Mineral resource management for national cohesion and progress

Kayode Fayemi

It is always a delight to be back in the university environment to engage in my first vocation – teaching. The university is an important and integral part of society and must be so recognised. We must continue to promote the bridging of the gap between town and gown so that higher institutions are not wholly removed from the socio-economic and political realities in which students will eventually enter. Curricula must bear relevance to current and future challenges and there must be regular interfaces such as this, between the university community and practitioners in the larger society.

As I have argued before, universities are designed to be the breeding grounds for society’s elite and are supposed to be sites of knowledge production where solutions to the challenges of development are produced. Implicit in this definition of higher institutions is the notion that theatres of higher learning are places where scholars and students reflect upon the peculiar problems of their milieu. Each environment throws up a host of unique challenges. True scholarship eschews abstraction and wholeheartedly commits to tackling the particular challenges faced by a society at a given time. It is therefore not misplaced for society to look to our universities to produce solutions to our many problems.

Let me begin by observing that the theme of this event and the subject of my lecture is coming at a most auspicious time in our national life. It is coming at a time not only of intensified fractiousness and polarisation in public life but also in a season in which we are being compelled by circumstances to reflect soberly on our track record of resource governance. Nigeria’s most pungent contradiction has always inhered in her conflicting status as a nation so abundantly blessed with natural resources and one that is plagued with profound poverty, misery and underdevelopment. A combination of attributes namely her vast population which connotes a wealth of human resources, her strategic location, fertile land, hospitable climate and wealth of natural resources instructed the belief among the early nationalists that Nigeria was destined for greatness.

No less a person than Chinua Achebe described Nigeria as “a nation favoured by providence” and argued that “the vast human and material wealth with which she is endowed bestows on her a role in Africa and the world, which no one else can assume or fulfill.” This belief in Nigeria’s exceptionalism has been a consistent theme in our national discourse since the era of the nationalists who won independence from colonialism. The statesman and Nigeria’s first president, Nnamdi Azikiwe proclaimed that by reason of “the number of its inhabitants and the extent of its resources, Nigeria will be a country of consequence and, I am convinced, a force in world affairs.” When oil was discovered in commercial quantity in Oloibiri in 1956, an event which marked Nigeria’s emergence as an oil and gas giant, it seemed a powerful confirmation of her calling to preeminence.

The initial signs seemed positive. The first oil boom began almost providentially at the end of the Nigerian civil war and the ignited a tremendous spurt in developmental and infrastructural investment which ensured that lingering discontent did not plunge the nation back into war as is typically the case after a period of civil strife. Encouraged by the influx of petrodollars, the regime of General Yakubu Gowon drew up a $100 billion development plan (1975 – 1980), the most ambitious ever conceived by a Black African government at the time, aimed at transforming Nigeria into a modern unified state in five years. The Plan unfolded components for the construction of seven new universities, thirteen new television stations, three new international airports, an overhaul of the communications grid, the building of a petrochemical plant, the construction of 13, 000 miles of paved road and a new federal capital in Abuja.

The expectation was that Nigeria would consolidate on these projects and take steps to create foundations for a sustainable prosperity, using her riches to facilitate a rapid transformation into a first world nation in the shortest possible time. Resources were certainly no object. As General Gowon himself famously remarked, the problem was not money but how to spend it. In other words, the Head of State had identified the challenge as that of resource management for national cohesion and progress. It is significant that more than four decades after he made that pronouncement, this continues to be perhaps the central problem of governance in Nigeria – how to put Nigeria’s wealth to work for all; how to ensure that the country’s riches are used to underwrite the common good and a higher quality of life for all her citizens. In this regard, the report card over the years has not been good.

Things did not and have not turned out as expected. Between 1973 and 1978, during the oil boom, oil revenue rose quickly to more than 90 percent of Nigeria’s revenue. This increase was matched by an increase in public expenditure which quadrupled between 1973 and 1975. Rather than seeing the influx of oil wealth as a summons to delayed gratification and strategic investment, Nigerian elites took it as an opportunity for unhinged self-aggrandizement and conspicuous consumption. By the early 1980s, Nigeria was gravely indebted, having borrowed against future oil revenues. The government was effectively bankrupt.

Subsequent oil booms were rendered inconsequential by the scale of official graft for which Nigeria had by then become legendary. In the field of development studies, Nigeria is one of the archetypal poster children for what has been called the Dutch disease or the resource curse. It has been proven that resource-rich economies tend to grow more slowly than other poor countries. This phenomenon is called the ‘Dutch disease’, is the name scholars gave to the difficulties that befell the Netherlands after its discovery of gas in the North Sea.

It is also known as ‘the curse of oil’. When a nation discovers oil reserves in her territory, the sudden avalanche of petrodollars causes the neglect of sectors like agriculture and manufacturing thus leaving oil to dominate the economy. With so much money being made with little exertion, the urge to create wealth and value diminishes as everyone focuses their attention on how to get a piece of the national cake. Oil wealth brings along with it the illusion of an infinitely abundant resource and with this also comes a culture of fiscal irresponsibility, official extravagance and outright theft.

The squandering of our riches has been well documented. The opportunity cost of our mismanagement of our most important natural resource has been catastrophically steep. In 2006, According to the World Bank, in the forty years that followed the discovery of oil in Oloibiri, Nigerian officials stole more than $300 billion of the country’s wealth. This amounts to a sum equivalent to 300 years of British aid for the entire continent of Africa.1 It also amounts to six times the American assistance given to rebuild post-war Europe under the Marshall Plan.

The most telling manifestation of this criminal mismanagement of our natural wealth can be found in the Niger Delta where decades of oil exploitation have resulted in a legacy of ecological degradation, transgenerational poverty and violence. The Niger Delta is a microcosm of our profound contradictions – the pervasiveness of poverty in the midst of plenty and the failure to use our oil wealth responsibly to maximize our human resources.

Bayelsa, where oil was first struck in commercial quantity in 1956 was connected to the national electricity grid only in 2006. For 50 years, while energy for power generation was being flared on its land, the state struggled to provide its own form of electricity at its own cost.

The militant groups in the region are largely made up of youths alienated by an inequitable social order and habitually exploited by politicians. They subsequently turned to violence as a means of extracting concessions from both the Nigerian state and the multinational oil companies, the two entities they blame for their disinheritance in the midst of plenty. By mid-2007, attacks by criminal gangs and militant groups had caused several major oil companies to shut down operations thereby cutting output by 30 per cent of national production capacity. Over the past two decades, the Niger Delta has become as synonymous with banditry as it used to be with crude oil.
Dr. Fayemi delivered this paper at Federal University of Technology, Akure.

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Kayode Fayemi
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