Transparency as Cure for the Resource Curse? A Nigerian Case Study

School of Social and Political Sciences

The University of Melbourne

POLS40011

Political Science Thesis

Transparency as Cure for the Resource Curse?

A Nigerian Case Study

Sebastian Hancock

134922

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Oil creates an illusion of a completely changed life, life without work, life for free…The concept of oil expresses perfectly the eternal human dream of wealth achieved through lucky accident…In this sense oil is a fairy tale and like every fairy tale a bit of a lie.

Ryzard Kapuscinki1

1 Quoted in Michael Watts, ‘Resource Curse? Governmentality, Oil and Power in the Niger Delta, Nigeria’, Geopolitics, Vol. 9, No. 1, 2004, p. 51.

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Contents Acknowledgements 5 List of Abbreviations 7 Chapter 1: Introduction 9 Chapter 2: The Resource Curse and the EITI 16 Chapter 3: The Slide into the Resource Curse 34 Chapter 4: Social and Political Causes 59 Chapter 5: Transparency as Cure? 69 Chapter 6: Analysis and Conclusions 73 Bibliography 77

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This thesis is dedicated to the loving memory of Ruth Hanley,

and to the strength of the Hanley family.

Acknowledgements I am heavily indebted to my thesis supervisor, Dr. Tom Davis, whose input, advice, encouragement, and above all patience, have been invaluable during the past year. I would also like to thank Susan Allen, Simon Lands, and George Hancock for reading all or sections of this thesis at various stages of its production, and providing useful suggestions and corrections. Thanks are also due to the University of Melbourne, and to the School of Social and Political Sciences in particular, for providing both the opportunity to complete this thesis, and the resources to do so. Lastly, I would like to thank Clare Hanley, not only for taking the time to comment on this work, but for all her love and support throughout a difficult year for us both, without which none of this would have been possible.

Sebastian Hancock

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List of Abbreviations

CCB Code of Conduct Bureau

CCT Code of Conduct Tribunal

CPI Corruption Perception Index

EITI Extractive Industries Transparency Initiative

EFCC Economic and Financial Crimes Commission

GDP Gross Domestic Product

G8 Group of Eight

HDI Human Development Index

ICPC Independent Corrupt Practices and Other Related Offences Commission

IMF International Monetary Fund

NEITI Nigerian Extractive Industries Transparency Initiative

NGOs Non-‐Governmental Organizations

NNPC Nigerian National Petroleum Corporation

NPC Northern People’s Congress

NPN National Party of Nigeria

OPEC Organization of Petroleum Exporting Countries

TI Transparency International

UN United Nations

WB World Bank

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Chapter 1: Introduction

Sub-‐Saharan Africa, home to 13 percent of the world’s population,

currently contributes only 3.3 percent of global Gross Domestic Product (GDP).

Growth and development have, moreover, been sluggish at best. As a result, in

the only region in the world where poverty has increased in the past 25 years, up

to 60 percent of the population live on less than US$1.25 per day.2 This is

despite the fact that sub-‐Saharan Africa holds seven percent of the world’s oil

reserves, not to mention large deposits of other valuable primary commodities

such as gold, diamonds, and minerals. Yet in spite of this apparent wealth, of the

177 countries contained within the United Nations (UN) Human Development

Index (HDI), sub-‐Saharan African countries are consistently ranked lowest.3

The inability to achieve significant social and economic development

amidst enormous resource wealth is a phenomenon widely known as the

‘resource curse’.4 Though it extends to resource-‐rich developing countries

across the globe, it is generally accepted that sub-‐Saharan African countries have

fared the worst from this ‘disease’. The resource curse manifests itself in

2 Hazel M. McFerson, 'Extractive Industries and African Democracy: Can the "Resource Curse" be Exorcised?’, in International Studies Perspectives, Vol. 11, 2010, p. 335. 3 Ibid, p. 336. 4 Richard Auty first coined the term ‘resource curse’ in 1993. Richard M. Auty, Sustaining Development in Mineral Economies: The Resource Curse Thesis, London, Routledge, 1993, pp. 1-‐6. The relationship is also commonly described as the ‘paradox of the plenty’, a reference to the title of Terry Lynn Karl’s seminal work. Terry Lynn Karl, The Paradox of Plenty: Oil Booms and Petro-‐States, Berkeley, University of California Press, 1997. The term resource curse will be used for the remainder of this study.

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economic stagnation, political instability, conflict, corruption, institutional and

societal failure, and ultimately underdevelopment.5 Nowhere has its effects been

more virulent than in Nigeria, where enormous oil wealth exists alongside

internal conflict, economic collapse, extreme poverty, endemic corruption,

instability, and long periods of authoritarian and predatory rule.6 Currently,

Nigeria’s UN HDI rating of 0.423 (with 1 being the highest score) ranks it well

below other oil producing states such as Saudi Arabia (0.800) and Indonesia

(0.697).7

The current global response to the resource curse, including its

manifestation in Nigeria, is centred on the energy governance framework known

as the Extractive Industries Transparency Initiative (EITI). Launched by Tony

Blair in 2002 at the World Summit on Sustainable Development in Johannesburg,

the EITI seeks oil-‐sector transparency via the voluntary publishing of

government revenues originating from resource extraction companies. Under

the EITI framework, countries firstly obtain ‘candidate’ status by successfully

meeting benchmarks for four signup indicators. Once completed, the country

can secure ‘compliant’ status by producing regular validation reports showing

the aforementioned flows of revenue.8 By undergoing this process it is felt that

5 See for example, Helen M. McFerson, ‘Governance and Hyper-‐Corruption in Resource-‐Rich African Countries’, Third World Quarterly, Vol. 30, No. 8, 2009, p.1529-‐1545. 6 Ibid, pp. 1540-‐1542. 7 When adjusted for income inequality this figure plummets to 0.246. This ranking puts Nigeria at 142 out of 169 countries measured. Saudi Arabia and Indonesia are ranked at 55 and 108 respectively. Nigerian’s currently have a life expectancy of just 48.4 years. United Nations Development Programme, International Human Development Indicators, retrieved 16 March 2011, available from <http://hdrstats.undp.org/en/ countries/profiles/NGA.html. 8 EITI signup indicators – ‘1. The government must issue an unequivocal public statement of its intention to implement EITI. 2. The government must commit to work

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civil society organizations in compliant countries will be able to use the release

of revenue information to hold their governments to account, thereby reducing

corruption and institutional failure, and helping to cure the resource curse.9

Nigeria is often presented as a test case for the effectiveness of the EITI

framework. Over 80 percent of Nigeria’s oil revenue has historically gone to only

one percent of the population, largely due to systematic corruption and graft.10

The cumulative effect of this enrichment has been the loss of resources that

could have been invested in social, economic and cultural development.11 After

returning to democratic governance in 1999 following prolonged periods of

military rule, the incumbent government signed up to the EITI framework,

completing the process by achieving compliant status on 2 March 2011.12

Although significant progress has been made towards oil-‐sector transparency,

the entrenched nature of systematic corruption and the failure of weak civil

society organizations in Nigeria to respond purposefully to the publishing of

with civil society and companies on EITI implementation. 3. The government must appoint a senior individual to lead on EITI implementation. 4. The government must publish and make widely available a fully costed Work Plan containing measurable targets, a timetable for implementation and an assessment of capacity constraints.’ Extractive Industries Transparency Initiative, Signup, retrieved 8 March 2011, available from <http://eiti.org/eiti/ implementation/signup>. For candidate status requirements see Extractive Industries Transparency Initiative, Country Implementation, retrieved 8 March 2011, available from <http://eiti.org/eiti/implementation>. 9 Daniel M. Firger, 'Tranparency and the Natural Resource Curse: Examining the New Extraterritorial Information Forcing Rules in the Dodd-‐Frank Wall Street Reform Act of 2010’, Georgetown Journal of International Law, Vol. 41, 2010, pp. 1064-‐1067. 10 Adekunle Amuwo, ‘Towards a New Political Economy of the Niger Delta Question in Nigeria’, Politikon, Vol. 36, No. 2, 2009, p. 241. 11 S.O. Osoba, ‘Corruption in Nigeria: Historical Perspectives’, Review of African Political Economy, Vol. 23, No. 69, 1996, p. 383. 12 Extractive Industries Transparency Initiative, Press Release: Six More Countries Compliant with Transparency and Accountability Standard, 2 March 2011, p. 1, retrieved 16 March 2011, available from <http://eiti.org/news-‐events/press-‐release-‐six-‐more-‐countries-‐compliant-‐transparency-‐and-‐accountability-‐standard>.

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information under this framework raises doubts about the EITI’s ability to cure

the resource curse in this country.13

This study will address the question of how effective the EITI as a global

governance mechanism can be in ‘curing’ the resource curse. It will attempt to

answer this question through an inductive case study method focusing on

Nigeria. It will ask: To what degree has the historical weight of specific social

and political factors in Nigeria entrenched its distinct manifestation of the

resource curse within its socio-‐political structures? It will analyse the historical

interplay of ethnic division, endemic and systematic corruption, and violent

competition for the state in Nigeria in order to uncover root causes for

developmental failure and the resource curse. Given the results of this analysis,

this study will ask whether the voluntary EITI framework is indeed wholly

inadequate, and whether deep structural and cultural change is in fact required

in order for resource abundance to be turned into positive developmental

outcomes.

Nigeria has been selected as the subject of this case study as it meets the

criterion of ‘typicality’ required for assessing the general effectiveness of the EITI.

The presence of extensive oil reserves, along with the country’s status as one of

the most corrupt in the world,14 has made Nigeria both a typical case of the

13 Ayo Obe, ‘The Challenging Case of Nigeria’, in Ann Florini (ed.), The Right to Know: Transparency for an Open World, New York, Columbia University Press, 2007, p. 147. 14 As at 2010, Nigeria was 134th out of 178 countries listed under Transparency International’s Corruption Perception Index. Transparency International, Corruption Perceptions Index 2010, Berlin, Transparency International, 2010, p. 13, retrieved 16 March 2011, available from <http://www.transparency.org/policy_research/ surveys_indices/cpi /2010/in_detail>.

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resource curse, and a test case for the capacity of the EITI framework to alleviate

the disease.15 Nigeria therefore satisfies John Gerring’s requirement that the

typical case be representative of a broader set, allowing for insight into some

broader phenomenon.16

The use of case study methodologies within the scholarly literature on the

resource curse is severely lacking. Instead, the vast majority of research has

taken the form of cross-‐country correlation analysis. Yet the sole use of the

latter methodology can be inadequate due to its inherent limitations. For

instance, the uncovering of correlations in datasets does not necessarily aid in

the formation of causal models, nor in dealing with complexity.17 It is these very

limitations that correspond to the advantages of case study research. For

whereas statistical analysis is the process through which conclusions are drawn

about the existence of characteristics in a population through study of a sample,

logical inference from case study data is the process whereby conclusions

regarding the essential linkage between those characteristics are made in terms

of a ‘systematic explanatory schema’ or theory.18 The two methodologies can

therefore be thought of as complementary, adding to a deeper understanding of

social forces through concurrent usage.

15 Alexandra Gillies, 'Obasanjo, the Donor Community and Reform Implementation in Nigeria’, Round Table, Vol. 96, No. 392, 2007, pp. 570-‐572. 16 John Gerring, Case Study Research: Principles and Practices, Cambridge, Cambridge University Press, 2007, p. 91. 17 Ibid, pp. 3-‐4. 18 J. Clyde Mitchell, 'Case and Situation Analysis’, in Matthew David (ed.), Case Study Research: Volume II, London, SAGE, 2006, p. 72.

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This is not to say that case study research has no limitations of its own.

There can be no doubt, for example, that the interpretation of case study data

lacks the level of objectivity obtainable in statistical analysis. Yet, the possibility

of ‘noisy, fallible, and biased’ results does not necessarily preclude the

attainment of knowledge; rather, it requires a critical reading with bias in

mind.19

In order to address the issues described above, this study has been

separated into sections. In chapter two I will discuss the status of the literature

surrounding the resource curse and its relationship to the EITI framework, while

identifying areas in which I feel the literature is lacking. In chapter three I will

provide an overview of the ongoing historical process in Nigeria, and the effect

the entry of oil had on that process. This overview will draw upon the available

primary and secondary sources, the former largely being documents related the

to the EITI and its Nigerian counterpart, the Nigerian Extractive Industries

Transparency Initiative (NEITI), and the latter consisting of works on Nigerian

social and political history, regional case studies, and analyses of particular

aspects of the Nigerian socio-‐political system. In chapter four, I will analyse the

specific social and political factors drawn out of that overview, and the effect

they have had on the specific manifestation of the resource curse in Nigeria.

From the results of this analysis I will assess, in chapter five, the suitability of the

EITI framework as a cure for the resource curse. In the final chapter, I will draw

19 Campbell, Donald T., '"Degrees of Freedom" and the Case Study’, in Matthew David (ed.), Case Study Research: Volume III, London, SAGE, 2006, p. 138.

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some conclusions from this study in relation to the questions outlined above, and

to the status of the literature on the resource curse and the EITI.

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Chapter 2: The Resource Curse and the EITI

Over the last two decades, a significant body of literature has emerged

which seeks to explain the seemingly contradictory relationship between natural

resource abundance and poor development outcomes, often referred to as the

resource curse. Within this body of literature, three separate sub-‐literatures can

be identified: natural resources and economic stagnation; natural resources and

civil war; and natural resources and governance failure. While this thesis sits

within the latter of the three, it is important first to address the development of

the resource curse theory.

