Viewers of the first episode of "The Philanthropist" were introduced to four basic, if not entirely salutary, features of contemporary Nigeria, Africa's most populous (one in every five Africans is a Nigerian) and arguably most important country: poverty, oil, corruption and political conflict. Most Americans know precious little about Nigeria and especially its relation to the American consumer and the U.S. economy.  But they should.  Most of us pump Nigerian high-quality petroleum -- Nigerian "sweet crude" is much sought after by U.S. refineries -- into our cars every day.  Half of Nigerian oil ends up on the U.S. market and as Africa's most important oil producer, Nigeria typically provides between 10 and 15 percent of all U.S. oil imports:  in other words, Nigeria supplies more oil to the U.S. than Algeria, Angola, Iraq, Kuwait and Venezuela.

I have been working in Nigeria since the early 1970s as a research and activist.  I arrived in the wake of the Nigerian civil war -- the eastern region had attempted to secede from the Nigerian federation -- and immediately prior to the "oil boom" of the 1970s. Nigeria was already a major oil producer but the sharp rise in oil prices, triggered in part by conflicts in the Middle East and the successful role of the OPEC oil cartel, and brought millions of dollars in oil revenues rushing into government coffers. It was an extraordinary period to live through as a poor and largely agricultural country was seemingly showered in vast, and potentially limitless, quantities of oil money ("petro-dollars").  But it all turned sour very quickly.

Nigeria is the eleventh largest producer and the eighth largest exporter of crude oil in the world. Nigerian oil production is currently running at roughly 2.45 million barrels per day. The Nigerian government expects proven reserves to grow to 40 billion barrels by 2010.  But from the vantage point of the global oil industry, Nigeria's real wealth resides not in oil but in gas. Nigeria contains the largest natural gas reserves in Africa (176 trillion cubic feet) and is a global player in the production of liquefied natural gas. It is an exemplary case of what New York Times correspondent Thomas Friedmann has called a "petro-state."

The first barrels of Nigerian crude oil destined for the world market left the country almost exactly fifty years ago, on February 17^th 1958. Oil had been discovered in the central Niger Delta in 1956 at Oloibiri, a small, remote creek community near Yenagoa -- now the capital of Bayelsa State -- located ninety kilometers to the west of Port Harcourt, the major oil city (Nigeria's Houston!) Wildcatters had begun drilling in 1951 in the northern and eastern reaches of what was then called Eastern Nigeria, and finally on August 3^rd 1956 discovered oil in commercial quantities in tertiary deposits at 12,000 feet. Soon after Nigerian gasoline was fueling automobiles in and around London, the new symbols of post-war British prosperity. The Nigerian oil industry had been born.

The Nigerian oilfields are located in the southeast of the country in the Niger Delta region, a vast riverine area where the Niger River empties into the Atlantic Ocean.  From the area, the Niger Delta appears as a huge carpet of tropical rainforest and mangrove swamps, criss-crossed by a maze of creeks and tributaries. Virtually every inch of the region has been touched by the industry, directly through its operations or indirectly through neglect.  Over 6000 wells have been sunk, roughly one well for every 10 square kilometer quadrant in the core oil states. There are 606 oilfields (355 on shore) and 1500 "host communities" with some sort of oil or gas facility or infrastructure. There are 7000 kilometers of pipelines, 275 flow stations, 10 gas plants, 14 exports terminals, four refineries and a massive liquefied natural gas complex.  

However, the effects of the oil industry in the fragile Niger Delta environment have been enormous. By conservative oil industry estimates there were almost 7000 oil spills between 1970 and 2000, more than one each day: that is an equivalent of one gallon of oil spilled for every 100 square meters of the Niger Delta. Gas flaring, dredging, large scale effluent release, mangrove clearance, massive pollution of surface and groundwater; these are the hallmarks of a half century of oil and gas extraction. A World Wildlife Fund report released in 2006 simply referred to the Niger Delta as one of the most polluted places on the face of the earth.

Like Saudi Arabia, Iran or Angola, Nigeria is an archetypical oil nation. Oil has indelibly shaped virtually all aspects of Nigeria's economic, political and social life. In 2009 over 87 percent of government revenues, 90 percent of foreign exchange earnings, 96 percent of export revenues and almost half of the gross domestic product (GDP) was accounted for by just one commodity: oil. Nigeria is what economists call a "resource dependent" economy: its wealth is tied to a single natural resource. It is, if you like, in economic terms a one-horse town.

As an oil state, Nigeria is driven by two cardinal principles: how and who captures the oil wealth and how to sow the oil revenues to pursue economic and social development.   But what sort of development and change have these two principles wrought? What does a half century of oil-development mean for the average Nigerian? 

