Managing oil: The only lessons from Nigeria are the wrong ones

Saturday November 8 2014

By GAAKI KIGAMBO, TEA Special Correspondent

The national co-ordinator of a coalition of environmental NGOs, the National Coalition on Gas Flaring and Oil Spills in the Niger Delta, Dr Edward Obi, last month shared its experience on the role of faith communities in the development of the oil sector at the third Consultative Assembly of Uganda’s Inter-Religious Council. He spoke to GAAKI KIGAMBO


The Niger Delta, where you have focused your work in oil governance, has become the epitome of the so-called resource curse. How did Nigerians let this happen and what is the situation like today?

The Nigerian state bears primary responsibility for the ‘resource curse’ in Nigeria. Poor governance is at issue here.

You may know that our country was ruled by military juntas for many years and so democratic structures/institutions and processes that would guide and guard the distribution of economic gains from oil are still weak.

One of the characteristics of oil wealth is its “presentness” or easy availability. In that situation, there is a strong temptation to use it or distribute it according to what is considered most expedient at the time by whoever is in charge of the government.

Furthermore, in such a situation, there usually arises a predatory elite among the ranks of rent seekers. The primitive accumulation hat is characteristic of this predation lends itself to some of the worst corruption that Nigeria has seen.

In many parts of the Niger Delta the land is scarred, the waters are despoiled and the air is noxious! Add this to the poor or absent infrastructure, economic opportunities or employment.

This renders the ordinary people of the region even worse off. Violent activities cannot be far away because those who gain want to protect their gains and those who lose out on this resource lottery resort to violence to get their own.

From your acquaintance with Hoima, which is the epicentre of Uganda’s oil economy, what parallels can you draw with the Niger Delta?

Last year I spent a few days in Hoima and discovered that many of the townfolk had moved in from other parts of Uganda looking for jobs. Immediate social impacts of this included, at that time, shortage of housing, school space, hospital beds, hyper-inflation, poor living conditions and so on.

Associated with this congestion is also the problem of crime and prostitution and, perhaps, the attendant possibility of sexually transmitted diseases and HIV. This picture replicates itself everywhere in developing countries that have an oil industry.

The reason is simple. Expectations are not well managed. People come looking for jobs but end up with neither jobs nor the capacity to take care of themselves adequately.

The oil industry does not employ many people, unless they are purposefully brought into the value chain of the oil industry through ancillary services/industries.

Uganda has apparently signed some lucrative deals that will guarantee it high revenues by global standards. From your knowledge of how this sector grows and evolves, what areas need further focus?

I am aware that Uganda has signed some lucrative agreements, but check out with whom these deals have been made. One of these companies is Chinese! CNOOC of China is government owned with a reputation for cutting corners.

Like many other Chinese companies, once they satisfy the most powerful people in the country they do not care much for environmental standards or livelihood issues affecting ordinary people.

The only power that can hold them to account is government regulation, enforced consistently and without favour. Ugandans must insist on this especially with regard to the management of waste from the industry.

International companies usually opt to give the dirty parts of the business to local companies that have neither the capacity nor the capital outlays to deal with it. In the end, these local companies use their political associates to aid the flouting of environmental laws.

Before this becomes obvious you could well have a chemical wasteland with thousands of your people suffering from cancers of different kinds. Civil society must remain vigilant about this. Just consider that oil companies are business concerns that want to make money for their shareholders. T

hey will not undertake any improvements to their technology unless it is cost-effective. So if they can cut corners and get away with it, they will. It’s worse if you have a corrupt government.

Oil has tended to be a politico-economic matter that is sealed off from religious leaders by dint of separating religion and the state. Where’s the convergence between natural resources and faith, upon which your engagement is founded?

I do not accept the argument that politico-economic matters are sealed off from the religious leadership of Uganda, or indeed anywhere else. All economics is about satisfying the legitimate needs of people just as all politics is about creating the right atmosphere for their self-determination.

Oil resources do not occur in the air! They occur on the ground, in the soil. Ordinary people occupied, farmed, and grazed on these lands for generations before the Chinese arrived to explore for oil.

What happens to the legitimate aspirations of these local people who have to be dispossessed of their land in favour of oil companies? Are they duly protected from the invasive actions of oil companies by their government? What if there are accidents and spillages? Will the companies clean and restore the tainted land to full productivity again?

You see, religious leaders are supposed to be shepherds with an interest in their flock, and everything that confronts them. They have a responsibility to teach their people civic responsibility as well as defend them against oppressive structures of all kinds.

If oil becomes a curse and benefits only relations and close allies of the people in power, then religious leaders have a duty to interrogate why this is the case. They must also do this in a propositional, rather than an oppositional, way.

While remaining politically educated and sensitive, they should remain above partisan politics; and should not look to get for themselves what is meant for the common good.  

Government and Ugandan civil society organisations have an uneasy relationship. The former accuses the latter of overreach in their efforts to compel it to be accountable to its citizens. What lessons does Nigeria offer in this regard?

In bringing people to consciousness over the exploitation of oil in Uganda, organisations like Global Rights Alert (GRA) have distinguished themselves as human-rights organisations. But this position comes with some pain.

The government will never applaud organisations like this for obvious reasons — they are shedding light upon an area of the economy that political authorities would prefer to keep hidden.

The more opaque it is the less likely is there to be accountability. In Nigeria too, civil society is still very weak, but certainly stronger than in Uganda. While the government does not openly condemn our actions, it pretends to ignore what we do. But people know and follow our activities well.

You said the difference between countries that get it right or wrong about how they manage their oil wealth comes down to good governance and accountability. What lessons does Nigeria, Africa’s largest economy and biggest oil producer, offer to emerging producers like Uganda?

The only lessons Nigeria can give are the wrong ones. That is why I am urging Uganda not to follow that path. First, government should never become a joint venture partner with the exploiting companies, because that way they would lose their power to regulate the companies.

In Nigeria, the government is a business partner with the companies, so regulation is very poor. Second, oil revenues should be hard to reach, sterilised if possible, in foreign banks for future generations.

That way markets remain undistorted and inflation remains low. If oil revenues must be used now, then they should be used to provide infrastructure to aid more to better the economic life for the generality of people.

Perhaps most important is the fact that Ugandans should not allow oil to crowd out your present engagements in agriculture. Tourism and hospitality are great employers of labour.

Use the oil revenues to develop these two sectors. Indonesia is a good example of this. The Suhartos stole money but did not take it out of their country. They invested in agriculture, infrastructure and tourism.

Today Indonesia is doing very well as a developing country. But there is nothing more powerful than good governance.