From Consensus to Curse

During the 1950s and 1960s, prominent development economists had

argued that developing countries were suffering from an imbalance in the factors

of production, caused by an oversupply of labour, and a shortage of capital. As

such, countries with abundant natural resources were in an advantageous

position; through exploitation of these resources, Walter Rostow and others

argued, their economies would ‘take-‐off’ thanks to the capacity of primary

exports to raise capital and attract foreign investment.20 While there were a

20 For an example of this argument see Walter Rostow, The Stages of Economic Growth: A non-‐Communist Manifesto, Cambridge, Cambridge University Press, 1960, p. 39; see also W. Arthur Lewis, The Theory of Economic Growth, London, Allen and Unwin, 1955, p. 52, where he argues that not only did natural resources lead to better development

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number of radical economists who challenged this view, their

underrepresentation in global development bodies negated their ability to alter

the overriding consensus.21 On the contrary, the oil boom years of the 1970s,

which led to soaring prices and a glut of capital in oil exporting countries,

solidified natural resources as a ‘blessing’ within the emerging neoliberal

mainstream.22

With the collapse of oil prices in the early 1980s and the economic

stagnation amongst exporters that followed it, this ‘blessing’ began to be

seriously questioned. Indeed, the majority of resource-‐rich developing countries,

with the notable exception of the East Asian economies, had not experienced

accelerated growth on the back of resource booms. Moreover, having geared

their economies towards primary exports, many were left heavily dependent

upon volatile global markets for national income.23 At the same time, conflict

outcomes, but ‘[m]uch of the world’s economic history can be written very simply in those terms.’ 21 For example see H. W. Singer, 'The Distribution of Gains between Investing and Borrowing Countries’, American Economic Review, Vol. 40, No. 2, 1950, pp. 482-‐483, and Raúl Prebisch, The Economic Development of Latin America and its Principal Problems, New York, United Nations Department of Economics, 1950, pp. 8-‐14, who argued that exporters would suffer from declining terms of trade in the long term. See also Jonathan V. Levin, The Export Economies: Their Pattern of Development in Historical Perspective, Cambridge, Harvard University Press, 1960, pp. 186-‐202, who argued that due to the boom and bust nature of resource markets, and correspondingly sharp price fluctuations, resource exporters would be left with volatile domestic economies, leading to unreliable foreign exchange supplies and a poor investment climate. 22 Andrew Rosser, The Political Economy of the Resource Curse: A Literature Review, Brighton, Institute of Development Studies, University of Sussex, 2006, p. 9. For an example of neoliberal arguments on natural resource backed ‘take-‐off’ see Bela Balassa, The Process of Industrial Development and Alternative Development Strategies, Princeton, Princeton University Press, 1981, pp. 2-‐4, and P.J. Drake, 'Natural Resources Versus Foreign Borrowing in Economic Development’, Economic Journal, Vol. 82, No. 327, 1972, pp. 951-‐952. 23 As Isham et al. have shown, since 1980 developing countries dependent upon natural resource exports suffered significant and ongoing slowdowns in economic growth, while manufacture exporters have experienced no such slowdown. Jonathan Isham et al. 'The

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and political instability were rife, signalling a general malaise, especially in the

case of sub-‐Saharan Africa.24 This failure to produce positive development

outcomes initiated renewed debate on the concept of ‘take-‐off’, and sparked the

emergence of resource curse theory.

Numerous empirical studies have since been undertaken by economists

in an effort to confirm the existence of the resource curse. These studies have

largely taken the form of cross-‐country statistical analysis in an effort to uncover

significant correlations between natural resource abundance and a variety of

indicators for poor economic, political, and social outcomes. The most influential

of these studies, Jeffrey Sachs’ and Andrew Warner’s seminal 1995 work Natural

Resource Abundance and Economic Growth, found that a one standard deviation

increase in the ratio of natural resource exports to GDP in developing countries

is associated with a decrease of just less than one percent in annual per capita

growth.25 In the years following, several other studies appeared which produced

similar results, albeit with variations in datasets and measurements.26 While

Varieties of Resource Experience: Natural Resource Export Structures and the Political Economy of Economic Growth’, World Bank Economic Review, Vol. 19, No. 2, 2005, p. 143. 24 Karl, The Paradox of Plenty, p. 1-‐2. 25 Jeffrey D. Sachs and Andrew M. Warner, Natural Resource Abundance and Economic Growth, National Bureau of Economic Research Working Paper 5398, Cambridge, National Bureau of Economic Research, 1995, p. 8. Specifically, Sachs and Warner found a one standard deviation increase led to a 0.93 percent per annum reduction. 26 See for example Alan H. Gelb, Oil Windfalls: Blessing or Curse?, New York, Oxford University Press, 1988, pp. 221-‐223, who found a statistically significant relationship between the size of natural resource endowments and growth of output; Richard M. Auty, 'Introduction and Overview’, in Richard M. Auty (ed.), Resource Abundance and Economic Development, Oxford, Oxford University Press, 2001, p. 3, who found that per capita incomes in resource-‐poor countries grew between two and three times faster than resource-‐rich countries between 1960 and 1990; and Carlos Leite and Jens Weidmann, Does Mother Nature Corrupt? Natural Resources, Corruption and Economic Growth, Washington, International Monetary Fund, 1999, p. 29, who focused on oil

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these findings have certainly generated controversy,27 Sachs and Warner, in

reviewing the evidence for the research curse in 2001, asserted that while not

‘bulletproof’, empirical support for its existence is nonetheless ‘quite strong’.28

With its existence largely confirmed, attention has concentrated on the causal

mechanisms of the resource curse, leading to the creation of three sub-‐

literatures.

Sub-‐Literature 1: Economic Structure

The first sub-‐literature focused on observed economic stagnation, and

suggested structural deficiencies as the explanatory variable. The most

prominent model put forward was the ‘Dutch Disease’, which describes the

negative effect resource booms can have on the growth of non-‐resource sectors

of the economy (manufacturing and agriculture for example) and refers to the

experience of The Netherlands following the discovery of natural gas in the late

exporters, and concluded that a one standard deviation increase in Sachs’ and Warner’s ratio led to a 0.6 percent decrease in output growth. 27 See for example Daniel Lederman and William F. Maloney, 'Neither Curse Nor Destiny: Introduction to Natural Resources and Development’, in Daniel Lederman and William F. Maloney (eds.), Natural Resources: Neither Curse nor Destiny, Palo Alto, Standford University Press, 2007, p. 3, who found that natural resources in fact stimulate growth, if measurements for natural resource abundance, other than Sachs’ and Warner’s, are used; Christa N. Brunnschweiler, 'Cursing the Blessings? Natural Resource Abundance, Institutions, and Economic Growth’, World Development, Vol. 36, No. 3, 2008, pp. 412-‐413, who used natural resource allocation per capita and found that between 1970 and 2000 there was a positive and direct effect on real GDP growth; and Graham Davis 'Learning to Love the Dutch Disease: Evidence from the Mineral Economies’, World Development, Vol. 23, No. 10, 1995, pp. 1774-‐1777, who found that by some measures such as infant mortality, life expectancy, and the UN’s HDI, they have actually outperformed non-‐mineral economies. 28 Jeffrey D. Sachs and Andrew M. Warner, 'The Curse of Natural Resources’, European Economic Review, Vol. 45, No. 4, 2001, p. 828.

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1950s.29 Yet as Michael Ross argues, structural economic mechanisms such as

the Dutch Disease tend to ignore the positive effect corrective government policy

could have, and fail to explain why such action is not undertaken.30 For as Paul

Collier and Anke Hoeffler have pointed out, natural resources have led to

accelerated development in Malaysia and Botswana, not to mention Norway and

Australia, rather than to manifestations of the resource curse.31 In response to

such criticisms, two further sub-‐literatures emerged which attempted to identify

broader causal mechanisms underlying the merely economic and structural.32

Sub-‐Literature 2: Curse and Conflict

The second sub-‐literature on the resource curse focuses on natural

resource abundance and the occurrence and duration of civil wars in resource-‐

rich countries. Several studies have sought to establish a positive correlation

between the two using cross-‐country analysis. For instance, Collier and Hoeffler,

in a 1998 study of 98 countries and 27 civil wars, found this relationship to be 29 Specifically, due to booms in the resource sector, productive resources are drawn away from other tradeable sectors of the economy towards ‘non-‐tradable’ sectors such as services, thereby shrinking productive output. Michael Burno and Jeffrey D. Sachs, 'Energy and Resources Allocation: A Dynamic Model of the "Dutch Disease"’, Review of Economic Studies, Vol. XLIX, 1982, pp. 845-‐846. See also W. Max Corden and J. Peter Neary, 'Booming Sector and De-‐Industrialisation in a Small Open Economy’, Economic Journal, Vol. 92, No. 368, 1982, pp. 825-‐842; and Peter J. Neary and Sweder van Wijnbergen, 'Natural Resources and the Macroeconomy: A Theoretical Framework’, in J. Peter Neary and Sweder van Wijnbergen (eds.), Natural Resources and the Macroeconomy, Oxford, Basil Blackwell, 1986, pp. 13-‐45. 30 See Michael L. Ross, 'What Do We Know About Natural Resources and Civil War?’, Journal of Peace Research, Vol. 41, No. 3, 2004, pp. 306-‐307. 31 Paul Collier and Anke Hoeffler, 'Rents, Governance, and Conflict’, Journal of Conflict Resolution, Vol. 49, No. 4, 2005, p. 627. For a good examination of the case of Botswana see Daron Acemoglu et al., An African Success Story: Botswana, CEPR Discussion Paper 3219, London, Centre for Economic Policy Research, 2002. 32 Michael L. Ross, 'Review: The Political Economy of the Resource Curse’, World Politics, Vol. 51, No. 2, 1999, p. 303-‐308.

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positive, which they would confirm in two subsequent studies of 2004 and

2009.33 Mary Kaldor, Terry Lynn Karl and Yahia Said, who examined oil

specifically, argued that these civil wars should be thought of as ‘new oil wars’,

for unlike those of the 20th century in which oil was seen as a strategic resource,

requiring territorial control or at the very least influence over host governments,

these new wars are essentially fought over access to resource rents. According

to the authors, conflict arises due to different groups within countries seeking

control over the economic gains generated from oil exploitation. This rent-‐

seeking behaviour, and the conflict that ensues, negatively affects economic

growth, leads to institutional failure, a predatory political culture, and ultimately

the resource curse.34

Sub-‐Literature 3: The Curse of Political Structures

The third sub-‐literature on the resource curse, and the one in which this

study is broadly located, focuses on what Karl terms the ‘political/institutional

phenomenon’ of the resource curse.35 As it became increasingly clear that

economic mechanisms alone failed to explain the existence of a resource curse,

the literature has since the mid-‐1990s progressively shifted toward explanations

focused on governance failures. These explanations emphasize abundance as the

33 Paul Collier and Anke Hoeffler, ‘On Economic Causes of Civil War’, Oxford Economic Papers, Vol. 50, No. 4, 1998, p. 571. In their two subsequent studies the data sets were greatly expanded, with their results holding regardless. See Paul Collier and Anke Hoeffler, 'Greed and Grievance in Civil War’, Oxford Economic Papers, Vol. 56, No. 4, 2004, pp. 563-‐588; and Paul Collier and Anke Hoeffler, Beyond Greed and Grievance: Feasibility and Civil War’, Oxford Economic Papers, Vol. 61, No. 1, 2009, pp. 13-‐24. 34 Mary Kaldor et al., 'Introduction’, in Mary Kaldor et al. (eds.), Oil Wars, London, Pluto Press, 2007, pp. 2-‐26. 35 Karl, The Paradox of Plenty, p. 257.

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root cause of institutional collapse, corrupt government practices, and rent-‐

seeking behaviour, which in turn act as both cause and effect of the resource

curse. Resource wealth, moreover, allows political elites to maintain control of

corrupt and inefficient systems through excessive spending on military and

internal security capacities, as well as political support.36 For these theorists,

natural resource abundance is associated with low levels of democracy and

democratic values, which helps to preclude development for the majority.37

A number of studies have found a correlation between natural resource

abundance, particularly in the case of point-‐source resources such as oil, and low

levels of democracy. In a study of 113 countries from 1971-‐1997, Ross found

that the presence of extensive oil reserves in particular has a detrimental effect

on democracy in developing countries.38 Nathan Jensen and Leonard

Wantchekon, who conducted a survey of 46 sub-‐Saharan countries between

1970 and 1995, also found that countries with higher levels of resource

dependency tended to be authoritarian compared with those less reliant on

natural resource endowments. Further, following the ‘third wave’ of

democratization in the region, those resource-‐rich countries tended to revert to

authoritarian rule over time.39 These and other studies confirmed a positive

36 Gavin Hilson and Roy Maconachie, '"Good Governance" and the Extractive Industries in Sub-‐Saharan Africa’, Mineral Processing & Extractive Metallurgy Review, Vol. 30, 2009, pp. 61-‐62. Rosser, The Political Economy of the Resource Curse, p. 20-‐22. 37 See for example, Karl, The Paradox of Plenty, pp. 14-‐18; Hazem Beblawi, 'The Rentier State in the Arab World’, in Hazem Beblawi and Giacomo Luciani (eds.), The Rentier State, New York, Croom Helm, 1987, pp. 49-‐62 in relation to the Middle East; and Nathan Jensen and Leonard Wantchekon, 'Resource Wealth and Political Regimes in Africa’, Comparative Political Studies, Vol. 37, No. 7, 2004, pp. 834-‐836 in relation to Africa. 38 Michael L. Ross, 'What Do We Know About Natural Resources and Civil War?’, Journal of Peace Research, Vol. 41, No. 3, 2004, p. 342. 39 Jensen and Wantchekon, ‘Resource Wealth and Political Regimes’, p. 836.

