THE JOURNAL OF ENERGY AND DEVELOPMENT

Paul G. Adogamhe,

“Reforming the Rentier State: The Challenges of Governance Reform in Nigeria,”
Volume 34, Number 2

Copyright 2011

REFORMING THE RENTIER STATE: THE CHALLENGES OF GOVERNANCE REFORMS IN NIGERIA
Paul G. Adogamhe*

Introduction

N

igeria has abundant mineral resources with crude oil exports alone accounting for 95 percent of the nation’s foreign-exchange earnings. The federal government bureaucracy has expanded significantly to meet the increasing federal government intervention in the economy. The share of the government’s participation in the economy has grown significantly, with consolidated expenditures rising from 29 percent of the gross domestic product (GDP) in 1997 to 50 percent in 2001.1 When Nigeria gained its independence in 1960, the federal bureaucracy consisted of 72,000 employees; 40 years later (2000), this bureaucracy has increased to a work force of 1.2 million, consisting of 26 ministries and about 400 extra-ministerial departments.2 The federal government bureaucracy is now the chief employer in Nigeria, bogging down the budget with recurrent expenditures on bureaucratic structures and personnel salaries. Consequently, the federal government capital project expenditures on health care, education, communication networks, and social security suffer financial insolvency. In an era of capitalistic democracy, Nigeria finds itself held hostage by big government, corruption, and poor governance.
*Paul G. Adogamhe is currently an Associate Professor of Political Science in the Department of Political Science at the University of Wisconsin-Whitewater. He holds M. Phil/Ph.D. degrees in international relations from the Graduate Center of the City University of New York; his doctoral dissertation was on Nigeria/OPEC relations. The author also earned a M.A. degree in international political economy and development from Fordham University. His articles have been published in The Nigerian Journal of International Affairs (NJIA), African Integration Review, Poverty and Public Policy, Journal of Development Alternatives and Area Studies, among others. The Journal of Energy and Development, Vol. 34, Nos. 1 and 2 Copyright Ó 2011 by the International Research Center for Energy and Economic Development (ICEED). All rights reserved.

227

228

THE JOURNAL OF ENERGY AND DEVELOPMENT

The independence of the Public Service Commission, which is supposed to insulate the public service from politics and to maintain neutrality and objectivity in the activities of the civil service, was compromised through undue political interference. The result has been the appointment or promotion of staff with inappropriate qualifications for the job in the public service system. The affirmative action policy of maintaining the federal character in the Nigerian civil service has introduced ethnic considerations in the appointment and promotion of civil servants to senior management positions in government agencies. The negative consequence of this political interference is that it has led, in some cases, to the appointment of incompetent and mediocre staff to senior management positions in the name of maintaining ethnic balance. This results in the inability of staff to carry out the duties of their positions, which has affected the quality of performance and the delivery of services to the people. At his inauguration in 1999, President Obasanjo advocated for public service reforms:
Our public offices have too long been showcases for the combined evils of inefficiency and corruption, whilst being impediments to effective implementation of government policies, 3 Nigerians deserve better. And we will ensure they get what is better.

Therefore, one of the priorities of President Obasanjo’s administration was to embark on a series of reforms to reinvigorate and streamline this unwieldy federal bureaucracy and to make it more responsive, efficient, and cost-effective. In 2004, President Obasanjo formally launched the reform manifesto entitled the National Economic Empowerment and Development Strategy (NEEDS). The series of political and economic reform initiatives were conceived as a medium-term blueprint for dealing with the structural and institutional dimensions of Nigeria’s developmental crisis from 2004-2007. This paper is an attempt to examine the proposed reforms vis-a-vis the ‘‘rentier’’ status of Nigeria. ` Nigeria: A Classic Rentier State H. Beblawi identifies four essential characteristics that would determine a rentier state: (1) if rent situations predominate; (2) if the economy relies on a substantial external rent and, therefore, does not require a strong domestic productive sector; (3) if only a small proportion of the working population is actually involved in the generation of the rent; and, perhaps most importantly, (4) that the state’s government is the principal recipient of the external rent.4 Nowhere are all these characteristics associated with a ‘‘rentier state’’ as clearly manifested as in Nigeria, a fact that has complicated the economic and administrative reforms championed by the Nigerian government.5 As A. Harneit-Sievers correctly observes,
. . . a rentier state is a state whose major source of revenue does not arise from taxation on productive activities—agriculture, industry, services—undertaken by its economically active

REFORMING THE RENTIER STATE: NIGERIA

229

population. Instead, the rentier state lives by collecting a convenient income from sources into which it invests little or nothing. Rent comes in without opportunity costs, and if it comes in as centralized as in the case of oil, it is even more convenient, from the treasury’s point of view. Nigeria is a drastic case—perhaps the most drastic among the populous nations of the 6 world—of a rent-based economy and it has suffered heavily from it.

