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Niger Delta Fund Initiative: Additional Information on the Current Situation in the Niger Delta

Niger Delta Fund Initiative

Additional Information on the Current Situation in the Niger Delta

The Niger Delta region of Nigeria is characterized by deep poverty. This is in spite of the fact that its abundant natural resources, particularly oil, account for over 80 per cent of the country's total annual earnings.

In the last 40 years of oil extraction, oil revenues have been used to develop other parts of the country, including the capital city of Abuja. A substantial portion of these funds have either found their way into private bank accounts in western countries or paid for paramilitary operations to deal with the unrest in the region. The gross underdevelopment and environmental devastation prevalent in the Niger Delta oil bearing communities is the direct result of decades of neglect by successive governments and calls for a serious restoration and revilatization initiative in the area.

The core Niger Delta states from where the bulk of oil is produced are Bayelsa State, Delta State, Akwa Ibom State, Ondo State, and Rivers State. Several ethnic minorities reside in these states, the dominant tribe being the Ijaws. The major occupation of the people is subsistence farming and fishing. Decades of incessant oil spills have damaged their means of subsistence. The people are also contending with acid rain caused by gross gas flaring. Much of this is due to many years of slack adherence to international environmental standards.

Angered by the destruction and neglect of their homelands, some of the people have acted out of desperation and disrupted oil production by vandalizing pipelines and taking oil workers hostage. There have been many bloody clashes bet ween youths and security and paramilitary operatives. There have even been violent clashes between communities over meager oil spill compensations.

Now the people of the region are seeking a fair stake in oil extraction for development purposes. This has manifested in the agitation for 100 percent resource control of the oil resources by the Niger Delta State governments, a dream that was dashed last year by the country's Supreme Court ruling.

In 2001, total revenue from onshore oil production was N233 billion. Of this figure, Bayelsa State's contribution was 36.22%, Delta State 29.19%, Rivers State 27.57%, Imo State 3.87%, Abia State 1.65%, Akwa Ibom State NIL, Cross River State NIL, Ondo State NIL.

That Supreme Court ruling which led to the temporary suspension of the payment of the 13% derivation allocation caused strained relations between the Federal Government and the southern states particularly the oil producing states. The tangled lines of this rela tionship still remain.

The cheering news from strong and positive indications is that the derivation percentage is likely to now include gas production which revenue is expected to equal oil production in the next few years. Nigeria currently flares 1,308 billion standard cubic feet of natural gas daily. This is equivalent to 37 billion liters of PMS (premium motor spirit petrol).

The capital gap among the communities in the Niger Delta region is indeed a wide one. In a clear attempt to address the gross underdevelopment of the region, the Federal Government set up the Niger Delta Development Commission (NDDC) to embark on projects that will facilitate a transformation of the area. This body replaces several other such bodies that have been characterized by gross inefficiency and corruption.

The NDDC is said to have awarded projects worth over N11 billion in different areas of the region. However, no positive impact has yet been felt by the people so there are now calls for its dissolution. Another aspect to it is that of under funding of the Commission by the Federal Government which has been described as grossly inadequate. Nevertheless majority of the people accuse the Commission of lack of community consultation in project identification for execution.

The gross mismanagement of resources by the state governments has left the people disillusioned about the actual dividends of democracy. At a one day reference workshop organized by African Netwrok for Environmental and Economics Justice in collaboration with Africa Centre for Geoclasical Economics held in Yenagoa, Bayelsa State on November 13th 2003, there was a consensus among representatives of oil producing communities that a separate body be established in the state to manage oil funds for the purpose of accountability and transparency.

In the year 2000, the 13 percent derivation revenue allocated by the Federal Government to these states amounted to N66.719 billion. In the year 2001, the total figure increased to N99.332 billion. These funds have been largely squandered.

Senator David Dafinone, Chairman of the Union of Niger Delta People, a front line NGO, spoke out against this corruption at a recent seminar in Kaduna, in northern Nigeria. He urgently called for the establishment of a trust fund to manage oil proceeds accruing to the oil producing states. He also proposed the establishment of a Niger Delta Bank for Reconstruction and Development.

The Second Republic Senator accused the Niger Delta State government officials of squandering over 90 percent of the monies accruing from oil to the states on personal emoluments and entitlements. (See the Nigerian Guardian newspaper of Monday February 28, 2002.)

It is therefore imperative that the oil royalties paid by oil companies who monopolize the fruits of nature be put into a common fund to reimburse those who are denied access by the monopolist holdings. The Federal government has allocated these royalties as derivation funds to oil bearing states. Now it is time for these funds to benefit the people as a whole. It is for this purpose that we are launching the Niger Delta Fund Initiative (NDFI).