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correlation between natural resource abundance and non-‐democratic

governance.40

Explanations for this correlation have focused on the detrimental effects

of economic rents associated with resource extraction, and the subsequent

establishment of ‘rentier states’. While rent in the broadest sense of income

derived from ownership of natural endowments is present in all economies, the

‘rentier state’ is a more detrimental phenomenon. Hossein Mahdavy, the first to

develop the concept, defined the ‘rentier state’ as one in which a significant

proportion of national income is derived from external economic rents.41 Hazem

Beblawi, observing the phenomenon across the oil-‐producing Arab states,

expanded upon this concept, arguing that ‘rentier states’ are not only

characterized by the reliance upon such rents, but that the gains derived are

produced for the benefit of a relatively small proportion of the population, who

are coalesced around the state. The remainder of the population, being excluded

from the generation of wealth, are engaged only in its ‘distribution and

utilisation’.42

Various mechanisms through which the rentier state gives rise to the

resource curse have been advanced. This thesis can be located amongst those

deemed ‘state-‐centric’, though others have also done important work on

40 For an overview of many to the studies not mentioned here, see Rosser, The Political Economy of the Resource Curse, p. 20. 41 Mahdavy developed the concept in relation to pre-‐revolutionary Iran. Hossein Mahdavy, ‘Patterns and Problems of Economic Development in Rentier States: The Case of Iran’, in M. A. Cook (ed.), Studies in Economic History of the Middle East: From the Rise of Islam to the Present Day, Oxford, Oxford University Press, 1970, p. 428-‐429. 42 Beblawi, ‘The Rentier Sate in the Arab World’, pp. 50-‐52.

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cognitive and societal mediation.43 A prominent example of the state-‐centric

approach is Karl’s Paradox of the Plenty. In it she argues that the origin of state

revenue determines all levels of governance, and hence the ability of the state to

foster economic growth. As decision-‐making and governance in the rentier state

are based upon linkages between power and abundance, accumulation and rent

seeking become the mainstay of political activity, and define the nature of the

state itself. Special interests, social classes, and negative patterns of action form

around oil rents, and competition for control of the state becomes paramount.44

For Karl, the particular characteristics of oil, including its enclave nature, high

capital requirements, and strategic value, produces an extreme form of the

rentier state’s institutional setting, which she terms the ‘petro-‐state’.45

As indicated above, once a rentier or petro-‐state has been established,

state-‐centric approaches argue that the tendency will be towards authoritarian

forms of rule. For Ross, three causal mechanisms mediate this relationship – the

rentier effect (the combined use of rent distribution and low taxes in order to

impede democratization), the repression effect (the use of resource rent wealth

to build up internal security apparatuses) and the modernization effect (the

absence of social and cultural changes towards democracy brought about by

sustained economic development).46 It is this ‘executive discretion’ over the

distribution of rents that helps to bring down democracies and sustain

authoritarian rule. Competition for the state can be contained only by (resource

43 See Ross, ‘Review: The Political Economy of the Resource Curse’, pp. 309-‐312. 44 Karl, The Paradox of Plenty, pp. 14-‐15. 45 Ibid, p. 15-‐17. 46 Michael L. Ross, 'Does Oil Hinder Democracy?’, World Politics, Vol. 53, No. 3, 2001, pp. 332-‐337.

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rent financed) authoritarian and military repression.47 This argument is

consistent with the findings of Benjamin Smith, who found that countries

abundant in oil wealth tend to exhibit fewer instances of civil war and anti-‐state

protest alongside high regime stability, as a result of the presence of rents.48

At the heart of these approaches, therefore, is the corrupting influence of

rents derived from natural resource abundance, and the negative effect this

influence has on the nature of the state, and on development generally. Little

attention is given to the ways in which external power forces related to geo-‐

political and geo-‐economic environments help shape the resource curse in

producing countries.49

Neglecting the Subject

Two key points can be made regarding the above literature for the

purposes of the current study. Firstly, at the heart of the majority of work on the

resource curse sub-‐literature lie the relative size of a country’s resource

endowment, and the rents it generates, as the explanatory variables. As a result

there is a tendency to ignore the specific social and political context into which

resource extraction penetrates.50 This is not to say that impediments to

development that can arise in specific contexts, such as ethnic division and

instability for example, are not acknowledged as an important mediator in the 47 Jensen and Wantchekon, ‘Resource Wealth and Political Regimes’, pp. 834-‐836. 48 Benjamin Smith, ‘Oil Wealth and Regime Survival in the Developing World, 1960-‐1999’, American Journal of Political Science, Vol. 48, No. 2, 2004, pp. 235-‐243. 49 Rosser, The Political Economy of the Resource Curse, p. 22 50 Ibid, p. 23; Watts, 'Resource Curse?’, p. 75.

26

relationship between natural resource abundance and the nature of governance

in these countries. But too often they are seen as being determined by the

resource base, rather than having historical roots specific to each country.51 In

order to understand better the discrepancy between the results of oil

exploitation in different countries, the effects of oil on specific social and political

factors needs to be explored.

Secondly, the shift in the resource curse debate towards the role of host

country governance has left the literature relatively silent on issues external to

those countries.52 One such issue, which will also be focused on here, is the role

of global energy governance in precipitating, extenuating, and perhaps curing the

resource curse. This issue will be addressed in the following section. As will be

shown, it is on the findings of the resource curse literature, at least in part, that

global responses have been based. The EITI framework is the current global

governance response to poor development outcomes amongst the resource-‐rich,

and it is to this issue and its associated literature that we now turn.

51 Rosser, The Political Economy of the Resource Curse, p. 10. There are a few exceptions to this neglect. See Gwenn Okruhlik, 'Rentier Wealth, Unruly Law, and the Rise of Opposition: The Political Economy of Oil States’, Comparative Politics, 31, 3, 1999, p. 309, who points out that the character of state institutions are mainly shaped prior to the imposition of oil; Watts, ‘Resource Curse?’, pp. 53-‐4, who argues that ‘petro-‐capitalism’ produces new forms of rule and political authority as it interacts with pre-‐existing social and political factors; and Kiren Aziz Chaudhry, ‘Economic Liberalization and the Lineages of the Rentier State’, Comparative Politics, Vol. 27, No. 1, 1994, p. 21, who argues through a case study of Saudi and Iraqi reform efforts that widely different results will be experienced in similar situations due to local characteristics. 52 Hilson and Maconachie, ‘”Good Governance”’, p. 62.

27

Governance, Transparency, and the EITI

Global energy flows have historically been governed by a patchwork of

institutions whose overlapping authority and jurisdiction make for complicated

analysis. Included in this institutional architecture are a myriad of bilateral

agreements; bodies such as the International Energy Agency (IEA) and the Group

of Eight (G8), in which energy exporters are grossly underrepresented; financial

institutions such as the World Bank (WB) and the International Monetary Fund

(IMF), which provide technical and financial assistance to developing countries;

poorly regulated and heavily distorted markets; and weak and nonbinding rule

systems which emanate from the above sources.53 Prior to the emergence of

transparency as an international norm, this fragmented institutional framework

was largely directed towards the correction of market failures, the lowering of

transaction costs, and the regulation of market exchange.54 Of importance to

those involved were value-‐free realpolitik concerns about the security of energy

supply and price stability.55 Such calculations were especially significant in the

case of oil – it is the foremost strategic good, the backbone of modern industrial

53 It is beyond the purview of this study to examine these institutions in full, or to list the full gamut of bodies involved in global energy governance. This has been attempted elsewhere with varying success. See for example Ann Florini and Benjamin K. Sovacool, ‘Who Governs Energy? The Challenges Facing Global Energy Governance’, Energy Policy, Vol. 37, No. 12, 2009, pp. 5239-‐5248. 54 Andreas Goldthau et al., 'Global Energy Governance: The Way Forward’, in Andreas Goldthau and Jan Martin Witte (eds.), Global Energy Governance: The New Rules of the Game, Washington, Brookings Institution Press, 2010, p. 344. 55 Thorsten Benner and Ricardo Soares de Oliveira, 'The Good/Bad Nexus in Global Energy Governance’, in Andreas Goldthau and Jan Martin Witte (eds.), Global Energy Governance: The New Rules of the Game, Washington, Brookings Institution Press, 2010, p. 287.

28

economies, and hence critical to the maintenance and survival of the state.56

Broader issues arising from energy extraction affecting the political, social, or

environmental concerns of exporting countries were treated on an ad-‐hoc basis,

often by bodies outside of the energy governance framework.57 ‘Good’ or ‘bad’

governance within this framework was therefore to be judged primarily in

economic terms.58

This narrow geo-‐political/geo-‐economic focus of global energy

governance has been reflected in the literature on the subject. As Ann Florini

and Benjamin Sovacool point out, insufficient scholarly attention has been paid

to the patchwork of institutions that currently make up the global energy

governance framework, or to the conspicuous institutional gaps that exist

between them. Rather, the global energy governance literature is focused upon

either the ‘technological or economic aspects of systems, markets, and policy

decisions’,59 or on energy security in the context of shifting geo-‐political

landscapes.60 According to Andreas Goldthau, this concentration on essentially

zero-‐sum games diverts attention from the institutional architecture that

underpins global energy governance.61

56 Dries Lesage et al. Global Energy Governance in a Mulitpolar World, Burlington, Ashgate, 2010, p. 183. The significance of maintaining the security of oil supply is unlikely to diminish, with global needs to rise by as much as 50% by 2030, assuming no drastic changes to national energy policies. Gillies, ‘Reputational Concerns’, p. 107. 57 Florini and Sovacool, ‘Who Governs Energy?’, p. 5239. 58 Benner and Oliveira, ‘The Good/Bad Nexus’, p. 287. 59 Florini and Sovacool, ‘Who Governs Energy?’, p. 5240. 60 Included here are China’s “scramble for Africa”, access to the Caspian Sea gas fields, as well as the beginnings of the race for the Arctic. See Andreas Goldthau and Jan Martin Witte, 'The Role of Rules and Institutions in Global Energy: An Introduction’, in Andreas Goldthau and Jan Martin Witte (eds.), Global Energy Governance: The New Rules of the Game, Washington, Brookings Institute Press, 2010, pp. 1-‐2. 61 Ibid, pp. 1-‐2.

29

During the preceding two decades a significant normative shift has

occurred at the global level towards the promotion of ‘good governance’ and

transparency.62 Thorsten Benner and Ricardo de Oliveira delineate four key

factors contributing to this normative shift as it relates to oil-‐sector transparency

and the resource curse. Firstly, the failure of the Washington Consensus policies

to promote economic development through value-‐free structural adjustment, led

donor agencies to link bad governance to developing country malaise.63

Secondly, studies linking poor governance and corrupt practices with the onset

of the resource curse, and underdevelopment more generally, gained influence

amongst international institutions during the 1990s. In response, bodies such as

the G8 and the WB began to re-‐examine the role of the extractive industries in

national governance failure. Thirdly, corruption emerged as a key global

concern, in part due to pressure exerted on the international community by Non-‐

Governmental Organizations (NGOs) such as Transparency International (TI).64

Lastly, the exploitive behaviour of corporate multinationals in developing

countries, perceived or actual, came under scrutiny, and led to calls for stricter

regulation and industry governance.65 The EITI, with its underlying normative

dimensions of transparency and ‘good’ governance, stands at the confluence of

62 Gillies, ‘Reputational Concerns’, p. 103-‐105. 63 Though rather than being the content of the reforms per se, it was felt that weak and corruptible public institutions serve to block real structural reform. As such it became necessary for external actors to promote good governance in domestic settings. Ibid, p. 291. 64 Prior to the 1990s corruption was barely on the global agenda, and indeed bribes were tax deductible for many European officials who operated in foreign markets. Ibid, 291. For an examination of the role of various NGOs in bringing the eradication of corruption to the forefront of the global agenda see Gillies, ‘Reputational Concerns’, pp. 109-‐110. 65 Benner and Oliveira, ‘The Good/Bad Nexus’, pp. 290-‐292.

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these concerns, and has become the key policy response to the resource curse

and ‘bad governance’.66

A fifth and arguably critical factor may be added to this list. As several

analysts have argued, the role of the reputational agendas of multinational oil

companies, international financial institutions, and many Western governments

were decisive in the emergence of oil-‐sector transparency as an international

norm for the extractive industries.67 For the emergence of the EITI deflected

attention and scrutiny away from these bodies at the very time their

responsibility for the resource curse was being questioned, and towards the host

governments as the source of economic mismanagement and corruption.68 The

multinationals, for their part, supported the EITI’s entrance in forums such as

the G8 and, as Nicholas Shaxson has argued, ‘love the EITI – it takes pressure off

them and puts it onto African governments to disclose.’69 The EITI was thus

attractive to multinationals, international institutions and Western governments

alike, and received support for its usefulness in protecting their public images.70

Supporters of the EITI, including international institutions and various

NGOs, argue that it has been a great success. Peter Eigen, the body’s inaugural

chairman, points to its global acceptance rate, which as of 2009 included twenty-‐

three candidate countries in Africa, Asia and Latin America, as well as the 66 Virginia Haufler, 'Disclosure as Governance: The Extractive Industries Transparency Initiative and Resource Management in the Developing World’, Global Environmental Politics, Vol. 10, No. 3, 2010, p. 54. 67 Gilles, ‘Reputational Concerns’, p. 115; see also Hilson and Maconachie, ‘“Good Governance”’, pp. 55-‐76. 68 Ibid, p. 55. 69 Shaxson, Poisoned Wells, p. 218. 70 Gillies, ‘Reputational Concerns’, p. 104.