The emerging paradigm of rentier political ecology places emphasis on the ‘‘rentier space,’’ which tends to deal exclusively with activities related to ‘‘the acquisition, control, disposition of oil and oil-related resources, including the financial benefits derived from them,’’ with the rentier state serving as the epicenter of coveted space.7 The economic behavior of a ‘‘rentier state,’’ according to D. Yates, ‘‘embodies a break in the work-reward causation. . . . [r]ewards of income and wealth for the rentier do not come as result of work but rather are the result of chance or situation.’’8 During the time of an oil boom, the government has windfall profits that can lead to massive spending schemes, including for nonproductive investments, and that can promote corrupt practices, in turn undermining transparency and accountability in the public sector.9 This social epidemic of the rentier state also involves a widespread behavior and often a mentality among the population. For example, most Nigerian citizens tend to see the oil revenue that pours into state coffers as something of a dichotomy—it is everyone’s and no one’s—so individuals clamor for a share of the ‘‘national cake’’ rather than earn an income largely generated through employment. With this weakening of the relationship between effort and reward, the federal government of Nigeria is perceived as a revenue distributive organ of the rentier state. This situation is described by T. L. Karl:
Because ‘‘petrodollars’’ are not ‘‘their’’ money, citizens are not motivated to ensure that state revenues are well spent; they are not engaged; and they seldom demand better monitoring of the utilization of revenues. Like their rulers, they too often become addicted to their share of 10 oil rents even as a type of permanent disconnect between the state and its subjects sets in.

H. Mahdavy, who first popularized the concept of the rentier state, argues that resource rents make state officials both myopic and risk-averse: upon receiving large windfalls from oil, the government grows irrationally optimistic about future revenues and ‘‘devotes the greater part of the resources to jealously guarding the status quo’’ instead of promoting long-term development.11 The rentier states tend to promote weak political and economic development and, instead of creating an efficient and responsive public sector, they create a corrupt and irresponsible one.12 More specifically, these states fail
to develop a robust central bureaucracy because their ability to rely on external revenue source engenders rigid and myopic decision-making. This includes. . . the failure to build a viable tax regime because they do not feel compelled to extract revenue from domestic sources to fill 13 their coffers.

For instance, available statistics indicate that the federal government of Nigeria in the last ten years (1999-2009) generated about the sum of 34 trillion naira in

230

THE JOURNAL OF ENERGY AND DEVELOPMENT

revenue. Proceeds from taxes accounted for 17 trillion naira. However, much of this amount was proceeds from oil taxes because nonoil tax proceeds contributed as little as 3 trillion naira during the period under review.14 This has presented a difficult situation for the government’s plan to de-emphasize the overdependence on oil revenue to fund the budget. The dependence on external rent not only frees the state from the need to extract taxes from the domestic economy for wealth creation but also ‘‘unwittingly diminishes its own administrative capacity.’’15 According to Hilary Benn, ‘‘the tax system is crucial for accountability . . . .when citizens pay tax, they demand services back.’’16 Taxation can become a powerful incentive for the Nigerians to demand accountability from the federal government. If domestic tax proceeds are not channeled to the provision of the public good, the Nigerian taxpayers are most likely to resist the federal government’s efforts to impose taxes. The fact that the federal government is less likely to rely on their citizens for financial support has resulted in weak linkages between the government and citizens. When citizens are untaxed they sometimes have less information about state activities and the public, in turn, is less likely to demand government accountability.17 Fluctuations in the oil market prices often create macroeconomic instability and, as a result, the government is plagued with inconsistent policies and service deliveries due to budgetary shortfalls. The federal government’s budget is almost entirely based on rentier income, causing Nigeria’s economic and political development to be held hostage to the volatility of the world’s oil markets. It makes a pretense of federal government budgetary debate. The Nigerian oil industry, like that in virtually all major oil-exporters, is not labor-intensive. Therefore, it employs only a few unskilled workers since Nigerian technology is far behind the industrialized countries. As a result, the oil industry, which accounts for at least 80 percent of the Nigerian GDP, is also responsible in part for high rates of unemployment in Nigeria. Thus, the Nigerian working population consists mainly of foreigners employed in the oil industry and the civil servants who work for the federal and state governments. The rest of the Nigerian population, which is able to work, largely remains either underemployed or unemployed. The oil industry has consumed the cottage industries (such as groundnut pyramids, cotton, hide and skins, rubber, cocoa, and palm oil industries) that once bankrolled the Nigerian economy in the early 1960s. These cottage industries were owned and managed by Nigerians in the private sector rather than by the federal government. Thus, despite record-high oil prices and unprecedented inflows of oil revenues, Nigeria is rated as among the 15 poorest countries in the world.18 The military dictators mortgaged Nigerian oil as collateral for borrowing billions of dollars from foreign banks at exorbitant interest rates. Until recently, the Nigerian national debt stood at $35 billion. The problems of excruciating poverty, ecological degradation, and underdevelopment have contributed to violent resource-based, religious, and ethnic conflicts throughout the country.19 Thus, the disruptive

REFORMING THE RENTIER STATE: NIGERIA

231

violence prevalent in many parts of Nigeria has diminished the government’s capacity to govern the country effectively.
GDP per capita is $400 per year, 60 percent of the population lives on the less than $2 per day, 78 out of every 1,000 infants dies at birth, 35 percent of the population under five years of age is malnourished, barely 50 percent of the adult female population is literate and so on . . . . The record is dismal, yet over the past 35 years, oil rents accruing to Nigeria have amounted to an estimated $300 billion. Nigeria, however, is not unique. Its experience is replicated throughout African oil-producing countries and in other regions of the world where there is 20 similar dependence on oil and gas.

