.

To be sure, this sort of governance is still the exception. A visit to the capital, Abuja, another six-hour drive north flanked by red earth dotted with filthy shacks, is sobering. The seat of government moved here two decades ago to escape swampy Lagos; now it is as chaotic as the former capital. A programme to subsidise fuel alone cost the government $6.8 billion in theft in three years (on top of the billions wasted on the market-distorting subsidy itself). Shady deals between officials and oil companies have swallowed an estimated $29 billion in the past decade. Yet more than half of all Nigerians live on less than $1 per day and get almost no electricity because the grid has collapsed.

Still, even Abuja is not without hope. Inside gleaming ministerial palaces dotted along new ring roads a band of reformers is at work. They are in a minority, but seemingly fearless. The central-bank governor has started cleaning up the financial sector. The finance minister, Ngozi Okonjo-Iweala (who recently published a memoir entitled “Reforming the Unreformable”), is reducing fuel subsidies and thus the scope for theft. A special task force in the president’s office is privatizing electricity assets. The reformers have encountered strong opposition, as much from an understandably suspicious public as from the wily crooks who stand to lose out. The good guys are winning, but it will be a long time before they triumph.

A very brief chronology of the Nigerian oil economy

English: Flag of the Organization of Petroleum...

A colleague of mine casually asked me yesterday about Nigeria’s oil economy after independence.  Many isolated events and economic explanations came to mind, but I was surprised when I couldn’t give her a succinct chronology. I thought I would write a paragraph or two to remedy this.

More Nigerians slowly moved from subsistence agriculture to private enterprise around independence, and oil, which had been discovered three years earlier, quickly become the basis of economic growth. Shell had been the first to commercially drill in the country, but in 1960 other companies such as Mobil and Agip were competing for their own stake.  Hopes were high. Oil profitability was greatest during the “Golden Decade” of the 1970s, in which Nigeria became the wealthiest country in Africa. Between 1958 and 1974, production rose from just over 5000 to 2.3 million barrels per day and government revenue increased from N200,000 to N3.7 billion. Within two years, state profit increased by almost 50% to an all-time high of N5.3 billion in 1976. Nigeria bolstered profits when it joined OPEC in 1971, an organization which helped to construct the global petroleum scarcity, and thus the massive profitability of fossil fuels at the time. The economic prosperity was short-lived however.

 

In accordance with the resource curse, the 1970’s oil boom led to a near complete economic crash in the following decade. Nigeria had made an almost total shift away from the traded and diversified agricultural sector to the non-traded sector of petroleum, and projected revenues for petroleum were high. Based on this, President Murtala Mohammed spent and borrowed billions on grand-scale modernization projects.   However, such spending and borrowing in a mono-economy proved highly problematic during the sharp decrease in world oil prices under Babangida in the 1980s. Domestic inflation became so high that even basic food stuffs become too expensive for consumers and Nigeria had to default on numerous debts. To create more jobs for Nigerians, the government forced out the thousands of West African workers who had immigrated to the country to take advantage of the employment in the formerly booming economy.  Rather than take a conditional IMF loan like Ghana did, the government implemented a controversial Structural Adjustment Program (SAP) that proved largely unsuccessful. The economic decline was so severe that by 1989 Nigeria was labeled a low-income country and qualified for World Bank assistance.

 

Despite a slight revival in the 1990s, the economy has yet to recover to early 1970’s levels of prosperity. Today, ¾ of Nigerians live below the poverty line, in a country that produces around 2.6 billion barrels of oil daily. Petroleum accounts for 80% of budgetary revenues and as a result, high inflation has hurt investments for the average Nigerian and made international investment aside from fossil fuels a near impossibility. Few jobs in the oil sector have been created for Nigerians and wealth distribution is grossly unequal. Robert Bates argues the Nigerian oil crisis and subsequent loss of export taxes is what caused the state to become predatory for its income, thus laying the groundwork for today’s poor and often corrupt governance.

 

So, there is the short of it, more or less. There was steady growth of the oil sector in the 1960s, a complete boom in the 1970s that created the “oil state” as we know it, a crash in the 1980s, then a slight improvement in oil revenue in the 1990s that leveled out to what we have today.

 

 

Renewed attention to the Biafran Conflict

The BBC has reported that at least 100 people have been charged with treason in south-eastern Nigeria after a march supporting independence for Biafra, their lawyer says. Igbo members of the Biafran Zionist Movement (BZM) declared independence from Yoruba- and Haused-dominated Nigeria, raised the Biafran flag and then marched through the region’s main town of Enugu over the weekend, the Igbo stronghold during the Biafran War. Most of those arrested were young men, many sons of former Biafran fighters, but some were veterans of the war themselves. They were all remanded in custody.

More than one million people died during the 1967-70 Biafran conflict – mostly from hunger and disease. Political scientists debate whether the term “war” accurately describes the conflict. To be a “war” a certain percentage of deaths must occur on each side, and nearly the all the deaths occurred among Igbos and nearly all were due to the national government and its allies cutting off food and medical supplies to Igbo communities.

The BZM first gathered on Sunday to mark the birthday of former Biafran leader Chukwuemeka Ojukwu, who died in November 2011 and was buried in Enugu in March. His burial revived some cries for independence. The BBC (from Lagos, and not Enugu mind you) says that 45 years after the Biafran flag was first raised – an action which sparked Nigeria’s civil war – a small number of separatists still keep their dream alive, despite the threat of being charged with treason.

Biafran War 1967-1970

map
  • 1960: Nigeria gains independence from the UK
  • 1967: South-eastern portion of Nigeria secedes as Republic of Biafra on 30 May
  • Biafra dominated by Igbo ethnic group
  • Home to much of Nigeria’s oil
  • Nigerian army blockades Biafra and more than a million people die through famine, disease and fighting
  • 1970: Biafran government surrenders

Some recently released books and films have increased attention to Biafra. The war has been put back in the spotlight as the renowned Nigerian writer Chinua Achebe, arguably the greatest male writer in Nigeria with Wole Soyinka, has just released his memoirs of the conflict. Igbo-American Chimanada Adichie’s amazing novel  Half a Yellow Sun is being made into an American film, as this traumatic period of Nigeria’s history is set to reach a wider audience. The title refers to the flag created for the shortly independent republics of Biafra. The film stars Thandy Newton and was filmed primarily in Calabar, with my friends working as extras on set. Far less impressive, the Jeta Amata’s movie Black November is soon to be released starring Mickey Rouke, Viviva A. Fox, and Kim Basinger, which is an effort to take Nollywood mainstream to Hollywood.  Based on the ridiculous trailer I almost hope no one goes to see the unrealistic portrayal of the oil conflict. Oil was a key impetus to the start of the Biafran War and control over reserves undergirded much of the struggle over Nigerian territory in the late 1960s, but I doubt the average viewer will think enough about the movie to be able to link natural resources to conflict.