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Rising poverty, resource misappropriation amidst N83trillion oil revenue


Workers drilling oil. SOURCE:Total Nigeria

Last week, Nigeria Natural Resource Charter (NNRC) in its Benchmark Exercise Report (BER) revealed that Nigeria has made N83 trillion from oil and gas in the last 37 years.

The report, which exposed the lax regulation and poor management of the nation’s oil earnings showed that an average daily crude oil production of 1.9mbpd is being produced in Nigeria. Despite producing more crude oil per day than Norway’s 1.84mbpd, Norway has $956 billion saved for future generation while Nigeria has less than $1.3 billion.

Just last week, the office of the Accountant General of the Federal revealed that Excess Crude Account (ECA) balance stood at a meagre $71.81 million. The account was over $20 billion in November 2008.

At the same time, Nigeria’s total debt stock rose to N26.14 trillion as of the end of September 2019. The country is also described as the poverty capital of the world with over 90 million Nigerians facing abject poverty.


Though the country raked from oil boom, continued neglect of the nation’s infrastructural development is expected to require $878 billion by 2040.

While very few Nigerians, especially political office holders and their allies feed fat from national resources under a cloudy system lacking in transparency and accountability, Nigeria’s unemployment rate, according to National Bureau of Statistics (NBS) stands at 23.13 per cent as of the third quarter of 2018.

Beyond this, millions of children are out-of-school, millions are malnourished even as nine states in the North are responsible for 50 percent of the entire malnutrition burden in the country alongside the challenge of maternal mortality rate.

With the bulk of such activities happening in the oil and gas sector, The Guardian had established that money stolen from Nigeria yearly through organised Illicit Financial Flows (IFFs) may provide almost 62 per cent of the funds needed to finance the 2020 budget. In 2019, Nigeria’s share of global IFFs ($18 billion/N5.5 trillion) was only a little lower than the N6.97 trillion total revenue the country needed to fund the 2019 budget.

The education sector is in decline, with the country accounting for the highest number of about 23,000 lecturers who leave the continent every year. Meanwhile, the $18 billion IFFs is twice the N3.90 trillion allocated to the sector in the past 10 years (2009-2018) from a total budget of N55.19 trillion.

With over 57 million Nigerians lacking safe water, over 130 million lack adequate sanitation and the country has more than 10 million children out of school. Besides, while Nigeria spent just 6.5 per cent of it 2012 national budget on education and 3.5 per cent on health, Ghana in 2015 and 2012, spent 18.5 per cent and 12.8 percent respectively.


Indeed, Oxfam, a global organisation fighting inequality to beat poverty had disclosed that between 1960 and 2005, about $20 trillion was stolen from the treasury by public office holders in Nigeria, stressing that the amount was larger than the GDP of United States in 2012, which was about $18 trillion.

A country characterised by high level inequality, where political or some level of connection is required to secure a job, contract or admission into institutions of learning, stakeholders have repeatedly noted that the country remained underdeveloped not because of lack of resources, but gross mismanagement.

To put the level of inequality in context, Oxfam reported last year that the combined wealth of Nigeria’s five richest men – $29.9 billion – could end extreme poverty at a national level yet 5 million face hunger. More than 112 million people are living in poverty in Nigeria, yet the country’s richest man would have to spend $1 million a day for 42 years to exhaust his fortune.

While the group added that the amount of money that the richest Nigerian could earn annually from was sufficient to lift 2 million people out of poverty for one year, it is important to note that most of the country’s richest made their fortune from the oil and gas sector.

In NNRC’s report, the nation’s resources failed to address living standard of the citizen because gaps remain in the institutional and legal frameworks of the oil and gas sector, as none of the components of the Petroleum Industry Bills (PIB), the Company and Allied Matters Act (CAMA), or many other critical pieces of legislation have been signed into law.

With these developments, hard earned resources which would have been deployed into addressing infrastructure gap, education and other critical social amenities, government continued to fund consumption of petroleum products in the face deteriorating domestic refining capacity.

The report also decried discretionary powers over the award of licences as no major bid rounds were conducted, adding that absence of much-needed reforms backed by legislation implies that the licensing process could still be abused.


Since the group conducted its 2017 Benchmarking Exercise, it noted that no significance change happened in respect of Taxation and other company payments, stating that Nigeria operates both a licensing and a contractual regime.

“The government has not totally minimised the use of costly and non-essential investment incentives, although there have been recent amendments to the Deep Offshore and Inland Basins Production Sharing Contract (PSC) Act of 2004. The legal framework and fiscal terms provide limited opportunity for accountability to citizens while providing greater accountability to investors, thus pointing to the need for reforms to improve accountability. The extractive companies still face multiple taxes and levies while access to direct information on fiscal terms in oil and gas contracts is difficult to obtain,” NNRC stated.

On local impacts, the group also revealed that no noteworthy changes have occurred since the 2017 BER, stressing that key legislation to ensure the participation of communities, protect the environment, mitigate costs, respect rights, and ensure that communities benefit from extractive projects has suffered setbacks.

NNRC said: “EIA and Social Impact Assessment processes are still weak; government agencies responsible for enforcing compliance with regulations are still performing below average; and mechanisms to ensure community trust is gained are ineffective. Nigeria’s ranking on local impacts falls far below NRC recommendations,”

Indeed, the think-tank disclosed that change in the Nigerian National Petroleum Corporation (NNPC)’s leadership in the review period has not altered the corporation’s recent practice of disclosing selective unaudited operational and financial information.

With an absence of legal provisions mandating such practices, the group feared sustainability remained a concern as stalled PIB left in place several factors limiting NNPC’s ability to operate transparently with the objective of being commercially viable in a competitive environment.

A leading economist, who once chaired the Chartered Institute of Bankers of Nigeria, Prof. Segun Ajibola told The Guardian that human development index for the country may get worst beyond the 60 per cent of the citizens who live below the poverty line of $2/day.

Ajiloba noted that political leadership must demonstrate the will to be good managers of men and resources, while there must be law and order, due process and commitment would revive industries otherwise the challenges may persist.

He said: “We need to see more equitable distribution of resources, even spread of developmental projects and infrastructures, resuscitation of ailing industries, etc. Then we will be able to preach social re-engineering and re-orientation that will include the consumption of local commodities as opposed to imported counterparts.”

Principal Partner at Nextier, Patrick Okigbo, said the low capacity of the public service to create well-considered policies, execute programmes and plans remained a basic challenge affecting development in the country. According to him, poor education system, poor incentive structure, nepotism and other forms of corruption, quota system that leads to recruitment of poor quality staff, account for the reasons the country could not make progress.

Chairman, NNRC, Odein Ajumogobia, linked the lack of full maximisation of Nigeria’s oil and gas resources to the absence of necessary regulations in the sector, stressing that Nigeria needs better oil and gas management and only a legal framework could help achieve that.


Ajumogobia said: “If you have a law that allows a man to do whatever he likes, then investors are not going to be pleased with that because they cannot predict him, they do not want uncertainties.

“You might have a very good man today, then you have a very bad man that does not do right. So, investors will like to look at the law rather than have that, thus the reason for the PIGB.”

A Professor of Petroleum Economics and Policy Research Omowumi Iledare, bemoaned that the country only appears to be wealthy considering that the level of prosperity was personalised instead of being institutionalised.

“What needs to change is the personalisation of governance and restructuring of the mind. We need to go back to the basic. Expand the middle class with functioning education for sustainable development. We need to invest in the education of the mind,” Iledare said.

According to him, Nigeria must move away from celebrating foreign ideas and embrace home grown solutions to its problems.


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