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endorsement of thirty-‐seven oil, gas and mining companies worldwide, and

numerous NGOs.71 Proponents argue that, within countries compliant with the

framework, the EITI will ‘help civil society groups to work towards a democratic

debate over the effective use and allocation of resource revenues and public

finance’ by empowering host country populations through knowledge

dissemination.72 Armed with information, civil society will force greater

accountability, reduced corruption and mismanagement, and state/society

cooperation, while also increasing state legitimacy and strengthening public

institutions.73

Yet, as Mark Fenster rightly points out, herein lies the weakness of

transparency initiatives such as the EITI. They rely on a ‘simplistic model of

linear communication that assumes that information, once set free from the state

that creates it, will produce an informed, engaged public that will hold officials

responsible.’74 As many critics of the EITI have pointed out, the citizenry of a

corruption-‐rich state is often already well aware of the corrupt practices of state

actors past and present.75 Moreover, their civil society organizations are often

severely lacking in political power. For this reason, the recent pressure for

71 Peter Eigen, 'A Coalition to Combat Corruption: TI, EITI, and Civil Society’, in Robert I. Rotberg (ed.), Corruption, Global Security, and World Order, Washington, D.C., Brookings Institute Press, 2009, p. 426. 72 Quoted in Haufler, ‘Disclosure as Governance’, p. 59. 73 Ibid, p. 54. 74 Mark Fenster, 'The Opacity of Transparency’, in Iowa Law Review, Vol. 91, No. 3, 2006, p. 885. 75 See for example, Yinka O. Omorobge, 'Alternative Regulation and Governance Reform in Resource-‐Rich Developing Countries of Africa’, in Barry Barton et al. (eds.), Regulating Energy and Natural Resources, New York, Oxford University Press, 2006, p. 55; Benner and Oliveira ‘The Good/Bad Nexus’, p. 303; and Haufler, ‘Disclosure as Governance’, pp. 55-‐56.

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transparency and reform of corruption has largely originated from external

sources rather than the agitation of citizens.76

Nonetheless, western donor organizations and NGOs still bemoan the

failure of top-‐down efforts to provoke significant grass-‐root action, or produce

lasting results.77 For Shaxson this speaks of a simplistic and externally derived

definition of corruption: ‘individual misuse of public resources for private gain’.

Such a definition underestimates the systemic nature of corruption in many

countries.78 As Martin Wolf, a Financial Times columnist put it, ‘in a society when

everyone cheats and takes or pays bribes, there is little incentive not to join in’.79

If there is an overriding consensus in the literature critical of the EITI as

an effective governance mechanism, it is that significant institutional and

cultural change within host countries must precede its implementation. The

literature argues that without such prior and wholesale changes, external reform

of one part of the problem will do little other than mask the underlying issues.80

For the changes the EITI aims to make exist at a ‘superficial or rhetorical’ level

and, while challenging the history of global energy governance, does not attempt

deeper structural and cultural change.81

76 Ibid, p. 70. 77 Nicholas Shaxson, ‘Oil, Corruption and the Resource Curse’, in International Affairs, Vol. 83, No. 6, 2007, p. 1134. 78 Ibid, p. 1125. 79 Quoted in ibid, p. 1126. 80 See Hilson and Maconachie, ‘”Good Governance”’, p. 58. 81 Benner and Oliveira, ‘The Good/Bad Nexus’, pp. 309-‐10.

33

To summarize, the main argument of this literature review is that

resource curse analysis of country specific social and political factors is seriously

lacking. So too is an understanding of how those factors may affect external

reform measures such as the EITI aimed at curing the curse. The aim here is to

add to this literature through an in-‐depth case study of Nigeria and its resource

curse in order to ascertain to what degree Nigerian social and political factors

have entrenched the resource curse in that country, and hence demand

wholesale structural and cultural change.

34

Chapter 3: The Slide into the Resource Curse

Any analysis of the social and political factors affecting modern Nigeria

must begin with its pre-‐colonial and colonial history.

The imposition of colonial rule in Nigeria, occurring in the late

nineteenth-‐century, was preceded by centuries of economic and cultural

interaction between Europeans and the indigenous population.82 Predominately

this took the form of the slave trade, conducted through native intermediaries

along the West African coast, which would see several million people forcibly

removed to the plantations of America, South America, and the West Indies,

between the fifteenth and mid nineteenth-‐centuries.83 During this period the

slave trade became central to the economies of several of the states and societies

of what became Nigeria, and came to underpin their political stability and

economic might.84 Indeed, the slave trade was instrumental in the emergence of

three large and centralized states, ethnically based, which would come to

82 Philip Terdoo Ahire, Imperial Policing: The Emergence and Role of the Police in Colonial Nigeria, 1860-‐1960, Philadelphia, Open University Press, 1991, p. 1-‐2. 83 Oronto Douglas and Ike Okonta, Where Vultures Feast: Shell, Human Rights, and Oil in the Niger Delta, San Francisco, Sierra Club Books, 2001, pp. 6-‐7. Though the trade was outlawed in Britain in 1807, it would continue illegally until around 1850. Oladimeji Aborisade and Robert J. Mundt, Politics in Nigeria, New York, Longman, 1998, p. 6-‐7. 84 Slavery as an institution had existed in the area that would form Nigeria prior to 1500, but slaves tended to be assimilated into their new community, and it existed alongside different forms of social bondage related to social and political interaction. See Toyin Falola and Matthew M. Heaton, A History of Nigeria, Cambridge, Cambridge University Press, 2008, pp. 40-‐45.

35

dominate the Nigerian political and economic landscape, and thus greatly affect

the federated structure of the post-‐colonial state.85

Located in the northern, western and eastern regions of Nigeria

respectively, these peoples were wholly distinct in their social and political

structures. In the North, the Hausa-‐Fulani lived in a hierarchal, even feudal,

society, which after the Fulani jihad of the early nineteenth-‐century was formed

into a caliphate under the Sultan of Sokoto. The Sultan was represented in the

provinces by emirs, who ruled a society split between the sarakuna (ruling) and

talakawa (commoner) classes, a status ascribed at birth. In the West, Yoruba

pre-‐colonial society was, like the Hausa-‐Fulani, hierarchical in nature, though

perhaps not as authoritarian as their northern neighbours. The monarchs (Oba)

though divinely appointed, did not have absolute power over the chieftaincy or

ruling council, whose hereditary status precluded arbitrary dismissal.86 Conflict

and competition were ubiquitous, leading to inherent instability. In the East, the

Igbo, by contrast, were organized around federated democratic norms that we

might recognize today. Each autonomous village contained an assembly, made

up of adult males and some prominent women, where open and free debate on

issues took place. Representatives would be elected for the village, but there

were no centralizing or kingship institutions prior to the colonial period.87 The

establishment of British colonial dominance would result in the forced

restructuring of these political and social institutions, particularly in the western

85 Ibid, pp. 59-‐60. 86 Those in the ruling council could only be of non-‐royal lineage. Funso Afolayan, ‘Nigeria: A Political Entity and a Society’, in Paul A. Beckett and Crawford Young (eds.), Dilemmas of Democracy in Nigeria, Rochester, University of Rochester Press, 1997, p. 53. 87 Ibid, pp. 52-‐54. See also Falola, A History of Nigeria, pp. 21-‐29.

36

and eastern regions, such that they could accommodate colonial ‘indirect rule’

systems.88

It was Britain’s attack on the supply side of the slave trade coupled with

the ‘legitimate’ trade in another form of oil, palm oil, which led to a settled

British presence to Nigeria.89 Palm oil, used in the lubrication of machinery, and

in the production of soaps and margarine, was in high demand, and in high

supply.90 The trading patterns established by the slave trade were essentially

reproduced, although recalcitrant native traders had to be displaced, thereby

creating interference in local politics. Some local populations resisted and some

were violently suppressed by the British representatives.91 As the level of

profitability in the region became clear, and the need for order became more

apparent, the British moved towards outright control, beginning with the

creation of the Lagos colony in 1861, and leading to the annexation of the Niger

Delta and its hinterland under the Oil Rivers Protectorate in 1885.92

With the coastal areas now under control and, under missionary influence

embracing Christianity, the British sought to expand their influence inland.

Wary of the similarly expansionist policies of the French and Germans in West

Africa, the British forcibly spread their political interests across the Yoruba and

88 Falola and Heaton, A History of Nigeria, pp. 113-‐116. 89 Ahire, Imperial Policing, pp. 2-‐4. 90 The port of Bonny, a coastal Ijo town and the richest port in the Delta was exporting more than 25,000 tonnes of palm oil a year by 1856. Douglas and Okonta, Where Vultures Feast, pp. 6-‐7. 91 Aborisade and Mundt, Politics in Nigeria, pp. 6-‐7. 92 The annexation was on the pretext, according to the Foreign Office, ‘to protect and develop the important trade of which their town is the sear; and to exercise influence on the surrounding tribes’. Douglas and Okonta, Where Vultures Feast, pp. 8-‐10.

37

Igbo states through a series of ‘small wars’, a euphemism for the brutal seizure of

territory.93 By 1897, the renamed Niger Coast Protectorate had joined the Lagos

colony and stretched across Southern Nigeria.94 In order to gain supremacy in

the region, short of complete colonial take-‐over, the British Government had

entrusted its interests to the Royal Niger Company95 of George Taubmann Goldie,

the ‘founder of modern Nigeria’, by way of a Royal Charter granted in 1886.96

In exchange for a monopoly of trade and political control, the company

was to negotiate ‘treaties’ with local rulers, which were secured through

coercion, including the bombardment and razing of towns that dared to resist. 97

Once control of an area was ensured, the company would establish judicial and

political institutions, structures upon which the colonial state would be built.98

In 1899, however, with the palm oil trade now worth £3.4 million per year, and

accusations of maladministration by the company continually surfacing, the

British government instituted direct colonial rule over southern Nigeria.99

Attention now moved to the newly created Protectorate of Northern

Nigeria, ruled by the Sokoto Caliphate. Under the command of Frederick Lugard,

93 ‘Small wars’ were conducted through attrition and the destruction of anything of value in order to intimidate into submission. For example, the village of Satiru was set on fire in 1903, with a curse placed upon its site to ward off rebuilding. Toyin Falola, Colonialism and Violence in Nigeria, Bloomington, Indiana University Press, 1999, pp. 174-‐175. 94 Falola and Heaton, A History of Nigeria, p. 98. 95 Previously known as the National African Company, but would be renamed following the granting of the Charter, and the amalgamation of three other companies operating in the area. Ibid, p. 98. 96 Ibid, p. 99. 97 Douglas and Okonta, Where Vultures Feast, pp. 13-‐14. 98 Ahire, Imperial Policing, p. 10. 99 Douglas and Heaton, Where Vultures Feast, p. 16.

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who would later became the first Governor of unified Nigeria, the British military

led a series of offensives against the North, culminating in the battlefield death of

the caliph in July 1903.100 Once the caliph was deposed, the British

administration under Lugard and his successors supplanted the caliph’s

authority over the emirs with their own, instituting a policy of indirect rule.

Under the British, however, the economy floundered and became reliant on aid

from the South. In order to better centralize revenue allocation and bring about

wider economic integration, the Northern and Southern Protectorates were

amalgamated in 1914 to form a unified Nigeria.101

The Colonial Project

Prior to 1914, the nominal indirect rule policy of the colonial

administration varied significantly in operation depending on local conditions.

In principle both areas were to be ruled according to the Dual Mandate –

obtaining advantage for the home country, while leaving indigenous structures

intact so that Africans could be ‘civilized’ gradually. The existing feudal authority

system in the North allowed the British to apply the policy of indirect rule, which

saved costs by ‘employing’ the emirs to govern through their existing

institutions.102 In the South, however, the British had to be more directly

involved in the running of the Protectorate due to a lack of readymade

authoritarian political structures. The traditional institutions had to be

100 Falola and Heaton, A History of Nigeria, p. 93. 101 The Lagos colony and the Niger Coast Protectorate had been amalgamated in 1906 to form the Protectorate of Southern Nigeria. Ibid, p. 117. 102 Kalu Ndukwe Kalu, State Power, Autarchy, and Political Conquest in Nigerian Federalism, Lanham, Lexington Books, 2008, p. 34.

39

significantly restructured to accommodate colonial rule.103 Although Lugard

would extend his form of indirect rule across Nigeria following its amalgamation

into a single administrative unit, the two areas were already on different paths,

with the South being far more Europeanized than its northern neighbours.104

The ideology that underpinned the imposition of colonial rule, regardless

of its ‘indirect’ nature, rested upon the perception of African culture and society

as backward in relation to its European counterpart. The British colonialists

presented their role in Nigeria as one of assisting in the elevation of indigenous

society to European levels, while maintaining existent structures, rather than of

exploitation and domination for their own gain.105 In reality, however, the drive

behind colonization included the exploitation of Nigerian natural resources for

the furtherance of industrial aims in Britain. The economy was directed towards

primary production, which utilized unskilled labour and discouraged industrial

development, leading to far reaching consequences, such as the overreliance on

one crop or product.106 The material benefits of this economic structure flowed

heavily towards the colonialists and a select group of European educated

indigenous elites while the majority of the population were alienated and

103 Joseph A. Umoren, Democracy and Ethnic Diversity in Nigeria, Lanham, University Press of America, 1996, p. 66. 104 Falola and Heaton, A History of Nigeria, p. 116. For example, Lugard had forbidden the entrance of missionaries into the North, arguing that such action was required to preserve traditional cultures. In the South, where missionaries established a system of Christian education, which involved among other factors the imposition of the English language, an educated middle-‐class had already begun to evolve. As a result, with access to education being far more limited, the North fell behind, a source of resentment still prevalent today. Umoren, Democracy and Ethnicity, pp. 67-‐68. 105 Ahire, Imperial Policing, p. 17. 106 Ibid, p. 19.

40

suppressed, forced into exploitative labour, and to live under the influence of

policies which they felt degraded and eroded traditional structures.107

Not surprisingly, the imposition of colonial rule in Nigeria spurred

resistance movements from the outset. Initially these movements were for the

most part successfully suppressed by the colonial administration.108 Moreover,

where resistance movements did arise, they tended to be ethnically or spatially

based, precluding a pan-‐Nigerian movement for change. From the 1930s

onwards, however, broad based anti-‐colonial movements, united by a desire for

Nigerian involvement in governance, began to emerge. They successfully

pressured the colonial administration to undertake constitutional reform,

leading to elite involvement, especially in regional governance, and eventually to

outright independence on 1 October 1960. Yet, despite the feeling of unity

during the initial stages of independence the country was still divided along

ethnic and religious lines, leaving the foundations of the new Nigerian state weak

as a consequence.109

From Euphoria to Civil War

Despite the outpouring of euphoria at the time of independence, three

significant factors intersected with the reality of division, and almost

immediately began to undermine the promising prospects of the First Republic.

