Petroloot
By Akinola Adetayo
" The World is full of countries that adopt the best of constitutions and proclaim the rights of man from here to the horizon, yet fail to achieve very much democracy. And why is that ?
It is because democracy requires a certain kind of citizen. It requires citizens who feel responsible for something more than their own well- feathered little corner; citizens who want to participate in society’s affairs, who insist on it; citizens with backbones; citizens who hold their idea about democracy at the deepest level, at the level that religion is held, where beliefs and identity are the same"
— Vaclav Havel
President of Czech Republic.
New York Times Magazine
May 11, 1997
Nigeria is the 19th poorest country in the world. She is ranked one of the least of the low-income economies. Low-income economies have GNP Per Capita (GPC) that is less than $765 (World economic indicators). At independence in 1960 Nigeria’s GPC was $170, today in 1997, it is $260 and falling! If we must compare Nigeria with other mono-economies (countries with one major source of foreign exchange income) in Africa, Botswana with diamond as the major foreign exchange earner has GPC of $3,020 and it is ranked a middle income economy. Gabon, which is rich in crude oil like Nigeria is ranked an upper middle income country with GPC of $3,490. If we must elucidate further and compare Nigeria with countries that were in the same classification with Nigeria at independence in 1960. Malaysia has IPC of $3890 and South Korea with GPC of $9700. From 1956-1966 when oil was first developed, income per person grew at 3.3%. Since 1973, the figure has been 0.02%. Folks, what happened?
The major source of our predicament is the military. They have usurped power for 27 of 37 years of independence. Worldwide, military governments leave their marks, they leave a horrible legacy of human rights abuses, murder, bankruptcies and war. The military left their footprints in Argentina (war and massive human rights abuses) Brazil (bankruptcy and violence), El Salvador, Guatemala and Uganda (war, murders, and human rights abuses). Though the military belongs with the power elite, which comprises; the economy (business) - with function to build the nation; the military-to defend the nation and politics-to rule the nation. The military was neither trained nor required for governance. Politics is the art of the possible. It is interplay of rational debate, discourse and negotiations. When the military seizes power, rationality and accountability are relegated. That is why Nigeria has run budget deficits since 1980. It is because there is neither blandishment nor coercion that $12.2 billion could be missing!
Granted that the military is the source of Nigeria’s economic woes, the multilateral organizations- the World Bank and the International Monetary Fund are a major tributary and beneficiary of Nigeria’s economic misfortune. Though the World Bank sermonizes about free market, in its operations, it is a monopoly that prefers to deal with dictators. These predators fundamentally believe that countries cannot go bankrupt. Hence they award loans to dysfunctional governments, rouge nations and dictatorships. A case in point, in 1985, Nigeria has GPC of Over $1000, before the structural adjustment program (SAP) was introduced. Nigeria academics, bankers, labor unions, lawyers and general public opposed SAP. The former bumptious dictator, General Ibrahim Babangida defied them all with the help of the World Bank and IMF. Nigeria’s GPC plummeted to $260. Since 1985, Nigeria’s debt has doubled from $18 billion to $35 billion in 1997. What is even more perplexing is that, what Nigeria borrowed($1.75 billion) is only 5% of what she owes ($35 billion) the difference $33.25 billion is revaluation and rescheduling fees, a fancy euphemism for usury. This is first class international robbery. In quantifiable terms, most of the unexploited crude oil in Nigeria might as well have world Bank and IMF property label on them. We get these horrors, despite that we have serviced and paid $10 billion on the same debt in the last ten years.
Devaluation— a toxic component of Structural Adjusment Program (SAP) has pauperized, devalued and degraded Nigerians. A clerk that earns between $150 to $200 in 1985 now earns a salary less than N 2000 ($25) in 1997. Pensioners’ work life savings were wiped out by devaluation. There was a drastic reduction in the buying power of Nigerians such that manufacturers could hardly sell their product at marginal profit Capacity utilization fell to 20%. Throughout the 1980’s the World Bank defended SAP- a sad policy that has no human face. After worldwide pressure from NGO’s and stark reality of the market place indicators that the SAPped countries economic conditions worsened. The new World Bank president James D. Wolfensohn in an address to its Board of Governors in October 1, 1996 titled ‘People and Development’ spoke about the new paradigm, the new bank, the new culture which will get the world Bank closer to its clients, satisfy customer needs and ensure top quality. The pertinent questions are; must we borrow from the World Bank and must we allow the World Bank to experiment and test their policies with our lives ?
Another major source of waste in the Nigerian economy is the mismanagement of megaprojects like the Ajaokuta Steel Complex ($6.8 billion), Petrochemical Plant ($ 2 billion) Aluminum Smelter Plant, ($1.4 billion) and National Liquid Natural Gas Plant ($4 billion). The problems range from defective planning, corruption, inefficient management, lack of funds, low capitalization and executive interference.
In the last 17 years, more than $15 billion had been sunk into the steel projects( Ajaokuta, Delta, Oshogbo, and Katsina) with the hope of transforming Nigeria from a poor developing country to an industrial nation, but today it costs tax payers $ 3 million annually to service the steel industry and pay the salaries of 20,000 practically redundant workers. So, what happened? Rather than award a turn-key contract which would bound the main contractor, the Russian firm, Tiapromex Port or Consortium to build Ajaokuta steel complex and deliver the plant within a specified time frame, Nigeria opted to coordinate the project. Ajaokuta Steel complex, which at inception in June 1981 was to cost $4 billion, has taken $6.8 billion and it is still not completed!
When National Liquefied Natural Gas (NLNG) project was initiated, Nigeria was to have 60% majority stake holding but due to mismanagement, it now has 49% and a consortium of multinational oil companies led by Shell has the majority stake (51%) and control of the $4 billion project. No country in Asia, Europe or America would allow a project of such national security importance to slip into foreign control. The most alarming is the Aluminum Smelter project. The total cost of the plant at inception was $1.4 billion, out of which Nigeria bears 70% ($980 million) Ferrostal of Germany, 20% ($280 million) and Reynolds of the United States of America, 10% ($140.0). In 1995, when the project was only 50% completed, Nigeria contributed only $490 million, a far cry from the $1.26 billion expenditure reflected in government records against the project A misappropriation of $770 million is yet to come to the open.
Incessant military incursion and political instability have created anomalies and leakages in the Nigeria economy. Multinational companies frontload their costs, services and perquisites, a practice, which inflates cost of goods purchased abroad, but depress profit. As a result, foreign companies siphon their profit and deny Nigeria tax revenues and Nigerians dividend and profit sharing. The military misadventures in Liberia and Sierra Leone have cost Nigeria more than $6 billion and several lives. Endemic institutional corruption in public companies like, Nigeria Airways, Nigeria Telecommunications (NITEL) Nigeria Electric Power (NEP Plc), Nigeria Port Authority (NPA) and several others has continued to create monumental waste.
To erudite, cultured and seasoned minds, the ineptitude, corruption and human rights violations of the military dictatorship in Nigeria confound, amaze, astound, flabbergast astonish and stupefy. It gives a sad, sinking feeling. If we must observe the record of countries that have experienced the misfortune of a military dictatorship worldwide, the military will not vacate power voluntarily. They must be disgraced out of office. In prior situations, where citizens allow them to transfer power, they transfer power to their clones and friends and prolong the misfortune and waste. This is the time for citizens with backbones to stand up and be counted. Nigeria must be free!