The wealth of Nigeria is desperately tied to oil. As a monoproduct economy, 90 per cent of our export earnings and 75 per cent of our national revenue comes from oil. Yet, a comparison between Saudi’s ARAMCO and the Nigerian National Petroleum Corporation (NNPC) can only elicit pity for the condition we have created due to greed and avarice. NNPC is the core of official corruption in Nigeria. Our rentier economy functions by carving the turkey served by NNPC between the federal, state, and local governments. The NNPC is grossly inefficient, bloated, unskilled and corrupt to the marrow. As a body, it has become a cartel and a racket with little oversight, if any. The NNPC spends on itself anyhow and conforms to no known international best practices, in form and function. A look at its policy and regulations over the industry and how it operates, shows how easy it is for the petroleum minister, and the group managing director of the NNPC to enrich themselves and their allies. Diezani Allison Madueke’s embezzlement charges and the Malabu oil deal are reference points. Another is the ongoing subsidy heist, which no government has the political cojones to abolish.
Corruption in Nigeria is a series of concentric rings, all exerting a disintegrating force on the core of the country. Agriculture is often touted as the nation’s way out of its economic doldrums. This is a charade and a huge lie.
The corruption in agriculture is third to that of the NNPC. Why? Agriculture accounts for 30 per cent of our GDP and is the backbone of our non-oil economy. Small farmers are routinely screened out of and most often unaware of government subsidies. These subsidies are misappropriated by government officials who grant them as favours to family and friends or to brokers and political elites who parade themselves as farmers. In a published study, between 1980 and 2010, the federal government gave out $5.8 billion in agricultural subsidies; of this amount, an estimated $5.2 billion was lost to corruption. The biggest fraud has been the government’s cheap fertiliser programme for small farmers in its various iterations. These fertilisers are often diverted and sold to brokers who resell to poor farmers.
Most of these brokers are political elites who also use farming as a ruse to launder money stolen from government coffers. This government approved grifting is facilitated through a loophole in Nigeria’s constitution, which approves farming as the only outside employment that public officials are permitted to undertake. A fertiliser bag here, a tractor there, while those involved in these diversions hardly connect the dots to their actions. Agricultural corruption has a big impact on the poorest Nigerians because the occupation employs more people than any other sector in the country and it is largely operated at the subsistence level. Our land tenure laws, which give states the power to grant and revoke occupancy rights, discourage farmers and make the establishment of large scale farms difficult.
Corruption is everywhere! We simply are not connecting the dots to have an understanding of how we found ourselves in underdevelopment. Trade related corruption is another one and it did not start today. We have been mirred in indecency, misappropriation and violation of the public trust since Nigeria became independent. In the mid-1960s, finance minister, Chief Okotie-Eboh skewed trade policy to benefit his interest. Every successive government has mismanaged our macroeconomic policies by deliberately creating policies to favour political and business elites, despite their destructive impact on economic growth and government revenue. Consistently, the government has embarked on protectionist trade policies, like Obasanjo’s nationalisation of businesses in the 1970s, import licenses and tariff waivers for the politically connected, monopolists and the clergy, etc. Protectionism does not work in the way we handle it. This has not improved domestic industrial and manufacturing output nor grown the economy. Between 2011 and 2015, $2.8 billion in revenues was lost to import waivers, according to the Nigerian Customs Service.
As Nigeria’s population approaches the 200 million mark, power generation is still under 5,000 megawatts (MW). The power sector is the second most lucrative in terms of grand corruption, after the NNPC. According to a recent study, Nigeria has lost $64.7 billion to corruption in the power sector between 1999 and 2017. The more money sunk into generating power, the lesser the power the country generates. At under 5,000 megawatts, Nigeria’s power generation could be compared to that of Oman, which generates 4,500 megawatts for a population of about 4.5 million people. The 2013 privatisation of power generation and distribution in Nigeria was another carving of the turkey. From inception, the process was ladden with graft. Many who won the bids had either been fingered in high level corruption or were bankers, oil moguls or the politically connected. They won their bids with no experience in the power sector. Given the lack of capacity, it is not surprising that they are suffering mismanagement, and underperformance. In all, the country has been bearing the loses yet again!
No sector is immune to corruption in Nigeria. The financial sector mirrors the larger society and given the ability of actors there to cook the books, its situation calls for more introspection. The banking sector is the facilitator of official corruption in Nigeria. In 2009, the Central Bank of Nigeria (CBN) spent $4.2 billion of our money no bailing out banks to forestall their collapse under the weight of bad debt and the widespread theft of depositors funds. It is the reason why millions of poor Nigerians will remain underbanked and unable to access affordable loans and credit.
No monument to industrial corruption is bigger than the Ajaokuta Steel Mill in Kogi State. Over $5 billion has been spent on this grandiose project and it has never produced any steel. In addition, $83.3 million in 2018 dollars has been spent on worker salaries since 2010. Worse, it needs an additional $1.2 billion to make the facility operational, according to published reports. That is a 40 year-old financial drain on Nigeria’s resources. A deep seated analysis of our steady decline in the industrial and manufacturing sector points to misguided fiscal and trade policies, corruption, lack of infrastructure, low power generation and distribution, foreign exchange and credit shortages. The landscape is littered with loss-making state-owned enterprises and white elephant projects. These fitting monuments to industrial corruption consume public funds, incur huge losses but are retained to dispense patronage and help siphon money out.
Where success could have achieved, political rivalry and short-term considerations rob us of patriotism, strategic thinking and a development mindset. Governor Nyesom Wike of Rivers State abandoned the nearly completed $400-million, 2.6-kilometre monorail project in Port Harcourt initiated by his predecessor, former Governor Rotimi Amaechi, citing its wasteful nature. How is that? What a waste of public funds! Every where in the country, the state and federal governments have spent billions on roads, schools, hospitals, railways, airports, electrical power, universities etc, and other economic enablers, with few gains. Construction is particularly corruption prone due to inflated contracts, kickbacks, and mismanaged budgets. The economic costs are rising because economic growth is constrained by Nigeria’s inadequate transport infrastructure. The human costs are escalating too as catastrophic buildings collapse, killing scores of Nigerians year in, year out, because contractors use substandard materials and bribe building inspectors to appprove their shoddy work. The deadly building collapse at Pastor T. B Joshua’s The Synagogue, Church of All Nations, which killed 110 people in Lagos in 2014, is a veritable example. To be CONTINUED.
Credit: Bamidele Ademola-Olateju
If you missed part 1 of this essay, read it here: Connecting the Dots of Corruption: How Individual Greed Has Crippled Nigeria (1), By Bamidele Ademola-Olateju