Firstly, the federated structure of the new state did little to solve what would

107 Falola and Heaton, A History of Nigerian, p. 136. 108 Falola, Colonialism and Violence, p. 171. 109 Falola and Heaton, A History of Nigeria, pp. 136-‐137.

41

become known as the ‘national question’ -‐ how to engender a unified national

consciousness out of ethnic and religious differences compounded by political

ambitions and economic disparities. The regional emphasis of the new

Constitution ensured that national power was determined by control at the

regional level. Thus, the Hausa-‐Fulani, the Yoruba, and the Igbo came to

dominate their regions and the contest for control of the federated state.

Minorities within those regions, fearful of domination by the majority, became

alienated from the political process. As such, an already fractured nation,

created artificially, began to fragment further within a supposedly unified nation

state.110

Secondly, the direct importation of the British Westminster system of

government ensured northern and Muslim domination of the new legislature.111

Favoured by a much larger population, confirmed by the 1952-‐3 census, the

Northern People’s Congress (NPC) would achieve outright majority during the

1959 parliamentary elections. Drawing its membership primarily from the

Katsina College, established by the British for the education of the former elite of

the Sokoto Caliphate, the NPC represented the most pro-‐British and conservative

forces in the country. As a result, independence constituted a mere ‘cosmetic

110 Ibid, pp. 158-‐159. 111 It is an enduring myth that Africa had no viable institutions of its own prior to the arrival of the colonists. As Ayittey points out, this confusion stems from the inability to differentiate between the existence of a particular institution, and the various forms it can take. Thus are shopping malls and bazaars part of the same phenomenon of the market. George B. Ayittey, Africa in Chaos, New York, St. Martin's Press, 1998, p. 85. Importantly though, the importation of the Westminster System was supported by many in the Nigerian elite owing to a belief that it would hasten the withdrawal. Robert T. Suberu, ‘Institutions, Political Culture, and Constitutionalism in Nigeria’, in Michael J. Baun and Daniel P. Franklin (eds.), Political Culture and Constitutionalism: A Comparative Approach, Armonk, M.E. Sharpe, 1995, pp. 197-‐198.

42

change’ from colonial rule, encouraging the withdrawal of the Yoruba and Igbo

elite from a commitment to a ‘Nigerian’ state.112

Thirdly, the Nigerian elites taking control of state apparatuses maintained

a regional political and social orientation, and an adherence to traditional

patrimonial relationships. They often looked upon those apparatuses as a source

of personal and communal accumulation, especially where capital was scarce.113

Almost immediately federal funds were diverted to clients at the regional/local

level, draining the state’s coffers and severely undermining its legitimacy.

Corruption would thus become endemic during the First Republic, a situation

that would only worsen with the beginning of the oil boom, and the subsequent

influx of immense oil rents. Such behaviour, along with the impending

fragmentation of the state, would provide the military with a ready excuse to

usurp the democratic government.114

It is little wonder that the First Republic lasted a mere six years. Unable

to solve the ‘national question’, a recurring theme throughout modern Nigerian

history, and replete with instability and corruption, the civilian government was

replaced by successive military coups. The first occurred on 15 January 1966,

and was led by the ‘five majors’,115 drawn from each of the three regions of

112 Toure Kazah-‐Toure, ‘Nigeria: Challenges to the State and Ways of Breaking Through the Quagmire’, in George Klay Kieh, Jnr. (ed.), Beyond State Failure and Collapse: Making the State Relevant in Africa, Lanham, Lexington Books, 2007, p. 153. 113 Axel Harneit-‐Sievers, Constructions of Belonging: Igbo Communities and the Nigerian State in the Twentieth-‐Century, Rochester, University of Rochester Press, 2006, p. 90. 114 Osoba, ‘Corruption in Nigeria’, p. 375. 115 Kaduna Nzeogwu, E. Ifeajuna, D. Okafor, C. I. Anuforo, and A. Ademoyega were later known as the ‘five majors’, but power would eventually devolve to Major General John Aguiyi-‐Ironsi, albeit briefly. Falola and Heaton, A History of Nigeria, p. 172.

43

Nigeria. Many in the North, however, came to see the coup as part of a southern

Igbo conspiracy, and on 29 July 1966, a northern Lieutenant Colonel, Yakubu

Gowan, gained control of the country following a successful counter-‐coup.

Another Lieutenant Colonel and commander of the Eastern region,

Chukwuemeka Odumegwu-‐Ojukwu, fearing for the safety of the Igbo in the

aftermath of the coups, and distrustful of Gowan, declared the east independent

under the new state of the Independent Republic of Biafra. Not willing to allow

the region to secede, partly due to the presence within it of 67 percent of known

petroleum reserves, Gowan plunged Nigeria into a civil war that would last four

destructive years.116 Clearly there were countless issues contributing to the

descent into civil war, but oil certainly provided an extra ingredient.117 In the

aftermath of the war Nigeria remained unified, at least in name, and the military,

as corrupt as their democratic predecessors, and operating with little regard for

the public they ruled, continued their dominance of the state.118

The Arrival of Oil Wealth

The evolution of the Nigerian oil industry began many years prior to the

oil booms of the 1970s and early 80s. In 1908 the German-‐owned Nigerian

Butimen Company attempted several well drills without success, leading to a

hiatus in exploration until 1937. In that year the British government granted

Shell D’Arcy concessions totalling 357,000 square miles, equal to the entire

116 Ibid, pp. 172-‐175. 117 Scott Pearson, Petroleum and the Nigerian Economy, Stanford, Stanford University Press, 1970, pp. 138-‐139. 118 Falola and Heaton, A History of Nigeria, pp. 175-‐176.

44

territory of Nigeria.119 Though interrupted by hostilities during World War II,

Shell D’Arcy had by 1951 successfully used seismic data to confirm that the Niger

Delta was the most likely area for oil extraction. Further exploration narrowed

the target area so that by 1962 the company had obtained 46 oil-‐mining leases

over territory covering 15,000 square miles.120 The first successful well was

drilled by Shell in Oloibiri, around 65 miles to the west of Port Harcourt, in 1956.

Four further wells were drilled by 1957, and exports would commence the

following year.121 With several other companies conducting their own

explorations, and exponential rises in exploitation capacities, the Nigerian oil

industry would see an extraordinary jump in production from just 5,100 barrels

per day in 1958, to 2.4 million in 2006.122

This rapid rise in oil production soon corresponded with two periods of

rapidly increasing world oil prices. The oil shocks of 1971-‐1973, and 1980-‐1981,

led to phenomenal rises in oil income across producing nations. In Nigeria the

boom saw oil revenue jump from $US1.2 billion in 1972, to $US6.6 billion in

1975, and then following a plateau in prices, to $US25.4 billion in 1980.123

Meanwhile, the military government had made progressive moves towards

ownership, if not control, of the oil industry and the profits emanating from it,

119 Shell D’Arcy was a joint venture between Shell and British Petroleum. Douglas and Okonta, Where Vultures Feast, 23. 120 Soala Ariweriokuma, The Political Economy of Oil and Gas in Africa: The Case of Nigeria, New York, Routledge, 2008, p. 23. 121 Nigerian crude oil would first be exported to European oil refineries in 1958. Ibid, p. 25. 122 For an in depth history of the various companies involved in extraction in Nigeria see ibid, pp. 23-‐25. 123 George Philip, The Political Economy of International Oil, Edinburgh, Edinburgh University Press, 1994, p. 174.

45

under the Nigerian National Petroleum Corporation (NNPC).124 With the boom

came extensive national development plans and investment in all manner of

infrastructure projects. Unfortunately, the boom proved unsustainable, and

following a collapse in world prices, oil revenue would reach only $US7 billion in

1986.125 At the same time, Nigeria’s agricultural industry suffered sluggish

growth, with urban construction and a growing informal sector drawing the

young away from the rural economy.126 The state, having become dependent on

oil revenues for its spending, turned to extensive international borrowing

programs. The growing debt burden, combined with poorly conceived structural

adjustment policies, would plunge the country into a recession lasting until 1992

causing plummeting standards of living.127

Oil had been received as a gift from providence, a wealth that could

reunite the nation after the civil war. Nigeria was remade in the ‘image of a

highly valued commodity form’ as centralized rent distribution led to destructive

state-‐fetishism.128 Yet the gains were not distributed evenly, benefiting

primarily those with access to state power. Prior to the boom years of the 1970s,

revenue allocation in Nigeria had been based upon the derivation principle; that

124 The Nigerian National Petroleum Corporation, which today controls the Nigerian industry, was created in April 1977 with the amalgamation of the Nigerian National Oil Corporation (established in 1971 following the joining of the Organization of Petroleum Exporting Countries (OPEC)) and the Ministry of Petroleum Resources. The intention of these bodies was to ensure the participation of the Nigerian state in oil exploration and production. Having become heavily involved in joint ventures, production sharing contracts, and service contracts, it has largely succeeded in this goal. Ibid, pp. 56-‐57. In 1979, General Olusegun Obasanjo would nationalize large parts of the oil industry. Falola and Heaton, A History of Nigeria, p. 196. 125 Philip, The Political Economy of International Oil, p. 174. 126 Watts, ‘Resource Curse?’, pp. 74-‐75. 127 Falola and Heaton, A History of Nigeria, pp. 203-‐205. 128 Andrew H. Apter, The Pan-‐African Nation: Oil and the Spectacle of Culture in Nigeria, Chicago, University of Chicago Press, 2005, p. 22.

46

is, resource-‐producing areas were to receive the largest share of revenues.

Progressive changes in this formula led to its complete reversal by 1982, with 55

percent going to federal coffers, 35 percent to the states, and 10 percent to local

governments. Funds that could have been used in welfare or environmental

protection measures for the oil producing regions were diverted elsewhere.129

Often these funds found their way into the pockets of government and military

elites, either through fraudulent contracts, kickbacks, or outright looting.

Coupled with ineffective financial management systems, corruption caused

development to suffer heavily.130 Simultaneously, conflict on religious, ethnic or

communal grounds had become omnipresent, and would only worsen as the

years unfolded.131

The Post-‐War Slide to Predatory Rule

The exponential growth in the Nigerian oil economy during the 1970s

was overseen by two military regimes. Gowan’s rule, despite constant

accusations of widespread corruption and mismanagement, would survive until

30 July 1975 when, on the pretext of ‘corrective’ rule, he was disposed in a

bloodless coup, bringing General Murtala Mohammed to power. Although

Mohammed was assassinated during an abortive coup attempt in February 1976,

and replaced by his second in command, Lieutenant General Olusegun Obasanjo,

the Mohammed/Obasanjo regime is generally considered together, owing to 129 The Okigbo Commission report of 1980 advised that only one percent should be allotted for environmental protection, and two percent for ‘special problems’ in exploitation areas. Augustine A. Ikein, The Impact of Oil on a Developing Country: The Case of Nigeria, New York, Praeger, 1990, pp. 27-‐29. 130 Obe, ‘The Challenging Case of Nigeria’, p. 145. 131 Falola, Colonialism and Violence, p. 184.

47

continuity in stated policies and aims, including the eradication of corruption

and the return to civilian rule.

In order to achieve the former, Mohammed carried out purges of the

military, the police force, the judiciary, and the civil service, replacing those

deposed with individuals having no links to the previous regime. Yet this action

had little effect on already endemic political corruption, primarily because a lack

of systematic reform of weak state structures meant they could continue to be

manipulated.132 Moreover, the credibility of the regime was undermined by

measures such as the 1976 decree banning accusations of corruption or

mismanagement against sitting government officials.133 In fact, much like Gowan,

Mohammed and Obasanjo presided over burgeoning corruption, gross

mismanagement of public funds, and the solidification of a kleptocracy in

Nigeria.134

General Obasanjo did, however, keep his promise to hand over power to a

civilian government. Following the formulation of a new constitution, and

parliamentary elections in 1978 that brought the National Party of Nigeria (NPN)

to power, the country was returned to democratic control, albeit briefly, under

the Second Republic.135 The constitution introduced several levers to engineer

political inclusion and stability in response to the failures of the First Republic. It

attempted to nullify conflict by creating more states, and required that, in order

132 Falola and Heaton, A History of Nigeria, pp. 188-‐189 133 Ibid, p. 196. 134 Ibid, p. 181. 135 Ibid, p. 198-‐199

48

to win elections, support amongst voters external to a candidate’s own state had

to be garnered. Unfortunately, this approach met with little success having

merely favoured those individuals whose ethnic groups crossed several state

lines.136 The NPN proved to be every bit as corrupt as its military precursors,

using the distribution of oil rents throughout countrywide patron-‐client

networks to ensure continued political support.137

Such was the extent of corruption that the populace itself began to call for

military intervention. This duly occurred in November 1983, on the back of an

NPN election victory in October, when in yet another coup Major General

Muhammadu Buhari took control of the state. Again the pretext was ‘corrective’

rule but, although Buhari aggressively prosecuted corrupt members of the

Second Republic, he failed to bring the economy under control and was removed

from power in 1985 by a military coup staged by Major General Ibrahim

Badamais Babangida. Unwilling to accept a democratic transition, and amidst

near total political chaos, Babangida was himself supplanted in a November

1993 coup by General Sani Abacha, considered by many to be the most

oppressive ruler in Nigeria’s history.138 Each of these regimes oversaw both the

further entrenchment of corruption, and the drastic decline of the Nigerian

economy, while maintaining their rule through brutal repression.139

136 John Boye Ejobowah, ‘Constitutionalism and Political Inclusion in Nigeria’, in Okon Akiba (ed.), Constitutionalism and Society in Africa, Aldershot, Ashgate, 2004, pp. 103-‐105. 137 Falola and Heaton, A History of Nigeria, pp. 198-‐202. 138 Babangida had promised to hold presidential elections as part of the creation of a Third Republic, initially in 1990, but this was held back until 12 June 1993. Babangida would, however, annul the results of the election, throwing the country into chaos, paving the way for his removal. Ibid, pp. 216-‐229. 139 Ibid, pp. 209.