While the institutional overhang of the rentier state continues to serve the interest of ruling elites and oil multinationals, rentier money continues to impede the type of reform policies that would lead to the better governance and effectiveness of the Nigerian state.21 Therefore, Nigeria must transform from its rentier status to deal with the crisis of economic stagnation as well as achieving a level of effective public governance. Some of the recent scholarly literature also have shown evidence that the quality of a country’s institutions and governance structures can explain variances in economic outcomes across natural-resource-abundant countries.22 The issues of fiscal federalism, for instance, are at the forefront of many socioeconomic and political challenges in Nigeria, including matters of service delivery, accountability, macroeconomic stability, balanced growth, and the strengthening of its fledgling democracy in general. The practice of true fiscal federalism therefore would create a legal, political, and economic environment required to restore professional ethos and integrity that will ensure both the effectiveness of the public service as well as the legitimacy of the Nigerian state.

The Governance Reforms in Nigeria The proposed agenda for reform in Nigeria are:
to right-size the economy and eliminate ghost workers, and re-professionalize the public service, rationalize, re-structure and strengthen institutions, privatization and liberalization program, tackling corruption, and improving transparency in government accounts, reduce 23 waste and improve efficiency of government expenditure.

The government also established several anti-corruption agencies including the Independent Corrupt Practices and Related Offences Commission, the Economic and Financial Crimes Commission (EFCC), the Cyber-Crime Commission, and the Code of Conduct Bureau. These agencies have the power to investigate allegations of corruption against public officials and bring charges against them. This has sometimes led to the arrest, prosecution, and conviction or dismissal of highly placed public officials who abused their offices.

232

THE JOURNAL OF ENERGY AND DEVELOPMENT

The federal government has introduced a series of reforms to achieve a balanced budget, transparency in accounting for oil revenue, public procurement, and contract awards.24 The government adopted the 2004 oil-price-based fiscal rule, a fiscal framework that delinks oil revenue flows from government expenditure and thus helps to protect macroeconomic stability. The Fiscal Responsibility Act to achieve fiscal discipline finally was passed and signed into law in 2007. Further, the reform program has emphasized the need for resource enhancement through greater prudence and efficiency in the use of public funds, a freeze of payments on extra-budgetary commitments, reduction and elimination of waste in the system, and greater efficiency in the collection of government revenue. Some of the other innovations in the management style proposed by the reform include: (1) the establishment of an independent monitoring framework that will involve a broad spectrum of stakeholders; (2) the establishment of a Peer Review Mechanism that will provide an avenue for former heads of government of the federation to review progress and problems, and learn from the experiences of one another; and, (3) special focus is also being placed on the need to gather adequate statistics and strengthen analytical work as key instruments for assisting the government in monitoring and evaluating projects. Budgetary and public financial management processes and systems have been reformed, which has impacted positively on some aspects of funds management. The procedure for awarding contracts has been redesigned to conform to international standards and practices, with emphasis on transparency, competition, and value for money. The oversight role of the Due Process Office has been formally established in the Bureau of Public Procurement, following the passage of the 2007 Public Procurement Act. The Public Procurement Act was put in place to guarantee fair play in the award of government contracts. For this reason, specially trained procurement cadres have been entrusted with the responsibility of handling government contracts to ensure the efficient implementation of the Public Procurement Act. An efficient procurement system is a vital instrument for expenditure management, which will ultimately lead to an effective delivery of public services, promoting economic growth, and development.25 There has been some improvement in the areas of public recurrent expenditure management, government procurement, and the accounting system, thus curtailing some of the waste in the public service.26 Nigeria has successfully enacted into law the Nigerian Extractive Industries Transparency Initiative (NEITI) bill in May 2007. NEITI was derived from Nigeria’s participation in the international reform effort known as the Extractive Industries Transparency Initiative (EITI), which is to enhance transparency and accountability in the oil and gas industry. When NEITI was passed by the Nigerian Assembly it became the first EITI-implementing country with a statutory backing for implementing EITI in the world. The government also has made efforts to collaborate with civil society organizations and other stakeholders by initiating efforts that will bring them into consultations on budgetary matters. However, this

REFORMING THE RENTIER STATE: NIGERIA

233

practice has yet to take firm root in Nigeria as there are many instances where these stakeholders were not consulted or their views were not taken into account in policy formulation. Nigeria paid its $30 billion external bilateral debt owed to the Paris Club of official creditors in April 2006.27 It also has exited its London Club obligations and, as of mid-June 2007, Nigeria’s external debts stood at about 3 percent of GDP, most of this being multilateral debt. This, in turn, has had a beneficial impact on investment and economic growth in Nigeria.

The Nigerian Public Service Reform Program The highlight of the reform agenda was to create
a public service that is performance and result-oriented, customer-driven, investor-friendly, professional, technically sensitive, accountable, fostering partnerships with all stakeholders and committed to a continuous improvement in government business and the enhancement of 28 overall national productivity.

