The Story of Nigeria's Petroleum Industry

Chapter 1

Nigeria's Development Dilemma

When Nigeria attained independence from Great Britain on 1 October 1960, there were high hopes that her political and economic development was sustainable, with a high potential for foreign investment. Obviously, the hope was grounded on the country's great resource endowment, a well-equipped civil service, and Africa's most educated class of graduates. About five decades later, such hopes and expectations have been totally dashed. Political scientists and economists have written endlessly in the search for the reasons and the solutions to the situation. Sadly, the way forward has not been identified, except that the situation has worsened.

Since the emergence of oil as a dominant factor in the country's economy, Nigeria has experienced an agonizing backward movement from promising development prospects to a country with one of the lowest development indicators in the world. This is strange because the promise which oil holds seems to be the very weapon which has brought the country down. Relentlessly, the country's development problem has been fuelled by forces which have remained stronger. There is agreement in all circles, except among the politicians who are the agents of the crisis, that the limitation of leadership is the most easily identifiable cause of the development problem.

Corrupt tendencies have been with mankind since creation, but the tone of corruptive inclinations has attained a pigment which is troubling. In times past, it was uncommon for people to steal from the soup pot of a neighbour, yet pots of soup and food items were never locked up. In those days, community life was built on trust. Treasured personal effects were kept above the ceiling under the roof, where everyone climbed up with a ladder whenever it was necessary to fetch clothes for special occasions. For someone to stealthily climb up to the ceiling store to take items which belonged to someone else would have been considered an abomination, because he would have succeeded in putting his family into utter shame forever. If a man was so perverted that he would, rather than ask for help from his neighbour, decide to steal tubers of yam from the farm of another farmer, he faced permanent ostracism or banishment. Silent barter was a common commercial practice which facilitated trading in farm products in the community. A farmer would put some harvested crops at the roadside post where human traffic was common. The crops were laid out in portions according to units of prices. If one portion of corn was to be sold for one unit of currency, that amount was put near the portion of the unit of currency for the prospective buyers to know. Upon passing by and deciding to buy any product from the post, a buyer collected whatever item he selected and placed the exact amount of money, being the cost of the commodity.

Many scholars and observers saw Nigeria as an emerging country, in terms of its potential for sustainable development. Such optimism was founded on Nigeria's favourable geographical and natural resource endowments. Furthermore, in the early years of independence, Nigeria achieved self-sufficiency in agricultural production, enough for domestic consumption as well as for export. Nigeria also had a large population which could help to accelerate industrialization. These factors continued to make observers believe that Nigeria would be a success story. As if to vindicate the observers, Nigeria experienced an oil boom shortly after independence. That experience lasted for another decade. However, regardless of the potential for rapid development, Nigeria started a downward slide in its development prospects and that slide, rather than abate, has accelerated. After five decades of independence, with an ever-increasing fortune from petroleum earnings, Nigeria remains underdeveloped, with economic and social conditions deteriorating. It is this paradox that I view as failure which has triumphed over the forces of success. What can explain this dismal picture?

A parliamentary system of government was practiced with between 1960 and 1966, when a military coup overthrew the elected government of Tafawa Balewa. The overthrow was masterminded by a group of educated young officers, who thought that failure was gaining a noticeable rise in government. That military intervention led to a succession of military coups which, in the meantime, caused the civil war that lasted from 1967 to 1970. In the interim, the military returned to the barracks after an election in 1979, which brought the government of Shehu Shagari, an experiment with the presidential system of government. Again, that administration was overthrown by the military in 1983, after which Major General Muhammadu Buhari became head of government.

The longest span of military rule came after the sudden overthrow of Buhari's regime by Ibrahim Babangida in August of 1985. That administration was the most spectacular disaster in Nigeria's search for nationhood. It endured for eight years, destroyed the professionalism of the civil service, and monetized every aspect of government, which has become the political and social culture of the country ever since.

The Babangida regime was ignominiously terminated after it annulled the 1993 presidential election results, which Nigerians overwhelmingly accepted as the only truly free and fair election held since independence. An extremely wealthy businessman, MKO Abiola, was elected, but a gang of military officers, with deep arrogance and self-conceited power-mongering instinct, refused to honour the popular choice made by the Nigerian people. A short-lived interim government, led by Ernest Shonekan, was devised, but it was not designed to last long because of the power drunkenness of the military. Sani Abacha took over power as if it was for the good of Nigeria, he implied he was going to restore democracy, but his bizarre and inhuman conduct in government coupled with his totalitarian disposition was probably the worst military regime Nigeria ever had to endure. He died under strange circumstances on 7 June 1998, with General Abdusalami Abubakar becoming the head of state.

In the meantime, MKO Abiola, who had been in detention since 1993, was to be released, but he died mysteriously on 7 July 1998, the purported date of his release. Olusegun Obasanjo was elected as president in 1999, in an election which was perceived to be fraudulent. He was re-elected in 2003, in another largely objectionable election. After eight years of large government with little governance, the most widely condemned election in Nigeria's history was held in 2007, which was characterized by fraud, murder, violence and outright disenfranchisement of the people.

In 1987, Richard Joseph1 stated in his book, Democracy and Prebendal Politics in Nigeria, that politics is fundamentally about the struggle over scarce resources. In Nigeria, however, the state has increasingly become a magnet for all facets of political and economic life, consuming the attention of traders, contractors, builders, farmers, traditional rulers, teachers, as much as that of politicians or politically motivated individuals. Nothing can be truer even today as we now know that in Nigeria, politics is about sharing the 'national cake', not about national interests. Joseph correctly asserted that there is little disputing the fact that individuals at the top of the social hierarchy gain largely from the distribution of state wealth, but we should not overlook the fact that support for such arrangements is generated at all levels. The strength of a nation is the character of its people, whether follower or leader. A people deserve the leaders they get.

1 Richard A. Joseph, Democracy and Prebendal Politics in Nigeria. (Cambridge, Cambridge University Press, 1987).

Nearly four decades ago, Obafemi Awolowo2 argued, in one of his famous lectures, that the countries of the world should be divided into two categories economically advanced and economically backward. He was of the view that the use of developing for describing backward countries was a delusion of progress in the midst of socio-economic retrogression. Unfortunately, political scientists and economists still insist on the use of the label.

2 Obafemi Awolowo, An Analysis of the Basic Causes and Remedies of Economic Backwardness, Faculty of the Social Sciences, University of Ibadan, 1973.

Dele Olojede3, at a public lecture in Lagos, in 2006, said that Nigeria was travelling down on an escalator on which other nations were going up. It is an apt image of Nigeria going the wrong way, while other nations are presumably making progress.

3 Dele Olojede, Public Lecture in Lagos, 2006.

Some writers argue that military rule brought the decline to Nigeria. I doubt if that answers the situation adequately, because I believe that a good military rule may succeed to transform a society, and some countries have been transformed by military rule. Some bad military leaders will draw any nation back and leave a legacy of bad governance. By a tragic stroke of misfortune, Nigeria was ruled, between January 1966 and 1998, except from 1979 to 1983, by a succession of military rulers with no vision.

Oil came, but was used as a weapon against the people. The leaders took the country on a...