49

By the time of Abacha’s take-‐over economic malaise had already become a

reality. The imposition of the Structural Adjustment Program in 1986 at the

behest of the IMF, while temporarily deferring debt repayments, led to drastic

reductions in government expenditure.140 In combination with an already

severe economic recession, falling state expenditures curtailed the traditional

avenues of patronage with government contracts, subsidies, and employment

being almost wiped out. Nevertheless, so entrenched were corrupt practices

within state activity that graft skyrocketed, even as the economy deteriorated

rapidly.141

During the Babangida and Abacha regimes, the latter especially,

substantial moves towards predatory and despotic rule were made, while a

reconfiguration of ethnically based patron-‐client relations towards less diffuse

forms heralded the onset of the personalized control of systematic corruption.

Consequently, the head of state sat at the top of a corruption pyramid, wielding

absolute power over his patrons below. The concentration of power in the

executive, along with the expanded repressive capacity of the security forces,

also allowed for the relentless persecution of civil society and human rights

groups.142 By the later years of the Abacha regime, extra-‐judicial murder was

rife, as was the execution of political prisoners.143

140 Ibid, p. 219. Debt interest payments had at reached 37.5 percent of revenue by the end of the Buhari regime, crippling the state treasury. Ibid, p. 215. 141 Peter Lewis, ‘From Prebendalism to Predation: The Political Economy of Decline in Nigeria’, Journal of Modern African Studies, Vol. 34, No. 1, 1996, p. 97. 142 Lewis, ‘From Prebendalism to Predation’, pp. 99-‐101 143 Kalu, State Power, Autarchy, and Political Conquest, p. 102.

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Another consequence of the period following the collapse of the Second

Republic was the further entrenchment of a politicized economy. Politics had

become the quickest way in which to accumulate wealth, with those closest to

the centre being the main beneficiaries, thereby increasing competition for state

access.144 With state processes orientated towards accumulation, followed by

distribution, rather than taxation and expenditure, the state was less inclined to

be involved in the provision of the public good.145 Indeed, the head of Nigeria’s

Economic and Financial Crimes Commission (EFCC) estimated in 2006 that since

independence, US$380 billion in oil revenues had been either stolen or

wasted.146 During the Babangida and Abacha regimes alone almost US$12 billion

in oil revenues was siphoned off the federal budget and into off-‐budget

accounts.147 Inevitably, by the time of the democratic transfer in 1999, Nigeria

found itself with extraordinary levels of crippling debt, with the United

Kingdom’s Department of International Development estimating that US$28.4

billion was owed externally by 2001.148 At the same time, despite abundant

natural resources, the majority of Nigeria’s people were living in poverty having

received little in the way of benefit from that blessing.149

144 A. G. Adebayo and Toyin Falola, ‘Politicians and the Economy’, in Segun Gbadegesin (ed.) The Politicization of Society during Nigeria's Second Republic, 1979-‐83, Lewiston, Edwin Mellen Press, 1991, pp. 13-‐24. 145 Jibrin Ibrahim, ‘Obstacles to Democratization in Nigeria’, in Paul A. Beckett and Crawford Young (eds.), Dilemmas of Democracy in Nigeria, Rochester, University of Rochester Press, 1997, pp. 156-‐158. 146 Larry Diamond, The Spirit of Democracy: The Struggle to Build Free Societies Throughout the World, New York, Times Books, 2008, p. 248. 147 Lewis, ‘From Prebendalism to Predation’, p. 101. 148 Mansur Muhtar et al., ‘Introduction’, in Mansur Muhtar et al. (eds.), The Debt Trap in Nigeria: Towards a Sustainable Debt Strategy, Trenton, Africa World Press, 2002, pp. 28-‐32. 149 Obe, ‘The Challenging Case of Nigeria’, 154-‐155.

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The Slow Growth of Civil Society and its Co-‐option in the Niger Delta

The period following the collapse of the Second Republic can also be

characterized by the slow growth of civil society organizations in Nigeria. These

bodies grew primarily in opposition to the maladministration of the state, and

were thus a crucial reason for the increasing repression of society by successive

military regimes.150 The most well known of these civil society organizations,

the Movement for the Survival of the Ogoni People (MOSOP), gained

international recognition as a symbol of opposition to the oppressiveness of the

Nigerian state. Its leader, activist and author Ken Saro-‐Wira, was executed in

1995, along with eight other MOSOP officials. They were convicted for inciting

the murders of four Ogoni chiefs who had sided with the government during the

struggle for minority rights in the Niger Delta.151

Saro-‐Wira had campaigned against corruption and the destruction of the

Niger Delta environment as a result of oil exploitation. He claimed that Shell had

‘successfully waged an ecological war against the Ogoni people since 1958’ with

the explicit support of the Nigerian security agencies.152 In fact, by the time of his

execution, the military and police forces had killed over 2000 people and razed

numerous villages, while the Ogoni land had been scarred by the effects of oil

150 Civil society organizations such as labour unions, student groups, and religious bodies had existed prior to the 1980s. But following the moves towards predatory rule, new bodies began to mobilize who were more involved in subverting the will of the military state. See Falola and Heaton, A History of Nigeria, p. 210. 151 Several witnesses would later claim to have been bribed either by the government or Shell to provide incriminating testimonies. Charles Lock, ‘Ken Saro-‐Wiwa, of "The Pacification of the Primitive Tribes of the Lower Niger"’, in Craig W. McLuckie and Aubrey McPhail (eds.), Ken Saro-‐Wira: Writer and Political Activist, Boulder, Lynne Rienner Publishers, 2000, pp. 4-‐5. 152 Ibid, p. 6.

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spills, poisoned water supplies, and natural gas flaring.153 As Human Rights

Watch argued, the government and multinationals had ‘ravaged their land and

contaminated their rivers, while providing little, if any, tangible benefit in

return’.154

Although MOSOP would dissolve after Saro-‐Wira’s execution, many other

organizations emerged in its wake. Despite experiencing negative publicity over

MOSOP, the Abacha regime brutally repressed them, leading to the growth of

radicalized militia-‐type insurgencies across the Niger Delta, who directed

violence against both the government and the companies operating there.155

While the return to democracy in 1999 momentarily quelled this conflict, the

perceived continuity in government policy in the following years reignited, and

indeed worsened the violence. Even increases in oil revenue shares for

producing regions, from three to thirteen per cent, failed to diminish militant,

and increasingly criminal, activity, partly because the extra funds merely served

to line the pockets of local government officials. These funds were then

channelled back into the recruitment of Niger Delta militia groups, whose

leaders were often former civil society activists, for their use in intimidation

153 Rob Nixon, ‘Pipe Dreams: Ken Saro-‐Wiwa, Environmental Justice, and Microminority Rights’, in Craig W. McLuckie and Aubrey McPhail (eds.), Ken Saro Wira: Writer and Political Activist, Boulder, Lynne Rienner Publishers, 2000, p. 111. 154 Quoted in Joseph Mclaren, ‘A Political Assessment: Genocide in Nigeria: The Ogoni Tragedy’, in Craig W. McLuckie Aubrey McPhail (eds.), Ken Saro-‐Wira: Writer and Political Activist, Boulder, Lynne Rienner Publishers, 2000, p. 18. 155 In a study of civil society radicalization between 1960 and 2002 amongst southern Nigerian ethnic associations, Adekson found that the policies of the state had led to the overt radicalization of such organisations, particularly after 1994. Adedayo Oluwakayode Adekson, The "Civil society" Problematique: Deconstructing Civility and Southern Nigeria's Ethnic Radicalization, New York, Routledge, 2003, pp. 19-‐20.

53

tactics during subsequent election years.156 Indeed, the fraternization of civil

society groups across Nigeria with the apparatuses of the state has, more often

than not, led to their corruption.157

Obasanjo and the Democratic Turn

Following the death of Abacha on 8 June 1998, moves were made under

the transitional government of General Abdulsalami Bubakar towards a

democratic transfer. Elections held for the state assemblies and governorships

on 9 January 1999 and for the Presidency on 27 February brought the People’s

Democratic Party (PDP), and their candidate and former military dictator,

General Obasanjo to power. Though allegations of vote rigging and intimidation

were widespread, the long period of military rule was finally put to an end with

the swearing in of the Fourth Republic on 29 May 1999.158

During his inauguration speech Obasanjo specifically called for an end to

corruption, the ‘greatest single bane of our society today’. Significant reforms

were undertaken in the years following the democratic transfer, including the

granting of autonomy to the legislative and judicial branches, increases in press

freedom, and moves towards transparent governance. Bodies directed towards

the eradication of corruption were established or strengthened. They included

the Code of Conduct Bureau (CCB), and the Code of Conduct Tribunal (CCT),

156 Darren Kew and Cyril Obi, ‘Nigeria: Dilemmas of Militarization and Co-‐optation in the Niger Delta’, in Thania Paffenholz (ed.), Civil Society & Peacebuilding: A Critical Assessment, Boulder, Lynne Rienner Publishers, 2010, pp. 356-‐358. 157 Falola and Heaton, A History of Nigeria, p. 212. 158 Ibid, pp. 234-‐235.

54

which had been established under the 1979 constitution in order to enforce the

declaration of assets and conflicts of interest, but had hitherto been ineffectual.

Obasanjo also created the Independent Corrupt Practices and Other Related

Offences Commission (ICPC) to investigate public complaints and educate the

public, and the EFCC to investigate economic and financial crimes.159 These

bodies have laid several high level charges since 1999, though most have not led

to lengthy jail terms or significant asset seizures.160

The Obasanjo government also made moves towards entering the EITI

framework. Obasanjo committed Nigeria to the framework in November 2003,

and launched the NEITI in February 2004. The first validation report was

released in 2006 (encompassing the period 1999-‐2004), and uncovered

significant discrepancies in the reporting of both government and multinational

company revenues. The second validation report (encompassing 2005), not

released until October 2008, uncovered similar discrepancies.161 Despite such

disparities, Nigeria was accepted as a candidate country on 27 September 2007,

having passed the NEITI Act in May, which made it an offence to give false

159 Rotimi T. Suberu, ‘The Travails of Nigeria's Anti-‐Corruption Crusade’, in Robert I. Rotberg (ed.) Corruption, Global Security, and World Order, Washington, Brookings Institution Press, 2009, pp. 262-‐264. 160 There have been several large-‐scale charges laid since 1999. For example, federal cabinet ministers Sunday Afolabi, Mohammed Shata, and Hussaini Akwanga, have all been charged for misappropriation, and in 2008 Minister for Health Adenike Grange and other officials were charged with siphoning off more than one million dollars through fake contracts. The most spectacular charges, however, were against state governors, who under the new system received 24 percent from the federation account. Between 1999 and 2007 31 governors of the 36 states were indicted. Unfortunately, more often that not, charges did not lead to sentences. Ibid, pp. 265-‐269 161 For instance, the second validation report included discrepancies amounting to $US800 million in missing funds. Extractive Industries Transparency Initiative, Nigeria, retrieved 16 March 2011, available from <http://eiti.org/Nigeria>.

55

information or false statements of accounts within that framework.162 Following

the release of the 2011 validation report, covering 2006-‐2008, and showing

unreconciled payments of US$917.1 million,163 Nigeria was accepted as a

compliant country on 2 March 2011, indicating its full acceptance into the EITI

framework.164

Despite the significance of these moves towards the reform of the heavily

corrupted Nigerian system, their success has been somewhat muted. Arguably

the reform initiatives have been inconsistent at best, and often contradictory at

worst, despite the enthusiastic response of donor countries. For example, in the

lead up to the farcical 2007 elections, Obasanjo was seen to be using the organs

of the anti-‐corruption campaign for his own political ends in order to remove

obstacles to his preferred candidate Alhaji Yar’Adua.165 Moreover, institutions

such as the ICPC and EFCC have been starved of resources and their efforts have

not been complemented by wider reform.166 Within the EITI framework

auditors have been given only restricted access to NNPC finances, obvious

shortcomings in the NEITI reports have not been addressed, and the audits

themselves have been significantly delayed and underfunded.167 Obasanjo

himself was linked to land grabs, extortion, failure to declare assets, and the

deliberate alienation of civil society groups, trends which changed little under

162 Ibid. 163 Nigeria Extractive Industries Transparency Initiative, 2006-‐2008 EITI Reconciliation: Final Report, 3 February 2011, p. 17, retrieved 16 March 2011, available from <http://www.neiti.org.ng/2006-‐2008ReconciliationReport.html>. 164 Extractive Industries Transparency Initiative, Press Release, p. 1. 165 Alexandra Gillies, ‘Obasanjo, the Donor Community and Reform Implementation in Nigeria’, Round Table, Vol. 96, No. 392, 2007, pp. 575-‐577. 166 Suberu, ‘The Travails of Nigeria’s Anti-‐Corruption Crusade’, pp. 275-‐277. 167 Gillies, ‘Obasanjo’, pp. 580-‐581.