Hence, the Bureau of Public Service Reforms was established on February 4, 2004 and given the following terms of reference: to initiate an Action Plan on the reform at different levels for attention of the Steering Committee; to elucidate government policy on reform; to coordinate, monitor, and evaluate reform implementation activities; to conduct research on implementation efforts and present best practices models; to provide advisory and technical support services to change management teams; to engender an environment of learning among ministries, departments, and agencies; to disseminate information on all aspects of reforms; and to submit quarterly progress reports on reform activities. The goal of public service reform was to reduce the size of the Nigerian federal bureaucracy. Each ministry, department, or agency of the federal government was required to initiate and conduct its institutional reform based on its core mandate while the cross-cutting reform issues, such as budget/financial management, common resources management systems, procurement, policy management, and the like, are handled centrally by appropriate agencies. By the end of 2007, 12 ministries were completely overhauled by the government: the Federal Capital Administration, Federal Ministry of Finance, National Planning Commission, State House, Federal Ministries of Transportation, Health, Foreign Affairs, Internal Affairs, Science and Technology, Commerce, Solid Minerals, and Education. The government has reduced the number of ministries by merging some of them and has been employing the organizational and management structures. Some ministries also have endeavored to computerize their payroll and conduct an audit-and-pay verification exercise to weed out ghost workers. The Bureau of Public Service Reform co-opted other relevant federal agencies to address the following reforms: performance management system, including target setting and

234

THE JOURNAL OF ENERGY AND DEVELOPMENT

performance assessment at individual, departmental, and organizational levels; review of rules, regulations, and procedures; review professionalization of staff cadres and the pool system; review of central personnel management; development of a training and capacity building systems; information technologyenabled payroll/personnel record system; other e-government implementation; pay reform; and, redundancy management. The Public Enterprises Act of 1999 empowered the formation of the National Council on Privatization and the Bureau of Public Enterprises as the Secretariat of the Council. It has enabled the privatization of public enterprises in the key economic sectors through the sale of government-held equity stakes, which has drastically reduced the size of the federal bureaucracy. The privatization of some of the public enterprises has led to the disengagement of an additional 32,240 workers from the public sector. The deregulation of the telecommunication sector has been particularly successful, resulting in an increase of foreign investment in the country.29 However, the growth potential in this sector has been due to pent-up demand and a willingness on the part of the Nigerian consumers to bear higher cost. While local participation has remained a priority of the government since 2005, the implementation of the privatization program has been hampered by controversies and accusations of political favoritism, weak capital markets, and an inappropriate regulatory framework. The Public Service Commission was charged with the responsibility of hiring and firing civil service officials. The federal government has introduced in-service training programs for civil servants and a new salary scale has been put in place to reward better performance. The Pension Reform Act was enacted in 2004 to ensure that the civil servants have good retirement benefits and those let go from the civil service were given severance benefits and training for a smooth transition to post-retirement life. The current pension scheme is a radical departure from the former pay-as-you-go-system and is meant to provide a pool of funds to boost the economy through savings and capital formation. In addition, ‘‘the Service Compact with all Nigerians’’ has been introduced to encourage integrity among civil servants and effective public-service delivery. The expensive and wasteful practice of providing houses, cars, telephones, electricity, cooking gas, water, free furniture, and medical services for the upper echelon of the civil service has been stopped. The reform has ‘‘monetized fringe benefits for all categories of public servants.’’30 Consequently, the fleets of government cars and houses were sold in a public auction and the revenue was paid to the Central Bank.

The Challenges to Good Governance in Nigeria The term ‘‘good governance,’’ according to the International Monetary Fund (IMF) and World Bank, consists of a wish-list of reforms, practices, and outcomes

REFORMING THE RENTIER STATE: NIGERIA

235

that are generally associated with the spread of democracy, the rule of law, efficient bureaucracies, accountability and transparency, free market economies, and independent judiciary.31 However, the concept has undergone recent modification by emphasizing democracy’s needs for supportive institutions and processes such as impartial judiciaries, transparent public agencies, and meaningful citizen participation.32 Therefore, good governance implies effective political institutions and responsible use of political power and management of public resources by the state. The United Nations Development Program defines governance as ‘‘the exercise of political, economic and administrative authority to manage nation’s affairs at all levels.’’33 The various attempts to measure the quality of governance indicators continue to face conceptual and ideological challenges.34 The World Bank categorized six measured indices of good governance as follows: (1) voice and accountability; (2) political stability and lack of violence; (3) government effectiveness; (4) regulatory quality; (5) rule of law; and (6) control of corruption.35 But has the Nigerian reform agenda resulted in a more efficient, cost-effective, and responsive public service? While opinions are divided among commentators on the impact of the Nigerian reforms, it is fair to say that Nigerian public service reforms have been partially successful, especially in the area of financial regulatory reforms. The Nigerian government has introduced a series of innovations in the procurement process to make it more transparent and cost-effective. But the key question still remains whether Nigeria’s financial corruption vis-a-vis rentier money will be ` overhauled by these reforms. On paper the reforms appear appropriate but, considering how deeply corruption is entrenched in Nigeria, one remains somewhat skeptical. One of the challenges facing the federal government is whether it can implement and enforce its own reforms. Despite the public service reforms, the Nigerian government continues to be ranked low on the ‘‘good governance’’ index in relation to other sub-Saharan African countries.36 This is critical as the poor grade on ‘‘good governance,’’ which Nigeria continues to receive, reflects the magnitude of the empirical challenges facing the Nigerian government in its efforts to reform the federal bureaucracy. The quality of Nigeria’s public institutions is ranked low internationally, and the bureaucratic inefficiency still remains a major deterrent to investment and growth.37 The process of implementing the reform program has generated several policy inconsistencies and contradictions that have continued to undermine the achievement of optimal performance and productivity in the Nigerian public sector. Since the governance problems are massive and entrenched, Nigeria still lacks a democratically accountable executive branch, an independent judiciary, a functional legislature, active and informed civic societies, an effective civil service, and open and transparent policy-making processes. The changing of the attitudes of public personnel is also the most difficult aspect of this reform process because of entrenched political and social interests. Part of this

