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Niger-Delta Crisis: Let people derive benefit from
oil revenue
By Thompson Ayodele and Olusegun Sotola
Quite recently, the Nigerian government
deployed soldiers and war ships todislodge the militants
in the oil producing communities. This developmentis in
direct response to the repeated attacks by militants on
flowstations and other oil installations, thereby
causing disruptions in oilproduction and substantial cut
in revenue.
The goal of the military campaign is to
end series of kidnappings, routthe militants and end
vandalisation of oil equipment and installations.What is
more worrisome is if the latest military operation will
bring theenvisaged solutions to plethora of crises in
the region.
The Niger Delta used to be a
peaceful region until oil was discovered in commercial
quantity coupled with the increase in oil related
activities without commensurate improvement in the lives
of people. Resistance usedto be in form of pockets of
violence and protests until it snowballed into large
scale hostage-taking with demands for ransom as well as
attacking oil installations, navy, police stations and
engaging soldiers in combat with assault riffles.
The federal government might have
embarked on the latest campaignapparently to stem the
volatile situation in the region and end disruptions to
oil production which has threatened the nation’s
revenue.There is however need for caution as previous
military involvements never yielded positive results.
Instead, it created bad public relations andended up
creating a new set of problems, thereby aggravating the
deep-seated negative feelings in the region.
For instance in 1994, more than 2000
civilian were reportedly killed, while about 100,000
were refugees when the Rivers State Internal
Securityoutfit occupied Ogoniland. In the same vein, the
military reprisal attacks in Odi Town in 1999 affected
over 2500 civilians and destroyed the town.What needs to
be done is to evolve innovative and practicable
solutions to the crises beyond the use of force.
It is understandable why government is
keen on resolving the crisis in theregion. The place of
oil in Nigeria’s economy is immense. It contributes95
per cent of export earnings, 83 per cent of government
revenue, and about a third of gross domestic product
(GDP). On a daily basis, Nigerialoses $46.44 million due
to the two recent attacks on Bonga and Chevron
facilities. This is outside $84 million daily lost to
the general activities of the militants. In monetary
terms this translates to $2.52billion per month and more
than a whopping $30 billion a year.
However, the current oil proceeds sharing
formula is inherently flawed. Itis obvious that it is
incapable of solving the crisis even it is raised to50
per cent. This is because statutory allocation goes to
states, local governments and other bureaucracy like
Niger Delta Development Commission
(NDDC). As things currently stand, lasting
solution surpasses mere provision of infrastructure and
political compensation for lackeys. The people who own
the land must derive direct benefit from oil
revenueaccruing to national purse. They must see
themselves as stakeholders. Asimportant the people are,
the present arrangement does not have them in picture.
A few weeks ago, some oil companies
proposed to the government the need todistribute certain
percentage of their profits directly to the
inhabitantsof the area. This no doubt represents an
innovative approach towardssolving the problem in the
region. Under this arrangement, rather thanrelying on
oil revenue, government would have to on a large scale
rely on normal tax policy instruments. The advantage of
this is that it will insulate the system from corruption
and mismanagement. This is because oil revenue would
stay out of the hands of the public officials. Above
all, it will rectify the imbalance of economics and
political power that oftenfavour government and against
the people.
It is a fact that the discovery of oil
has had negative impact on domestic economy and
political institutions. It has given rise to officials
seekingrent which in turn affects investment climate and
growth. When oil revenue flows in large quantity as it
is in Nigeria, promoting wealth creation will be a
mirage and citizen has less incentive to hold government
accountable. Government in turn has little incentive to
manage well, provide adequate public services or respond
to citizens. In addition, under the circumstances,
building a strong market economy and awell-established
property rights become a mirage.
A more lasting solution rests on a
genuine restructuring of ownership and control of lands.
There is the need to reform legislation such as
thePetroleum Act and the Land Use Act that effectively
deprive local residents of ownership stake in land and
its resources. Consent for oilexploration should involve
local communities and families. This will make them
partly responsible, apart from restoring ownership. This
is a sure way not only to sustainable peace in the Niger
Delta but also a powerful linkage to a freer economy
through limitation in government restrictive policies.
Oil producing communities must be a
stakeholder in oil business. When theydo, they will
ultimately see themselves as co-owners. They will dare
not destroy what is theirs. Under this arrangement,
everyone wins; the government, the people and oil
companies. Time was in some East Africa countries when
the people in communities where most of the animals
lived never got any direct benefits. People saw the
animals as problems. Expectedly, the rate of poaching
and illegal sale of ivory boomed. Thiswas reverse when
people get direct benefits and there were incentives
forthem to protect the animals.
The involvement of military again
is largely misdirected. The involvement of military has
strengthened the youths in the region who are bent
unresisting military occupation. Many young people in
the area possess varying knowledge of weapon handling.
Military option will further provide veritable ground
for brainwashing and consequent recruitment of young
people into militancy.
The Niger Delta crisis requires a careful
handling. Military operation isshort time solution. To
insist on using military might to end the crisiswould at
the end be counter productive.
• Ayodele and Sotola are with the
Initiative for Public Policy Analysis, apublic policy
think-tank based in Lagos.
Thompson Ayodele,Director
Initiative for Public Policy Analysis
P.O.Box
6434
Shomolu,
Lagos, Nigeria
Email:thompson@ippanigeria.org
Backup:
thompsondele@onebox.com
Website: www.ippanigeria.org
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