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his protégé Yar’Adua.168 At the same time, more than two-‐thirds of the

population still lives in poverty.169

With the military in control for 29 or the 51 years since independence, it

is hardly surprising that transparency is not ingrained within the political

system. No doubt transparency will take many years to achieve. Yet the

continuing involvement of the military, and specifically former dictators in

Obasanjo and Yar’Adua, his deputy head of state from 1976-‐1979, does not bode

well for change.170 During the 2003 and the 2007 elections, intimidation, vote

rigging, and widespread calls for annulment only intensified,171 while Nigeria

remained firmly fixed at the bottom of TI’s Corruption Perception Index (CPI)

ratings.172

A New Beginning?

In April 2011 Nigeria held what has widely been hailed as the most free

and fair elections in its history. Goodluck Jonathan, who replaced Yar’Adua

168 Suberu, ‘The Travails of Nigeria’s Anti-‐Corruption Crusade’, pp. 270-‐275. For example, Obasanjo did not declare his assets in 1999 under Section 140 (I) of the constitution. When this was pointed out by the Human Rights Law Service to the CCB, it advised that he had made the declaration in private and was not required to make a public declaration. Obe, ‘The Challenging Case of Nigeria’, p. 166. Yar’Adua, for his part, allowed the removal of the highly respected Mallam Nuhu Ribadu, head of the EFCC under trumped up corruption charges widely believed to have been politically motivated following his pursuit of government supporters. Global Integrity, Global Integrity Scorecard: Nigeria 2008, Washington, Global Integrity, 2008, pp. 1-‐2, retrieved 8 March 2011, available from <http://report.globalintegrity.org/Nigeria/2008>. 169 Helen M. McFerson, ‘Governance and Hyper-‐Corruption’, p. 1541. 170 Obe, ‘The Challenging Case of Nigeria’, p. 147. 171 Kalu, State Power, Autarchy, and Political Conquest, pp. 163-‐165. 172 Nigeria was second last on the TI CPI ratings in 2003, with a similar rating in 2004, and a slight raise to sixth last in 2006. Obe, ‘The Challenging Case of Nigeria’, p. 149.

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following his death in office in May 2010, was elected to his first full term over

the former military dictator Buhari, winning by 23 to 12 million votes. As

opposed to the series of elections since 1999, this vote has been given a pass

mark by foreign observers, with minimal violence and vote rigging being

reported during the process.173 The election was far from perfect, however, and

rigging claims by Buhari’s supporters have been prevalent in the post-‐election

period. Yet high hopes are held for Nigeria with many believing it has turned a

corner on its past.174

The reality is that change will be a slow exercise. Despite what appeared

to be an orderly process, violence was brewing just below the surface. In post-‐

election violence in the country’s Muslim North, 500 people (mostly Christians)

were recorded killed, with widespread rioting accompanying the violence.175

Moreover, immediately following Jonathan’s inauguration, bomb blasts occurred

in the country’s north.176 What this underlines is that deep divisions still exist

across the country, and will be a significant challenge for Jonathan to

overcome.177

173 Joe Brock, ‘Nigerian Election Victory for Goodluck Jonathan Sparks Riots’, Guardian, 19 April 2011, p. 16. 174 David Smith, ‘Goodluck Jonathan Elected President as Nigeria Takes a Hopeful Step’, Guardian, 19 April 2011, retrieved 27 April 2011, available from <http://www.guardian.co.uk/world/2011/apr/19/goodluck-‐jonathan-‐president-‐unrest-‐nigeria>. 175 Reuters, ‘Hundreds Killed in Nigerian Post-‐Election Violence’, Guardian, 25 April 2011, p. 22. 176 Reuters, ‘Bomb Blast at Nigerian Army Barracks’, ibid, 30 May 2011, retrieved 4 June 2011, available from <http://www.guardian.co.uk/world/2011 /may/30/bomb-‐blast-‐nigerian-‐army-‐barracks?INTCMP=SRCH>. 177 John Campbell, ‘Nigeria: The Morning After’, International Herald Tribune, 3 May 2011, retrieved 4 June 2011, available from <http://www.nytimes.com/2011/05/03/ opinion/03iht-‐edcampbell03.html>.

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Conclusions

Clearly, oil entered into an arena where ethnic and religious divisions,

corruption, and violent competition for control of the state were already

entrenched within the socio-‐political system. Oil certainly exacerbated these

existing problems, but it did not create them. Rather, these social and political

factors, specific to the Nigerian historical context, are the underlying causes of

the resource curse as manifested in that country.

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Chapter 4: Social and Political Causes

Natural resource abundance compounded an already deteriorating

political and social context in Nigeria. What would normally be regarded as a

blessing would be whittled away through graft for personal or communal ends.

In this chapter the social and political causes of the resource curse in Nigeria, as

identified in the historical overview, will be explored in greater detail in order to

clarify their causal role.

Ethnic Division and the State

The creation of an amalgamated Nigerian state by the British colonial

administration in 1914 would, at least outwardly, seem to signify the possibility

of a unified, or unifiable, national consciousness. State formation in Nigeria has,

however, been plagued by the reality of entrenched ethnic and religious

divisions, which have precluded the fostering of a pan-‐Nigerian identity.

Local and regional communities have remained the focal point of identity

formulation, and persistent and often violent struggle for the centre has marred

the shaping of a viable post-‐colonial state.178 Oil, and the vast rent yield that

accompanies its exploitation, became the context in which this conflict has taken

178 Falola and Heaton, The History of Nigeria, pp. 158-‐159

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place, but its roots go far deeper than the ‘devil’s excrement’ itself.179 Indeed, the

failure of successive regimes, military or otherwise, to solve the ‘national

question’ lies at the root of Nigeria’s inherent political and social instability,

which in turn explains the inability to turn resource abundance into

developmental windfall.180

Ethnic division is so embedded within the Nigerian polity that its

particular manifestation is generally, and negatively, referred to as ‘tribalism’.

More than mere ethnic nationalism, itself not necessarily inherently damaging,

tribalism refers to a ‘morbid loyalty and commitment to one’s ethnic group to the

exclusion, prejudice and often at the expense of other groups’.181 Despite the use

of a rather anachronistic sounding term, the phenomenon it describes owes

more to alienating colonial policies and perverse manipulation by Nigerian elites

than to pre-‐colonial ethnic formations and relationships. Despite differing

traditions, languages, and forms of political organization, West African ethnic

groups had often interacted peacefully in areas of common interest such as trade,

idea transference, and religious practice, prior to colonization.182 Yet they had

not experienced broader political unification, a fact that ensured amalgamation

would be ‘inorganic, alien, and transformative’.183

During the colonial period the British deliberately used divisive policies

to control the population thereby exacerbating differences either perceived or 179 Juan Pablo Pérez Alfonso, Venezuelan oil minister in the 1960s and one of the founders of OPEC, quoted in McFerson, ‘Extractive Industries’, p. 337. 180 Falola and Heaton, A History of Nigeria, p. 159. 181 Afolayan, ‘Nigeria’, p. 51. 182 Ibid, p. 46. 183 Falola and Heaton, A History of Nigeria, p. 109.

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actual.184 As many retreated towards traditional solidarity groups in an attempt

to evade the pernicious effects of colonial rule, the foundations of the post-‐

colonial state were significantly weakened.185 Thereafter, persistent

manipulation of ethnic loyalties by the new Nigerian political elites for their own

personal or communal ends has instilled fear, hatred and aggression within the

Nigerian political and social system, as witnessed in the aftermath of even the

comparatively calm 2011 elections.186

The insular nature of Nigerian tribalism has served to reinforce the

country’s prevailing form of official corruption known as ‘prebendalism’.

Developed by Richard Joseph, this term describes the manipulation of traditional

patron-‐client networks in Nigeria to serve modern corruption networks at the

expense of state coffers. As in the notion of the ‘prebend’ – an office of a feudal

state, acquired either through service or purchase, and subsequently used for

accumulation by the holder – these networks have been used throughout the

post-‐colonial era in the acquisition of state offices, whose holders subsequently

divert public funds back to client groups as recompense.187 With the inclusion of

enormous oil rents into this dynamic, political activity deteriorated into an

‘unremitting and unconstrained struggle for possession and access to state

offices, with the chief aim of procuring direct material benefits to oneself, and

184 Afolayan, ‘Nigeria’, p. 47. 185 Claude Ake, ‘Political Ethnicity and State-‐Building in Nigeria’, in Winston A. van Horne (ed.), Global Convulsions: Race, Ethnicity, and Nationalism at the End of the Twentieth-‐Century, Albany, State University of New York Press, 1997, p. 300. 186 William D. Graf, The Nigerian State: Political Economy, State Class and Political System in the Post-‐Colonial Era, London, J. Currey, 1988, pp. 19-‐21. 187 Diamond, The Spirit of Democracy, p. 248.

62

one’s acknowledged communal or other sectional groups’.188 In turn, Nigeria’s

oil wealth would become associated with, and appropriated by, these ethnically

delineated patron-‐client networks, thereby assigning a material value to

ethnicity.189

Official corruption and its direct links to ethnicity in Nigeria would reach

its zenith during the 1990s, rather than in the heady days of the oil booms. In the

earlier decades patron-‐client networks and the corruption emanating from them

had been largely decentralized and diffuse. The Babangida and Abacha military

regimes moved towards more personalized forms of rule and predatory state

apparatuses, and instigated a more rapacious and autocratic control of the

state.190 Both ran roughshod over already debilitated public institutions and

embryonic civil society organizations, looting the state treasury almost at will,

and all while standing at the apex of hegemonic and ethnically framed patron-‐

client networks.191 Personalized control of this nature served to preclude the

emergence of an ‘impersonal state’, based upon the rule of law. As Max Weber

argued, this leads to a state lacking in the ‘bureaucratic separation of the “private”

and the “official” sphere’.192 The transition to democracy, and the continued

manipulation of this system by the Obasanjo administration, has done little to

break this trend towards ethnically based control. On the other hand, the failure

188 Quoted in Apter, The Pan-‐African Nation, p. 30. 189 Ibid, pp. 30-‐31 190 Lewis, ‘From Prebendalism to Predation’, pp. 99-‐101. 191 Peter Lewis, ‘Nigeria: An End to the Permanent Transition?’, Journal of Democracy, Vol. 10, No. 1, 1999, pp. 144-‐148. 192 Quoted in Ibrahim, ‘Obstacles to Democratization’, p. 156.

63

to address underlying ethnic tension has led to an explosion of resentment, and

ultimately violence, particularly in the Niger Delta oil region.193

Endemic and Systematic Corruption

Following independence, corruption became the primary means through

which elites accumulated wealth. This fact served to shape both political activity

and the nature of the state itself, as well as fuelling aggressive competition for

state power. There can be no doubt that the considerable volume of available oil

rents intensified unscrupulous behaviour, however, it is important to recognize

it was already pervasive in the years leading up to the oil boom, and was a

significant factor in the collapse of the First Republic.194 Indeed, corruption was

endemic during the late colonial period, both in objective reality, and as a matter

of public discourse.

The emerging political elites, who had begun to take over positions of

power within the bureaucracy, and who continued to honour traditional

patrimonial relationships, began diverting public funds back to their client bases.

Traditional forms of patron-‐client obligation were therefore corrupted as they

were implanted into modern political systems, though the extent of the problem

had yet to enter into public awareness. Ostensibly concerned about the

implications for self-‐rule, the British inserted concerns over rampant corruption

193 Falola and Heaton, A History of Nigeria, p. 235. 194 Osoba, ‘Corruption in Nigeria’, p. 371.

64

in public office into the debate over the transference of power.195 Corruption

was, therefore, thrust into the public discourse, becoming politicized in the

process, and was being increasingly utilized in political competition as a weapon

against one’s foes.196 Despite the level of awareness corruption obtained during

the late colonial period, little definitive action was taken to combat it, and

independence would bring about only a ‘cosmetic’ change, paving the way for the

systematization of corruption within the Nigerian political edifice.197

Attempts at the eradication or negation of corruption have rarely risen

above the level of symbolism in Nigeria. Having given corruption as the primary

motive for military intervention one would expect some degree of systematic

investigation. Instead, a recurring pattern emerged in which an agenda of

corrective rule would be framed amongst rhetorical flushes, followed by the

establishment of investigative commissions whose final report would be

subsequently buried and forgotten. Beyond the prosecution of a handful of

corrupt politicians, the majority of whom happened to be political rivals, little

real change would be instigated.198

Such was the case in the aftermath of the original military take-‐over in

1966 by the Gowan regime, and in the formation of the 1975 Public Complaints

Commission following his disposal by Murtala Mohammed. As a consequence of 195 For example, gift giving in the North was viewed as dangerous for the modern polity, a pre-‐colonial hangover that needed to be cleared. Such concerns were pushed over and above others such as ethnic tension and general bureaucratic incompetence. Robert L. Tignor, ‘Political Corruption in Nigeria before Independence’, Journal of Modern African Studies, Vol. 31, No. 2, 1993, pp. 175-‐176. 196 Ibid, pp. 175-‐176. 197 Osoba, ‘Corruption in Nigeria’, p. 373. 198 Ibid, pp. 375-‐36.

65

the lack of enduring and systematic measures undertaken prior to the

democratic handover in 1999, corruption has been allowed to become

embedded within the Nigerian political system, almost to the point of public

acceptance.199 Furthermore, the contradictions inherent in Obasanjo’s assault on

corruption from 1999 onwards have undermined the push for tangible change.

Corruption in the Nigerian context has not been caused by the

introduction of significant oil abundance and corresponding rents. Rather, oil

rents provided more opportunities for graft and more fuel for violent

competition for the state. The underlying cause of corruption in this case is the

interplay and mismatch between traditional obligation structures and the

formation of modern political systems. Once implanted, corruption became

entrenched within those systems, and everyday society. It has instilled the belief

that honesty does not pay, leading to its acceptance as a reality at the local

level.200 For ordinary Nigerians, corruption has become a ‘survival strategy and

moral imperative – for to be without a patron is to have no resources’ – while at

the same time standing in the way of economic and social advancement.201

Competition, Statism, and Violence

The Nigerian political system exhibits an extreme form of statism, which

in turn engenders violent competition for the control of the state. Claude Ake,

199 Suberu, ‘The Travails of Nigeria’s Anti-‐Corruption Crusade’, p. 263. 200 Osaba, ‘Corruption in Nigeria’, pp. 384-‐385 201 Daniel Jordan Smith, ‘The Paradoxes of Popular Participation in Corruption in Nigeria’, in Robert I. Rotberg (ed.), Corruption, Global Security, and World Order, Washington, Brookings Institution Press, 2009, p. 284.

