The Buhari/Osinbajo Initiative and the Niger Delta

By Dele Awogbeoba

For a while now, the Niger Delta has been on the boil again. Bayelsa, Delta, Rivers and Akwa Ibom constitute the major sources of oil revenue that makes up over 60% of Federal Government foreign exchange earnings and over 50% of Federal Government Income. Ondo, Imo, Abia, Anambra and Lagos states contribute to a significantly lesser extent to Federal government income from oil exports. It had therefore become imperative that actions are taken to resolve the agitation going on in the Niger Delta.

One cannot but acknowledge that despite the 13% derivation (which during the oil boom of the mid 2000’s to 2014 yielded sizable amounts of revenue to the Niger Delta states) the Niger delta were getting significantly less than they contribute to the federation accounts whilst zones such as the South East, North East, North West and North Central got significantly more from the federation account than they contribute to it. Such disparity is not unheard of. In the UK, London is the major contributer to UK income whilst Northern England and Wales and major net recipients of government revenue. However, that does not resolve the nation from addressing the critical issue of ensuring a greater amount of income that comes from the Niger Delta stays within the Niger Delta. Additionally, one has to ensure that the added income is actually reflected and felt by the residents of the Niger Delta as opposed to flowing into the private pockets of politicians of Niger Delta extraction.

The issue therefore is how is to consider how this is best achieved. The first (and least practical) option, is greater devolution of the right of states to exploit its own resources whilst sending the remainder of the income to the Federal government. It may be right to consider moving the derivation principle (which should cover all mineral deposits and tax revenue) to 35% over the next ten years and then to 50% thereafter. I say this is the least practical because most states dependent on Federal Government income will focus more on oil income lost to them than increased income due to them from the exploitation of other mineral deposits found within their states that the under funded federal ministry of Mineral resources is unable to optimally exploit. It would be a very hard sell to get the required numbers of states to key into this new reality to be able to amend the constitution in the near term. It is easier for people to do nothing and pick up a nice cheque than expend energy and resources marketing its resources so that it can be exploited for the good of its people.

The second option, is to encourage the Niger Delta states or (more importantly) oil producing areas of the Niger Delta to incorporate oil exploration and oil and gas exploitation corporations. These corporations MUST be given a specified percentage of oil licenses (subject of course to those entities showing that they have the manpower and expertise to fulfill the obligations required of them). Those entities will be wise to hire the best people from within and outside Nigeria in the knowledge that the vast profits of the incorporated entity are kept within the oil producing communities of the Niger Delta and used to develop the infrastructure and standard of living of the oil producing communities of their area. This is the next best option to resource control if most states object to changes in the constitution to allow for the first option to take hold.

What should not be countenanced is the forceful relocation of the headquarters of any International Oil company or indeed non oil company to any other state or region. In a democracy and in federal structure, private business should be allowed to staff their organization however they choose and to select and change their headquarters however they like. All 36 states of the Federation are competitors and are free to compete against each other in order to make their respective states more attractive to local and multi national corporations. It is for the oil producing states (especially those with direct access to the Ocean) to devise means of making their states more attractive economically, socially, tax wise and as a source of a highly skilled work force perspective necessary to entice these corporations to voluntarily change location. That is what should be encouraged in a free market. It is the emphasis on the free market that would ultimately bring more development and investment to Nigeria and encourage existing investment into Nigeria to stay.

Dele Awogbeoba
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