Erin Sams

February 11, 2019

Legislative Inefficiency and Corruption Delays Economic Reform

Executive Summary
Reform postponement and financial mismanagement in the Nigerian National Petroleum
Corporation (NNPC), likely prevents economic and social improvements. The politicization and
slow reform process in the oil industry stagnates infrastructure development, and
embezzlement of oil profits by the government negatively affects employment opportunities.

Discussion
President Muhammadu Buhari’s attempts to minimalize corruption in the oil sector and create
a better financial model is met with political resistance, so it is likely legislative reforms will
develop slowly.1 The slow growth of bureaucratic reform, generated by resistance from political
elites who profit from the oil industry, likely affect citizens access to basic infrastructure needs.
There are significant issues in road, sanitation, water, and air transportation ports. 2
Furthermore, the annual funding gap for infrastructure is around USD 4 billion, which is mainly
needed to improve the power sector.3 Only 50 percent of households have access to power,
and a majority of this statistic derives from upper income citizens.4

Nigeria’s ability to leverage domestic capital markets and outside financial gains from major
trade partners, such as China, would diversify the economy, yet government corruption likely
inhibits this possibility.5 Approximately 77 percent of total government revenue aggregates
from oil manufacturers, which is being used for independent gain by political figures. 6 8 out of
13 international oil companies that operate within Nigeria pay approximately USD 15 billion in
payments to 10 Nigerian government entities.7 There is evidence of over USD 1 billion in bribery
payments between international oil companies located in Nigeria, such as Shell, and the
Nigerian government, and none of the payments funnel into the national treasury.8 This limits
job sustainability and monetary supply for Nigerian civilians, and the federal government is not
implementing protections.9
References

1 Stratfor. “Nigeria’s Oil Industry Churns On”. November 18, 2016. Stratfor Worldview.
Accessed April 10, 2019.
2Pushak, Nataliya. Foster, Vivien. World Bank Group. “Nigeria’s Infrastructure: A Continental

Perspective.” February 2011. World Bank. Accessed February 11, 2019.

3Pushak, Nataliya. Foster, Vivien. World Bank Group. “Nigeria’s Infrastructure: A Continental

Perspective.” February 2011. World Bank. Accessed February 11, 2019.

4 Pushak, Nataliya. Foster, Vivien. World Bank Group. “Nigeria’s Infrastructure: A Continental

Perspective.” February 2011. World Bank. Accessed February 11, 2019.

5 White House. “Remarks by President Trump and President Buhari of the Federal Republic of

Nigeria in Joint Press Conference.” April 30, 2018. White House. Accessed February 11, 2019.
6 Malden, Alexander. “Nigeria’s Oil and Gas Revenues: Insights From New Company

Disclosures.” Natural Resource Governance Institute. December 2017. Resource Governance.

Accessed February 11, 2019.
7 Malden, Alexander. Natural Resource Governance Institute. December 2017. Resource

Governance. Accessed February 11, 2019.

8 Webb, Jonathan. “Shell Knew Of Bribe Payments To Nigerian Official, Global Witness

Report Alleges”. April 10, 2017. Forbes. Accessed April 10, 2019.
9 VICE News. “The Battle Raging In Nigeria Over Control Of Oil.” YouTube. March 22, 2018.

Youtube. Accessed February 11, 2019.