66

addressing the May 1981 Conference of the Nigerian Political Science

Association, described it thus:

The Nigerian state appears to intervene everywhere and to own virtually everything including access to status and wealth. Inevitably, a desperate struggle to win control of state power ensues since this control means for all practical purposes being all powerful and owning everything. Politics becomes warfare, a matter of life and death.202

Such a political environment is not favourable to the fostering of democratic

institutions and values, rather serving to solidify economic competition as the

mainstay of political activity. The introduction of extensive and valuable natural

resources into this dynamic both extends competition for the state, and provides

those already in power with a tremendous advantage.203

The federal state structure established at the time of independence did

little to defuse this competition. By instituting regionalism, whilst giving no

power to the constituent units themselves, Nigerian federalism bred instability

in the form of contests for control of the centre.204 This inherent instability in

the political sphere is evidenced by the fact that between 1960 and 2000 there

have only been two instances of orderly power transitions – 1979 and 1999. The

remaining twelve transfers occurred violently, arbitrarily, and

unconstitutionally.205 Moreover, the continual creation of additional states, with

many of them being unsustainable, has merely bred new opportunities for

202 Quoted in Suberu, ‘Institutions, Political Culture, and Constitutionalism’, p. 203. 203 Ibid, p. 203. 204 Rotimi T. Suberu, Federalism and Ethnic Conflict in Nigeria, Washington, United States Institute of Peace, 2001, pp. 16-‐20. 205 Victor Oguejiofor Okafor, A Roadmap for Understanding African Politics: Leadership and Political Integration in Nigeria, New York, Routledge, 2006, p. 11.

67

conflict over borders, distribution and discrimination.206 At the same time,

ethnic minorities within those states, ever fearful of majority domination, have

tended to withdraw from the political process, further undermining the system

itself.207

Competition for the control of the state in Nigeria is compounded by a

political culture steeped in violence. Threatened or actual violence had been an

integral element of the imposition of colonial rule, and the subsequent

maintenance of domination. Violence would also mark the state soon after

independence, with the country plunged into a bitter civil war within seven

years. Thereafter, the belief in violence as a useful political tool, and further that

its use was required in the maintenance of power, became fossilized in the

political psyche. Members of the political class, whether of military origin or

otherwise, have often controlled the state’s apparatuses through murder and

intimidation, behaviours which seeped into civil society itself. Thus did the

agents of the state become impediments to change, and instruments of state

directed terrorism.208 Unfortunately the transition to democracy has thus far

failed to eradicate violence from the political process, with Human Rights Watch

reporting that violence and corruption are so pervasive in Nigeria that politics

has come to resemble criminal activity. Indeed, overt vote rigging and violent

206 Eghosa E. Osaghae, ‘Interstate Relations in Nigeria’, Publius, Vol. 24, No. 4, 1994, pp. 85-‐86. 207 Falola and Heaton, A History of Nigeria, p. 159. 208 Falola, Colonialism and Violence in Nigeria, pp. 171-‐185.

68

intimidation so marked the elections of 1999, 2003, and 2007 that each

approached the level of a farce.209

Military control of the state has been disastrous for Nigeria’s social and

political development. A prime example of Harold Lasswell’s ‘garrison state’,

Nigerian politics is based upon the military model, as is the structure of state-‐

society relations. Despite the shift to democratic modes of governance, civilian

leaders have by and large reverted to command and control governing styles, not

least because they frequently had a history of involvement in the military. In the

Obasanjo government, for example, many retired generals found their way into

the legislature, despite the forcible retirement of 150 officers who had served in

the 1984 to 1999 period.210 This continuity of military rule across several

decades has created a militarized state and political culture, and at the very least

contributed to the appearance of violence in social interactions. The argument

that the military prevents outbreaks of chaos, repeated in the lead-‐up to every

coup since Gowan’s, is disingenuous.211

209 Human Rights Watch, Criminal Politics: Violence, “Godfathers”, and Corruption in Nigeria, 9 October 2007, Vol. 16(A), pp. 1-‐2, retrieved 11 January 2011, available from <http://www.hrw.org/en/reports/2007/10/08/criminal-‐politics-‐0>. 210 Kalu, State Power, Autarchy, and Political Conquest, pp. 146-‐149. 211 Ibrahim, ‘Obstacles to Democratization in Nigeria’, pp. 160-‐163.

69

Chapter 5: Transparency as Cure?

The above social and political factors all served to embed the resource

curse deep within the Nigerian system once abundance arrived. The current

global response to the failures of the Nigerian state, which they have engendered,

the EITI, seeks to alleviate the curse by emboldening civil society to hold

governments to account. According to TI, ‘[t]ransparent resource governance is

the key to reversing a country’s resource curse into a blessing’. It will do so by

making ‘civil society better equipped to hold policy makers accountable for

actions on related development decisions’, and ‘provide citizens with key

evidence needed to pressure governments’.212 Such confidence in civil society’s

ability to act as a bulwark against state power seemingly echoes Tocqueville’s

observation that there is an inverse relationship between a state’s ability to

coerce and the extent to which organized local interest groups advance their

interests.213 Indeed, a robust civil society is considered by many to be the

‘missing ingredient’ of state legitimacy and viable state-‐society interaction in

Africa more generally. Civil society is the point at which the citizenry at large is

involved in rule making, and agreed rules are essential to a functioning society,

212 Transparency International, Enhancing Revenue Transparency in Oil and Gas Company Reporting, Transparency International Policy Position 05/2008, Berlin, Transparency International, 2008, pp. 1-‐2, retrieved 16 March 2011, available from <http://www.transparency.org/publications/publications/policy_positions/pp5_enhancing_revenue_transparency>. 213 Joel D. Barkan, ‘Resurrecting Modernization Theory and the Emergence of Civil Society in Kenya and Nigeria’, in David E. Apter and Carl R. Rosberg (eds.), Political Development and the New Realism in Sub-‐Saharan Africa, Charlottesville, University Press of Virginia, 1994, p. 91.

70

and to the interaction between state and society. Its emergence is therefore

considered essential to the ‘prevention of political decay that undermined new

African governments a generation ago’.214

Yet civil society, and a working relationship between state and society

more generally, are severely lacking in Nigeria. The absence of a unifying

political culture and deep divisions within society itself has undermined the

growth of viable civil society organizations, even in the democratic era. So, too,

has the often-‐violent repression of embryonic bodies by predatory state

apparatuses.215 The political weakness of those organizations supposedly

keeping the government accountable is clear from the EITI process itself; when

the NEITI was first setup in 2004, of the 28 member National Stakeholders

Working Group overseeing its implementation, only two were drawn from civil

society.216 This is perhaps not unexpected given that there is a conspicuous lack

of a coalition of civil society at the national level that can act as counterpoise to

societal division on the one hand, and rapacious elites on the other.217 Attempts

have been made to bring together civil society and militant groups from the

Niger Delta region, yet they have encountered significant obstacles, including the

weak structures of most organizations, a culture of violence, and the absence of a

unifying agenda.218 Arguably, without addressing the social and political factors

214 John Harbeson, ‘Civil Society and Political Renaissance in Africa’, in Naomi Chazan et al. (eds.), Civil Society and the State in Africa, Boulder, Lynne Rienner Publishers, 1994, pp. 2-‐3. 215 Kalu, State Power, Autarchy, and Political Conquest, pp. 18-‐19. 216 Obe, ‘The Challenging Case of Nigeria’, pp. 154-‐155. 217 Peter Lewis, Growing Apart: Oil, Politics, and Economic Change in Indonesia and Nigeria, Ann Arbor, University of Michigan Press, 2007, p. 262. 218 Kew and Obi, ‘Nigeria’, p. 352.

71

that have hindered the emergence of a viable civil society in Nigeria, the mere

provision of incriminating information will do little to strengthen their position.

Despite these clear obstacles to its success, the EITI and its Nigerian

counterpart have already been declared as victories. The CPI compiled by TI,

using expert assessments obtained from sources both internal and external to

the country, has seen Nigeria rise from last in 1999, to equal 134th (out of 178

countries) in 2010.219 Furthermore, Nigeria was announced as a compliant

country in March of 2011, notwithstanding glaring evidence of large

discrepancies occurring since 1999.220

Looking at the TI’s own Global Corruption Barometer, however, which

measures public opinion through surveys within the country itself, we find a far

different story. Over the period of 2007 to 2010, 14 percent responded that

corruption had decreased, whereas 73 percent felt that it had increased.221 The

reality is that, regardless of the rhetoric and backslapping on the part of

international organizations and the Nigerian government, civil society is barely

represented in the EITI process, and the same structures that led to the problem

remain, as do the individuals. External reform will simply not have the desired

effect, unless internal processes are arrested and reversed. This dynamic

between the external and the internal has been wholly overlooked by the

literature on the resource curse.

219 Transparency International, Corruption Perceptions Index 2010, p. 13. 220 Extractive Industries Transparency Initiative, Nigeria. 221 Transparency International, Global Corruption Barometer 2010, Berlin, Transparency International, 2010, p. 44, retrieved 16 March 2011, available from <http://www.transparency.org/policy_research/surveys_indices/gcb/2010/in_detail>.

72

My argument here is not that transparency in the resource sector of

Nigeria is a waste of time and effort. Transparency is essential to the functioning

of an open democracy whose ends are directed towards the public good rather

than the pockets of the political elites. But as a solution to the resource curse, oil

sector transparency falls despairingly short. Perhaps if the underlying cause for

the resource curse in Nigeria were purely the nature of the state as ‘rentier’ the

fair and transparent distribution of oil rents would alleviate the curse. Yet as

Kalu Ndukwe Kalu argues, rather than the ‘rentier state’ describing the nature of

the state itself, it outlines the activities undertaken by it. In this way it is a

‘process-‐driven phenomenon’ as opposed to a definition of what a particular

state is.

The presence of natural resources, and the existence for an international

market for them, has determined the processes in which the state will be

involved.222 But natural resource abundance does not determine the nature of

the state itself, nor the functioning or otherwise of Nigerian society. As should

be clear from the above discussion, social and political factors, played out across

a long period of history, have entrenched corruption, division, and violence

within a weak Nigerian state, precluding successful development. It will take

wholesale change to rend this asunder.

222 Kalu, State Power, Autarchy, and Political Conquest, p. 124.

73

Chapter 6: Analysis and Conclusions

As outlined in the Introduction, this case study was undertaken to

determine the effectiveness of the EITI framework as a cure for the resource

curse, to see how one country’s historical social and political factors entrenched

the resource curse within its socio-‐political structures, and to see whether

deeper structural change is required in order to address the resource curse. The

central argument of the thesis is that the EITI is not of itself a cure in Nigeria, and

cannot be so unless and until the historical legacy is understood and addressed,

and major structural and cultural change is undertaken.

The resource curse in Nigeria results from historical processes well

underway by the time of the 1970s oil boom. The cumulative effect of these

processes resulted in a weak post-‐colonial state, replete with division and

instability, as well as endemic and systematic corruption. Oil wealth certainly

raised the stakes for those competing for the control of the state. Yet the

structure of state and society changed little in qualitative terms upon and since

its arrival. Rather, oil came to dominate economic, social, and political activity in

a way that concealed the social and political deterioration that had been well

under way since the colonial period.223 During the oil boom and its aftermath,

those with access to state power continued to treat the country’s resources much

as they had before: as capital to be deployed in the maintenance of power, rather

223 Graf, The Nigerian State, pp. 218-‐219.

74

than as funds through which to alleviate poverty, much to the detriment of

Nigeria’s development.224

For these reasons the EITI framework is wholly inadequate in the case of

Nigeria. Rather than addressing the underlying historical factors, which to a

large degree are the cause of the resource curse in that country, the EITI merely

seeks to confront its overriding symbol, the oil-‐sector. While oil-‐sector

transparency is no doubt helpful, as a cure it falls short. Externally-‐driven

reform of this kind must be complemented by internal structural and cultural

change, preferably originating from Nigerians themselves. While it is not

possible to draw definitive conclusions from this case study for the operation of

the EITI in other oil producing and resource curse affected countries, the extent

of the difficulties experienced in Nigeria would suggest that comparative work

may find the EITI to be an inadequate response to the problem elsewhere.

These findings have significant implications for the bodies of literature

discussed in chapter two. The resource curse literature has been directed

primarily towards cross-‐country statistical analysis, showing correlations

between abundant natural resources and measurements of poor governance.

The findings above indicate that, in the case of Nigeria, the cause of this

correlation is not necessarily abundance itself, but the historical social and

political factors which have been discussed in chapter four, and the interaction of

these factors with abundance. Thus, the literature appears to be lacking in case

study research, which may illuminate the causes and possible solutions to the

224 Obe, ‘The Challenging Case of Nigeria’, p. 149.

75

resource curse further. Secondly, the reality of the entrenched nature of the

causes of the resource curse in Nigeria indicate that the criticisms of the EITI

framework – that it operates merely at the superficial or rhetorical level and

hence does not attack the system itself – may be well founded. What is required,

in this case, is more fundamental structural and cultural change rather than

simply tinkering at the edges. If global attention remains concentrated on the

edges, the causes of the resource curse will continue to fester, and constrain the

development of a large part of the global economy.

77

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Transparency as Cure for the Resource Curse? A Nigerian Case Study

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