236

THE JOURNAL OF ENERGY AND DEVELOPMENT

difficulty has been attributed to the fact that, while the public servants are the target of the reform in terms of social dislocations, loss of privileges, and jobs, they also are expected to serve as the agents of the reforms. What has become obvious is that the military government, which was supposed to be a corrective regime, failed catastrophically to stamp out financial corruption. As a matter of fact, it plunged Nigeria further into a rentier-state economy. The present reform program is under the auspices of a so-called democratic form of government. Therefore, the fledgling democratic system of government in Nigeria requires time to mature. What Nigeria needs now is time and the right ideas that can be enacted into laws and put into practice. Nigeria already has undertaken the heavy lifting by constitutionally replacing the military government with a democratic one. With this in mind, there is hope that, with time, Nigeria will be a truly democratic state and shed its rentier status. President Jonathan reiterated this point during his address to the nation on the occasion of Nigeria’s golden jubilee celebration when he stated that,
‘‘. . . in midst of these challenges facing the country, it is easy to forget our unusual circumstances. We have actually been moving from one political instability to the other such that we have barely been able to plan long-term and implement policies on a fairly consistent basis. This instability has also impacted negatively on institutional development, which is necessary for advancement. The structures of governance had barely been developed when we ran into a series of political obstacles shortly after independence. . . . One of the greatest achievements of our union these past 50 years is our togetherness,’’ said the president who 38 declared that ‘‘a new Nigeria is [a project] in the making. . . .’’

Thus, it would be naive to think Nigeria, after only 12 years of embracing democracy and only two democratic elections, is capable of enforcing all the democratic reforms.
Problems of Corruption, Clientelism, and Political Elites in Nigeria: In Nigeria there is a strong partnership between the multinational oil companies and the federal government in the exploitation of petroleum resources. The underlining
logic of governance is that the allocation of resources and opportunities is done in such ways as to strengthen the position of those in power. Such a system, operating over decades creates wealth and influence which depend on these distributional patterns for their continued 39 existence.

Consequently, ‘‘corruption in resource-rich countries is often political and bureaucratic in nature, involving both abuse of office on the part of key decisionmakers and corrupt acts among lower-level officials tasked with policy implementation.’’40 The track records of most Nigerian military, politicians, and bureaucrats demonstrate the misuse of the government oil revenues and the state-

REFORMING THE RENTIER STATE: NIGERIA

237

owned enterprises for political patronage and cronyism. They use the oil money to maintain themselves in power. They siphon the rentier funds into private accounts in Swiss banks, buy elections, build up their clienteles, and waste much of the rest on bogus projects. This seems to be the case in Nigeria. In 2003 President Obasanjo decried this endemic corruption:
Until 1999, Nigeria had practically institutionalized corruption as the foundation of governance. Hence institutions of society easily decayed to unprecedented proportions as opportunities were privatized by the powerful. This process was accompanied, as to be expected, by the intimidation of the judiciary, the subversion of due process, the manipulation of existing laws and regulations, the suffocation of civil society, and the containment of democratic values and institutions. Power became nothing but a means of accumulation and subversion as productive initiatives were abandoned for purely administrative and transactional activities. The legitimacy and stability of the state became compromised as citizens began to devise extra-legal and informal ways of survival. All this made room for corruption.41

The deeply entrenched neopatrimonial institutions and systemic corruption are central to understanding the Nigerian government’s resolve to change its government for the better. Neopatimonial rule undermines formal rules and institutions of governance by using it for systematic patronage and clienteles as a means of maintaining political order.42 As Richard Sklar and his colleagues asserted,
Neopatrimonialism is bad for Nigeria, as for other countries, because power is excessively personalized while national policy is driven by elite relationships rather than by public needs. Neopatrimonialism may randomly allow more enlightened rulers to govern and even to install some reforms for a time, but these inevitably come second to the unending need to service the 43 expensive elite relationships that keep one in power.

The Nigerian government’s passage of the Extractive Industries Transparency Initiative (EITI) into law in 2004 has provided the legal basis for collecting and publishing oil and gas revenue data and thus opening up oil rents to greater scrutiny. The public disclosure of oil contracts is intended to ensure the integrity of the bidding process and negotiations as well as guarantee transparency of government contract awards. However, there have been allegations of corruption or that Obasanjo hand-picked the civil society representatives on the stakeholders committee overseeing the NEITI process. This committee has met irregularly, fueling the perceptions that civil society is being manipulated or marginalized.44 This legal instrument is only a partial solution to the problem. The application of legal policy instruments as universal norms for controlling corruption is very much dependent upon effective implementation and on the close monitoring by activists of civil societies, parliamentary communities, and the international community.45 The prospects for effective bargaining between the Nigerian government and the general public is still very weak, because civil society lacks the capacity and resources it needs to truly influence government policy, programs,

