Now that the North Has Found Oil...
In October 1973, Egypt and Syria launched a surprise attack on Israel over its occupation of the Golan Heights and Sinai Peninsula, two Arab territories. With the now-defunct Soviet Union (read Russia) backing Egypt and Syria, the US automatically queued behind Israel. Arab countries, in solidary with Egypt and Syria, retaliated by placing an oil embargo on the West. Crude oil prices skyrocketed. The Organisation of Petroleum Exporting Countries (OPEC) became awash with raw cash. Juan Pablo Perez Alfonzo, a Venezuelan politician and lawyer who co-founded the oil cartel in 1960, promptly nicknamed crude oil “the devil’s excreta” as petrodollars flooded OPEC members.
Nigeria began to swim in an ocean of petrodollars. Our problem was no longer money but how to spend it. From an average price of $3 in 1973, a barrel of oil was selling for $12 by December 1974. And from modest oil earnings of about $200 million in 1970, Nigeria netted $32 billion between 1973 and 1978, averaging over $6 billion per year. Imagine your monthly salary jumping from N1 million to N29 million. You will go crazy. Alfonzo was not impressed. He famously said: “We’re drowning in devil’s excrement… ten years from now, twenty years from now, you will
see: oil will bring us ruin...” He added in 1976: “Look at us, we are having a crisis… we are dying of indigestion.”
With billions of dollars in the hands of the Nigerian government, we went on a spending spree, increasing civil servants’ salaries and benefits and backdating them (“Udoji Award”) and paying for laundry for undergraduates. The tsunami of dollars kept the naira at par with the dollar. That meant it was cheaper to import a bottle of water than to make it at home. We took to import binging and neglected the productive bases of the economy, only to start whinging decades later that the naira was losing value. We went on a spree of creating subsidies, thinking petrodollars would rain eternally. We became a den of rent-seekers feeding fat on oil. We still consider it our golden era.
What oil wealth did to us was to make the government awash with petrodollars while Nigeria and Nigerians were not better off commensurately. Government became the biggest centre of patronage. To be in government was an invitation to become rich with minimal work. Government started creating more ministries, departments and agencies where access to cash is unlimited and the levers of accountability are terribly low. Getting government appointments became more profitable than running businesses. Government contracts could give as much as 500 percent returns. That is what oil windfalls can do to a society without visionary and accountable leadership.
We built infrastructure, to be sure, so I am not suggesting the entire windfall was wasted on subsidies and whiskies. But nearly 50 years later, we still have thousands of kilometres of unpaved roads and thousands of communities without access to potable water and electricity, which should have been part of our priorities. If we are honest, petrodollar is easy money and the temptation to spend it anyhow is always there — except there is a strong public accountability system. Though Arab countries have absolute monarchs, they are visionary and place priority on infrastructural development. Norway had a well-established public accountability structure before the oil boom.
Despite all trouble oil has brought upon us, our reserves are about to get bigger with the flag-off of drilling in the Kolmani River field by President Muhammadu Buhari on Tuesday. In 2005, the New Nigeria Development Company (NNDC) — owned by the 19 northern states — had won OPLs for Blocks 809 and 810 in the bid round organised by President Olusegun Obasanjo. The previous year, Obasanjo had, as part of addressing issues in the Niger Delta, preferentially awarded marginal fields to Akwa Ibom (Universal Oil & Gas), Bayelsa