How oil discovery in Northern Nigeria can birth the long-awaited restructuring – By Emmanuel Azubuike
The debate on restructuring has become a politically branded word which rears its head during election seasons in Nigeria, only for it to become a matter of less concern after the party, which campaigned on the premise of restructuring the nation, gets elected. Restructuring in the Nigerian political context is defined as true federalism; a less powerful central governmental system with powerful regional governments. However, many see Nigeria’s oil regime as a factor that prevents the return to the good old days of regional government that existed before the end of the first republic in 1966.
For three decades, oil exploration in Lake Chad, which has gulped in about ₦149.4 billion, continued in what appears to be an insatiable quest to find oil in Northern Nigeria. While the exploration around Lake Chad is yet to yield any result, oil has been found in commercial quantities in the Gongola Basin, between Bauchi and Gombe States.
During the drilling flag-off of the Kolman River II well, estimated to have over one billion barrels of oil reserves and 500 billion cubic feet of gas, on November 22, 2022, President Muhammadu Buhari said:
“As a fully integrated in-situ development project comprising upstream production, oil refining, power generation and fertiliser, the project promises many benefits for the nation. This includes but is not limited to Energy Security, Financial Security, Food security as well as overall socio-economic development for the country.”
Unfortunately, I do not believe the discovery will have any significant economic impact on the region, state or country at large.
Let me use Bayelsa State as a case study.
Oil was first discovered in Nigeria in Oloibiri, Bayelsa, in 1956. Aside from the negative environmental impact oil activities have caused the state, Bayelsa is the second poorest state in Nigeria, according to the 2022 Multidimensional Poverty Index report. Cross River, another oil-producing state, is poorer than Bauchi and Kaduna, the data from MPI shows. What then is the need for more oil wells when states that produce the oil ravage in poverty? Moreover, after 66 years of earning from oil proceeds, 63 per cent of Nigerians – 133 million- are multidimensionally poor. But there is some good an oil-North can bring to the country. I believe that an oil-producing Northern Nigeria could finally ignite a genuine conversation about restructuring, which has been stalled by the efforts of some political actors, especially from the north, who believe that the regional government will impoverish regions without oil.
In November 2017, Kashim Shettima, the then Governor of Borno State and currently the presidential running-mate to Ahmed Tinubu of the All Progressive Congress(APC), downplayed the importance of restructuring.
“People are talking about artificial intelligence, other nations are talking about nanotechnology or robotics engineering, but unfortunately, the topical issue in Nigeria is restructuring. Restructuring my foot! To hell with restructuring.”
There is a general feeling that without Nigeria’s revenue-sharing formula, a state without oil will not be capable of running its financial affairs. This assertion, on the surface, is true. Out of the 36 states in the federation, only two states, Lagos and Ogun, can survive without monthly allocation. But a deeper dive into why states live on monthly Federal allocation could reveal that the oil regime, which aims to prevent them from being bankrupt, is the reason why many states generate very little. Put in a simplified term, Nigeria’s oil regime, in my view, is why many states are not economically viable.
In 2021, Abia State’s initial budget was pegged at ₦131 billion, but the state, despite being one of the oil states, generated a little over ₦31 billion, and the deficit of ₦100 billion was financed through foreign and domestic loans as well as Federal allocations. Why would a governor seek to create wealth if, at the end of the month, his state would receive an allocation from the federal government?
While we celebrate the discovery, records show that the contribution of oil to Nigeria’s economy has been on a steady decline for over three decades. In 1990, oil accounted for 31.8 per cent of the country’s Gross Domestic Product (GDP). The number fell to 15.4 in 2015, and by 2020, the oil sector contributed just 8.16 per cent to the economy. In 2022 (January- September), Crude oil accounted for 6.19 per cent of GDP. Compare this figure to agriculture which contributed over 25 per cent in the first three quarters of 2022.
Before the end of the first republic in 1966, Nigeria practised regional government. There were the Northern, Western and Eastern regions, with political leaders called premiers that oversaw the economic, security and social affairs of their region, but nothing shows that Nigeria is better off economically now than it was then.
Another factor restructuring will address is Nigeria’s multicultural and religious diversity. In the high quest for oneness, some of our political class has wished away Nigeria’s religious and cultural differences which could be better managed in a regional government.
As explorations continue in Anambra, Dahomey, Sokoto, Benue trough, Chad and Bida Basins, I do not believe that more oil wells will change the economies of Nigeria. But if more discovery will sow the false idea that a region will become financially independent, allowing for restructuring to cease to be a theoretically appealing word aimed to gain votes, and becomes Nigeria’s reality, then I have no choice but to support more oil wells in all the geo-political zones of the country.