238

THE JOURNAL OF ENERGY AND DEVELOPMENT

and legislation. Therefore, the ruling elites are relatively unrestrained by organized societal interests. The federal government needs independent civil society groups to put government excesses in check. While it is true that Nigeria has improved slightly its corruption perception rating index, much remains to be done to fully overcome the rampant corruption.46 In support of this, the former World Bank Representative in Nigeria, Dr. Hafeex Ghanem, in his valedictory speech in 2007 in Abuja, cautioned Nigeria not to claim victory over corruption yet because the country still had numerous challenges on the enforcement front. The oil windfall has enabled the Nigerian government to increase its expenditures through the offering of public-sector inflated contracts and thus provide increased opportunity for kickbacks or other avenues for siphoning off public funds. According to the Nigerian government’s own assessment, the country has been plagued by ‘‘a rent-seeking and unproductive culture of over-dependence on government patronage and contracts, with little value added.’’47 Although a nation may transit from authoritarian rule to a democratic system of government, according to Peter Lewis that does not necessarily mean neopatrimonialism has disintegrated in the process. Instead, as evidenced in most African countries, it has been ‘‘reconfigured rather than displaced by the new democratic structures. Many elected presidents have adapted to patronage structures, cultivating crony relationships with key notables and marginalizing political rivals or opponents.’’48 Although the oil industry was governed by a number of public-sector institutions, it is the President and his closest advisers, along with the top leadership of the Nigerian National Petroleum Cooperation (NNPC), who manage the petroleum industry. In addition, President Obasanjo virtually served as the Minister for Petroleum during his administration, with very little influence from his junior Minister of State for Petroleum. This did not augur well for transparency as Nigeria’s principal source of rentier money was almost entirely in the personal control of the President. As Minister of Petroleum, he awarded contracts in the oil industry to transnational oil companies. It is through the contracting procedures that corruption and bribery infiltrate the Nigerian oil sector as these contracts did not follow due process. This makes it difficult to assess their contracts, know what revenues actually accrue to the government from the petroleum industry, and hold government accountable for their revenue management. For example, between 1994 and 2004, the officials of Halliburton, an American company, admitted to funneling millions of dollars to top Nigerian government officials in what turned out to be a monumental corruption scheme, in return for multibillion dollar contracts to build the Nigerian Liquefied Natural Gas (LNG) facility in Bonny. While the National Economic Empowerment and Development Strategy may clearly recognize that ‘‘a key aspect of the institutional reforms is to fight corruption,’’ the current piecemeal approach by the government anti-corruption agencies may amount to too little, too late. The irony of the anti-corruption

REFORMING THE RENTIER STATE: NIGERIA

239

crusade in Nigeria is that the anti-corruption agencies called upon to help eradicate corruption have themselves become agents of mass corruption. This has enabled the new actors to enrich themselves at society’s expense and thus reinforces the image of Nigeria as a ‘‘prismatic society.’’49 To make matters worse, the anticorruption crusade in Nigeria is profiling certain members of the public service who are considered opponents of the government and ignoring those wealthy and powerful enough who can buy their way through the legal system.50 These anticorruption agencies have become toothless bulldogs because they also lack the power to deal aggressively with the endemic corruption in government. Their terms of reference only empower them to investigate, bring charges, and prosecute offenders in the courts, which have already proved to be ineffective in aggressively dealing with these corrupt public officials. The Transparency International Report stated that Nigeria has an impressive array of structures, institutions, and laws aimed at combating corruption but still falls short of the standards and requirements of an effective anti-corruption regime as demanded by the conventions against corruption. The irony of democratic politics in Nigeria is that it disregards democratic political culture. The general elections of 2003 and 2007 were marred by what international and domestic observers characterized as massive fraud and serious irregularities, including vote rigging and political violence. The flawed elections have provoked widespread outrage among the Nigerian public, who have called for electoral reforms and demonstrated a disturbing evidence of popular disengagement from the democratic process. In fact, despite the glaring cases of fraud at the elections, which necessitated the nullifications and cancellations of some of the results, not a single perpetrator has either been apprehended or prosecuted. While there have been spate reversals of electoral mandates by the election tribunals, the NEPAD-APRM Nigeria: Country Self-Assessment Report: Executive Summary stated that political corruption continues to remain a major challenge to progressive politics in Nigeria.
. . . of all forms of corruption, political corruption has remained a major obstacle to national progress in Nigeria. The current democratic regime has put in place mechanisms that can prosecute the war against corruption, while there is improved awareness on the part of the citizenry regarding the imperative of exorcising the ghost of corruption. . . But not much appreciable progress has been made in coming to terms with political corruption expressed in electoral fraud and vote buying as demonstrated by the 2003 and 2007 elections. In general, 51 there is a challenge to check the excessive use of money in politics.

In 2007, the late Nigerian President Mr. Umaru Musa Yar’Adua lamented that corruption is the most worrisome problem of public life in the country. Corruption, he regretted, had eaten deep into the fabric of the society and polluted even the most sacred and sacrosanct institutions of Nigerian national life over the years. He pointed out that corruption is massive, extensive, endemic, and pervasive at all

240

THE JOURNAL OF ENERGY AND DEVELOPMENT

levels of the government and the society, and no noble policy of government or any laudable program stood the chance of success if public resources were habitually and brazenly frittered away by those entrusted with them. The late president observed that corruption has distorted planning and implementation of policies, prevented equitable and even distribution of opportunities and resources, hampered economic growth and development, and had given Nigeria a tarnished image globally.52