The Initiative will work with NGOs, community based organizations and government officials to form and implement the Niger Delta Fund (NDF). Similar to the Alaska Permanent Fund, the NDF will be a legal mechanism whereby a restoration and sustainable development model will be evolved. By this, the oil curse will be reversed to benefit of the people.

The Niger Delta Fund is not intended to replace the Niger Delta Development Commission or compete with it but to complement it in practical terms. The Fund will be a model of good governance for the distribution of resource rents and royalties, guiding them towards the prosperity and well-being of the peo ple. We contend that this model will bring new strategic thinking in development for other regions in Nigeria and Africa.

Fair and prosperous economies grow upwards from the earth. They are rooted in the rural areas where the greatest numbers of Nigerian people live and labor. These are the peasants, peddlers, unregistered craftspeople and service providers and the masses of people scraping together a living any way they can, writes Lindy Davies, Director of the Henry George Institute. These so-called 3informal sector2 workers are the people who will be best served by the Niger Delta Fund.

As communities engage in true revitalization and development practices, conflicts will decrease, oil production will continue unhindered, and the resources now expended on security services and paramilitary forces will be channeled into productive use.

With the Fund in operation, millions of people will be elevated from the cycle of poverty and despair to one of hope and prosperity. With the people's creative energies freed from resource wars and violence, the region will be on the positive path of progress.


Tragedy in the Nigerian Delta, New York Times, June 13, 2002
Copyright 2002 The New York Times Company

Conflicts between oil producers and residents of the Niger River delta in Nigeria burst into the world's consciousness in 1995 with the government's execution of an environmental activist, Ken Saro-Wiwa. The disputes are still raging, with residents' groups threatening to attack oil facilities unless the government begins talks on giving the states control of more oil revenues and the oil companies start hiring more local residents.

Nigeria's dictatorship was replaced by an elected government three years ago, when Olusegun Obasanjo became president. But so far, civilian rule has not changed the government's habitual use of harsh repression nor dented the delta's overwhelming poverty. Although delta oil brings in more than 80 percent of Nigeria's hard currency, the delta's seven million residents are among the poorest in the nation.

Environmental damage from oil extraction has ruined agriculture and fishing, but oil produces few jobs. A new Constitution, written before Mr. Obasanjo took office, raises the percentage of oil revenues that go to the delta from 3 percent to 13. But the money has come late, and has not all been paid.

The Supreme Court, moreover, recently ruled that offshore oil is federal property, a decision that may force delta states to cut their budgets. Nigeria's government and the delta oil companies say, with some justification, that local residents aggravate matters. Ethnic youth organizations engage in kidnapping and extortion. Local chiefs demand payoffs. Unfortunately, the oil companies have gone along with such payments, buying the allegiance of local leaders rather than winning public support with effective development projects.

The government must also change its reflexive use of force. One horrifying incident came early in Mr. Obasanjo's tenure, when soldiers destroyed the town of Odi after gangs killed 12 police officers. No soldier has been punished. It will take real improvements in delta life for the poisonous atmosphere to clear, but such a change is crucial not only for the delta but for the future of oil production.

From: Gordon Abiama

Subject: Tragedy in the Nigerian Delta
Date: Tuesday 18 June 2002

Dear Editor,

I read with deep personal interest "Tragedy in the Nigerian Delta." (New York Times June 13 editorial).

It is painfully true that the people of Nigeria's oil rich Niger Delta region are mired in abject poverty. It is also true that oil extraction there has been characterized by bloody conflicts between local residents and security operatives manning oil installations. There are no indications that these conflicts will abate in the foreseeable future, of course, except if the issue of equitable distribution of oil royalties is addressed in practical terms.

Local residents want a fair stake in oil exploitation but the Nigerian law forbids them, making extortion and disruption of oil production an attractive alternative for youth organizations. Oil companies with their divide and rule tactics in dealing with local residents have not helped matters.

As an indigene of Odi Town, my experience of its destruction by the Obasanjo regime is too grim to be forgotten.

It is in the light of these that my NGO, Africa Center for Geoclassical Economics in partnership with America's Earth Rights Institute and the Henry George Institute and other bodies is planning an international conference in Nigeria that will address the issues raised in your article.

The need to initiate realistic and pragmatic policies that will reduce conflicts in the region which would give rise to greater security for oil production while ensuring economic justice cannot be overemphasized.

The proposed conference which is part of the Niger Delta Fund Initiative is being designed as an instrument to institute a transparent and equitable distribution of resource rents and royalties for sustainable development for Nigeria's oil bearing communities.

Yours truly,

Gordon Abiama, Director
Africa Center for Geoclassical Economics
P. O. Box 50124 Falomo, Ikoyi, Lagos, Nigeria