Here the record is dismal and provides an entry point into the unforgiving, ruthless, and austere world of oil. To compile an inventory of the achievements of Nigerian petro-development is a salutary, if dismal, exercise: 85 percent of oil revenues accrue to 1 percent of the population. According to former World Bank President Paul Wolfowitz, at least $100 billion of the $600 billion in oil revenues accrued since 1960 have simply "gone missing." Nigerian anti-corruption czar Nuhu Ribadu claimed that in 2003, 70 percent of the country's oil wealth was stolen or wasted; by 2005 it was "only" 40 percent. By most conservative estimates almost $130 billion was lost in capital flight between 1970 and 1996. Between 1970 and 2000, the number of people subsisting on less than one dollar a day in Nigeria grew from 36 percent to more than 70 percent, from 19 million to a staggering 90 million. Over the last decade GDP per capita and life expectancy have, according to World Bank estimates, both fallen. According to the United Nations Development Program (UNDP), Nigeria's ranking in terms of the Human Development Index [HDI] -- a composite measure of life expectancy, income, and educational attainment -- is number 158, below Haiti and Congo; over the last thirty years the trend line of the HDI index has been moving upward, but barely.

Nigeria appears close to the top of virtually everyone's global ranking of corruption, business risk, and lack of transparency, fraud, and illicit activity. If viewers have any association with Nigeria it is probably through email fraud -- "Dear Sir: I am a former oil minister and I have the privilege of requesting your assistance in transferring $47 million" -- these are called "419 scams" in Nigeria. Nigerian fraud has its own FBI website. Nigeria is not country, as someone once noted, it is a profession.

To suggest, as the International Monetary Fund has, that $600 billion dollars have contributed to decline in the standard of living -- that most Nigerians are poorer today than they were in the late colonial period as Nwafejoku Uwadibie says -- is mind boggling and at the same time a gigantic failure of leadership and governance.  Nigeria has become a model failure. After the discovery of oil in Mongolia, a local leader pronounced: "We do not want to become another Nigeria."

 

It is sometimes hard to gasp the contours of Nigeria's "oil failure." From the vantage point of the Niger Delta -- but no less in the vast slum worlds of Kano, Port Harcourt or Lagos -- oil-development is a pathetic and cruel joke.  It is not simply that Nigeria is a sort of Potemkin economy -- it is of course -- but the cruel fact is that the country has become a perfect storm of waste, corruption, venality and missed opportunity. To say that Nigeria suffers from corruption -- organized brigandage is how a famous Nigerian once described it -- does not really capture the nature of the beast. Money laundering and fraud on gargantuan scales, missing billions and inflated contracts in virtually every aspect of public life, touts, security, military and police forces all taking their cuts and commissions on the most basic of everyday activities. 

Perhaps there is no better metaphor for this oil-fueled failure than the stunning fact that huge quantities of oil are simply stolen every day. Over the last five years, between 100,000 and 300,000 barrels of oil have been stolen daily (perhaps 10-15 percent of national output), organized by a syndicate of "bunkerers" linking low-level operatives and thugs in the creeks to the highest levels of the Nigerian military and political classes and to the oil companies themselves. Managing Director of Chevron Nigeria, Jay Prior, once observed that he had "run companies that have had less production than is being bunkered in [Nigeria]." The head of the Economic and Financial Crimes Commission [EFCC] Nuhu Ribadu described the matter with great precision: the state, he said,  is "not even corruption. It is organized crime."

Nowhere are the failures more profound and visible than across the oilfields of the Niger Delta. For the vast majority, oil has brought only misery, violence and a dying ecosystem. A United Nations report on human development in the Niger Delta was unflinching in its assessment: the "appalling development situation" reflects the shameful fact that after a half century of oil development "the vast resources from an international industry have barely touched pervasive local poverty." By almost any measure of social and economic achievement, the oil-producing region is a calamity. The United Nations, in the most systematic account of development trends, estimates that between 1996 and 2002 the Human Development Indices actually fell in the core oil-producing states. Literacy rates in the core states are barely 40%, the proportion of primary school children enrolled is, according to a Niger Delta Environmental Survey (NDES), 39 percent. The ratio of doctor-to-population is 1:27,000 in Delta State (and 1:282,000 in some of the local government areas in Southern Ijaw, Bayelsa State). There is one secondary health care facility for every 131,000 people serving an area of 583 square kilometers. The number of persons per hospital bed is three times higher than the already appalling national average. Electricity is a running joke. Outside of the urban areas only 20% of settlements are linked to a national grid that does not function in any meaningful sense. 