Problem of Weak Institutional Capacity in Nigeria: Corruption, according to the World Bank, often flourishes where institutions are weak, where the rule of law and formal rules are not rigorously observed, where political patronage is rife, where the independence and professionalism of the public sector have been eroded, and where civil society lacks the means to generate public pressure.53 The difficulty in managing oil revenues in most oil-exporting countries has been attributed to weak political and administrative capacity and to the lack of public participation necessary for counteracting rent-seeking behavior.54 Therefore, it is assumed that the implementation of good governance and institutional changes can address the paradox of plenty and thus argue for the need to build competent and capable state institutions that can promote good governance, economic growth, and reduce poverty. But despite the rhetoric of adopting governance reforms by the Nigerian government, the problem is that their prescriptions for administrative reforms have not taken into serious account the many insights of the new trends in public administration. Since the early 1990s, the paradigm shift toward new public management has called for performance orientation toward increased technical efficiency, flexibility, and accountability among both developed and developing nations. The model has provided a critique of the traditional model of public administration by accepting the weakness of traditional measures of personnel management in the face of hierarchy, the development of powerful institutional cultures, and their resistance to change. With respect to administrative reforms, the new public management model stresses the need for public choice, the separation of policymaking and policy implementation, and ‘‘the use of market mechanisms to address public sector problems.’’55 It emphasizes the importance of radically altering the structure of administrative agencies to overcome the problems of bureaucratic hierarchy, with managers clearly taking greater responsibility. The Nigerian reformers are still entrenched in the standard prescriptions of old-line public administration, especially their lack of a full commitment to decentralization as advocated by the donor community because of the nation’s dependence of rentier money. The process of devolution of power and responsibilities in Nigeria has proven to be very difficult in most cases and has remained an ideal rather than a reality. Can Nigeria, a classic case of a rentier state,

REFORMING THE RENTIER STATE: NIGERIA

241

truly reform itself and break away from the shackles of dependence on rentier money? Judging from the proposed current reform under way, the answer is no. The current public-sector reform is not intended to radically dismantle the pathologies of the rentier statehood, which has swallowed the Nigerian democratic governance.56 Rather it is an attempt to reform the bureaucratic apparatus of the Nigerian state. Brian Levy cautioned us to learn from the lesson of experience of the past bureaucratic reform efforts in Africa:
. . . a principal reason for the limited success of the first round of efforts to build state capacity was the implicit presumption that the weakness of public administration was managerial and could be remedied in a straightforward manner through a combination of organizational overhaul and financial support to procure the requisite specialist technical advice, training, and hardware. By contrast, a central lesson of experience. . . is that public administrations are embedded in a complex, interdependent system. This system incorporates not only the bureaucratic apparatus as a whole, but also political institutions and social, economic, and po57 litical interests more broadly.

Pierre Englebert also has reviewed this type of public-sector management reforms and the consequence for governance reforms in Africa:
Patterns of bureaucratic inefficiency, corruption, delinquent rule of law, and the like answer to a political logic and are consequences of the dichotomization between statehood and power in African non-legitimate states. It is hard to see how public sector management programs address these deeper issues. They may provide temporary Bands-Aids, but they are unlikely to bring about lasting improvements.58

The weakness of the Nigeria reform agenda is that it views its political and economic woes solely on the malfunctioning of the bureaucracy. An improved governance reform agenda in Nigeria will require the radical transformation of Nigeria from a rentier state to a more modern and democratic one. This means creating democratic governance with strong, efficient, and effective institutions that can foster a culture of accountability and transparency. For such a transformation to take place, the reforms must be embedded within the broader socioeconomic, political, and constitutional frameworks of the country, ‘‘a product of deliberate policies, which require all institutions to function in accordance with . . . a country’s constitutional provisions of the rule of law, due process of law, cultures and traditions.’’59 J. Robinson et al. argue that the key to avoiding the ‘‘resource curse’’ is institutions that limit the ability of governments to distribute public-sector positions to political supporters, which distorts the allocation of resources in the economy.60 ‘‘Good governance depends on the qualities of the men and women that deal with governance. It is institutions that guarantee good governance.’’61 However, Nigeria’s reliance on a rentier political economy has adverse effects on the development of democratic institutions and consolidation.62 With the failure of parliamentary democracy in 1966, Nigeria was ruled for decades by decrees