One of the horrors of the Delta is that the ultra-modernity of oil sits cheek by jowl with the most unimaginable poverty. Around the massive Escravos oil installation with its barbed wire fences, its security forces, and its comfortable houses for international oil workers are nestled shacks, broken-down canoes and children who will be lucky to reach adulthood. "You will just shake your head," says local resident Dorothy Ejuwa, casting an eye on the glare of the nighttime lights of Escravos: "For how long can we remain like this? That is our bitterness."

It is from this sea of misery and exclusion that another aspect of contemporary Nigeria,  "The Philanthropist's" passing reference to "rebels," has garnered international attention.  Currently the Nigerian oil and gas industry has in effect been closed down by a military insurgency. Various militant groups, beginning in the late 1990s, have gradually escalated their war against the Nigerian government and the international oil companies who operate in the Niger Delta (most importantly Shell, Chevron, Total, Agip, Exxon).   The descent into violence and crime cannot be understood outside of the processes by which the oil-producing region has incurred all of the costs of the development of the oil and gas sector and received few if any of the benefits. The current population of the oil region is 28 million of the total population of 150 million, yet the majority of the oil wealth is captured by the federal state and distributed to the so-called "ethnic majorities" in the politically dominant northern and western states. 

One of Nigeria's greatest activists and human rights leaders, Ken Saro-Wiwa, who mobilized a small ethnic group called the Ogoni in the early 1990s to demand compensation from the companies and the government, feared that the grievances, if left unaddressed, would descend into the worst sort of bloodletting. But even Saro-Wiwa's gravest fears could not have anticipated the calamitous descent into violence over the last decade, culminating with the dramatic appearance of the Movement for the Emancipation of the Niger Delta (MEND) in late 2005. In a series of attacks, something like 20 percent of national output was compromised in a single day. MEND insurgents, claimed Jomo in 2006, "were not communists... or revolutionaries. [They] are just very bitter men." By March 2007 over 200 expatriate oil-worker hostages have been taken and 42 attacks on oil installations have occurred. Within a year of their appearance MEND had, as they themselves predicted, shut-in over one third of Nigeria's oil output. Writing in mid-2007, the International Herald Tribune (April 22^nd 2007) captures vividly the brave new world ushered in by the oil rebels:

Companies now confine employees to heavily fortified compounds, allowing them to travel only by armored car or helicopter... One company has outfitted bathrooms with steel bolts to turn them into "panic" rooms, if needed. Another has coated the pylons of a giant oil-production platform 130 kilometers, or 80 miles, offshore with waterproof grease to prevent attackers from climbing the rig. ...Some foreign operators have abandoned oil fields or left the country altogether. "I can't think of anything worse right now," said Larry Johnson, a former U.S. Army officer who was recently hired to toughen security at a Nigerian site operated by Eni, an Italian oil producer. "Even Angola during the civil war wasn't as bad."

By the summer of 2009, oil output, which typically runs at roughly 2.3 million barrels per day (mbpd), was down to 1.7 mbpd. Shell, the largest international operator accounting for almost half of all oil output, had lost $10.6 billion in revenues since late 2005. On May 13^th 2009 the Nigerian military forces launched a full-scale assault on the militants in an effort to stabilize a region, and an economy, that was in effect ungovernable.

 

This is the larger canvas on which the first episode of "The Philanthropist" first must be located. Poverty, corruption, oil wealth and political conflict are central realities not just to doing business in Nigeria, but to the everyday realities of the armies of Nigerian poor.

 

Viewers interested in exploring these issues further may wish to see a collaborative effort between myself and New York photographer Ed Kashi, in which we document the costs of a half century of oil in the Niger Delta (the book is entitled "Curse of the Black Gold," Powerhouse Press, 2007, and Ed's website is: http://www.curseoftheblackgoldbook.com/). Seattle-based filmmaker Sandy Cioffi has also released an excellent new film on oil and the Niger Delta entitled "Sweet Crude." (http://www.sweetcrudemovie.com/). In addition, a number of non-profit and philanthropic groups have been active around oil and development issues in Nigeria and you may wish to see the websites of the following organizations in Nigeria and elsewhere:

Environmental Rights Action: http://www.eraction.org/

Social Action: http://www.saction.org

Justice in Nigeria: http://justiceinnigerianow.org/

Global Witness and OxfamAmerica have both been involved in issues of corporate social responsibility in the oil and gas industry and in bringing the plight of the poor in African and other oil states to international attention. 

See:

Global Witness: http://www.globalwitness.org/

OxfamAmerica: http://www.oxfamamerica.org/

A new report on the region has been released in June 2009 by Amnesty International: http://www.amnesty.org/

Michael Watts

Class of '63, Professor

UC Berkeley