242

THE JOURNAL OF ENERGY AND DEVELOPMENT

rather than by the constitution, which prevented democratic political culture from firmly taking root in Nigeria. Upon assuming power, the military junta ensured that they purged the Nigerian armed forces and the civil service of all elements they considered a potential threat to their regime. They also banned political parties, marginalized civil society organizations, undermined the judiciary, threatened the media, stifled private-sector initiative, and created an atmosphere of fear and submission. The long military rule in Nigeria has left in its wake a tradition that has institutionalized or reinforced opportunities for corruption and rentseeking behavior. The present presidential democracy is plagued by an ill-defined constitution, weak political institutions, an inefficient bureaucracy, a delinquent judiciary, and a presidential power monopoly—some of the characteristics of the previous military regime. In such circumstances, the stakes are huge for the governing elites, who seek access to the Nigerian rentier state because it is perceived as a means of rent accumulation rather than a catalyst for sustainable development. What Nigeria needs is a competitive political system in which alternation of power exists among political parties through a credible and transparent electoral system. Such a system will provide an increase in the quality of governance by strengthening mechanisms of both horizontal and vertical accountability as well as a strong independent judiciary to protect the interests of those out of power. But what we have is a multi-party democracy in which politics is still characterized by personal rule and oligarchic control by the dominant political party, the People’s Democratic Party. The opposition has little or no influence on government policies, programs, and legislations. The Nigerian political leaders distribute rentier money to co-opt the opposition parties to ensure their patronage in maintaining the status quo and thus avoid having to relinquish power through competitive elections. The fledgling democratic rule is only 12 years old and is marked by flawed elections, financial embezzlements, a compromised judiciary, and a dysfunctional social system. Many of the formal democratic institutions still lack the autonomy and resources needed to successfully carry out their assigned tasks. There is a desperate need for political decentralization of powers as outlined in the Nigerian constitution.63 Obasanjo’s presidency dominated the other branches of government and treated them as appendages of the executive branch rather than independent branches. In a situation of relatively weak opposition parties, President Obasanjo often attempted to manipulate the other democratic institutions in order to bolster his power beyond formal constitutional control. This was evident in the attempt to extend his presidential tenure limits, a reflection of executive ambition and disregard for the constitutional authority. The independent roles of the legislative and judicial branches of government to check the monopoly power of the executive branch was virtually non-existent in Nigeria in part due to the overdependence on rentier money, making the presidency almost an absolute monarchy. The president

REFORMING THE RENTIER STATE: NIGERIA

243

governs by trying to centralize absolute power in the presidency. There is a crucial need for a delicate balance of power in a democracy with legislative, judicial, and executive branches of government, particularly as Nigeria has been under military rule for the majority of time since it gained its national independence. The Nigerian legislature should play a more dynamic role in developing national policy, controlling the budget, and monitoring of project implementation. This would foster greater openness, accountability, and transparency in the country. Despite constitutional guarantees, the general perception of the average Nigerian is that the nation’s judiciary is poorly administered, corrupt, and only partially independent. The judiciary is weakened by undue pressure from political and economic lobbyists. Bribery of judges sometimes influences the outcomes in the courts. Judicial investigations are often slow and prejudicial. The shortage of judges and their poor service conditions further contribute to noticeable delays in settling cases. The judicial reforms under way fall short of adequately addressing the weak judicial system in Nigeria. Nigeria needs to re-build its judicial capacity by improving the underlying conditions of service for judges and supporting personnel, promoting judicial independence, and nurturing impartial dispute resolution by judges.
Problem of a Militarized Bureaucracy in Nigeria: One of the legacies of the military regime has been its strong influence in the development of the bureaucracy in Nigeria. The military regime did not appreciate the professionalism of the Nigerian bureaucrat. The due process principle was disregarded as too slow for the military approach. There was no room for discussion, dialogue, or negotiation. The military government frequently was resistant to suggestions from civil servants and disdainful of time-tested principles of public administration. Over the years, the civil servants serving under the military administration abandoned some of the better qualities that existed in the bureaucracy and replaced them with more authoritarian methods as an approach to public service. Even when an order was deemed contradictory, the military boss told the civil servant to make it work. Consequently, the civil service protocol and professionalism were compromised for a period of about 30 years, thus leading to the public service’s unresponsiveness to the citizens. A large credibility gap grew with the public. The close collaboration of the public servants with the military ruling class further engrained an environment of corruption, elitism, and patronage, which led to the deterioration of the public service values of loyalty to the state. Loyalty to the ruling elite replaced state loyalty, and there was no one to protect the ‘‘national interest.’’64 As A. Mukoro correctly observed:
The experience of Nigeria is such that the administrative state allows a clique of public officials, the military and politicians to accumulate wealth, get away with it and leave the system to suffer for it. The effect of this and other constellating factors earlier mentioned render

244

THE JOURNAL OF ENERGY AND DEVELOPMENT

public administration ineffective, ineffectual and corrupt. Administrators support whatever 65 government is in power and end up becoming part of the rot.

The introduction of the Structural Adjustment Program (SAP) by the military in the 1980s and 1990s was a major departure from the public-sector-led development strategy. Since then, the Nigerian economy has been driven by fiscal crises, and as a result, the focus of the reform process has been on cost-cutting at the expense of improvement in public-sector effectiveness.66 The argument was that the public sector’s expenditure had grown too high and, therefore, there was urgent need for staff rationing in government agencies. The strategy, which was recommended by the IMF and World Bank, has been to reduce the dominance of the public sector in the economy and develop the work force levels that will enhance the competitive advantage of the state in the global marketplace. The extent to which the work force in the civil service has been reduced and the extent to which public enterprises have been commercialized becomes the measurement criteria instead of efficiency and effectiveness as the main factors in assessing the success of the reform. SAP undermined effective wage incentives for civil service employees and, as a consequence of its austerity measures, resources allocated for training programs of public officials and staffing of training centers have been drastically reduced. The various measures taken by the government have failed to have an effect on employment generation, performance, or productivity in the country. What seems to be evident is that there is a prevalence of capacity deficits in the public service.
It is important to distinguish between state scope and state strength. Scope refers to the range of activities pursued by the state. Strength refers to how effective the state is in pursuing its activities. Public sector reforms attempted to restrict the scope of state activity, but the main obstacle to modernization in developing states is a lack of state strength. As a result, the reforms often proved to be tragically inappropriate to developing states. The pressing need in many developing states is to establish bureaucratic institutions with clear lines of account67 ability, impartial officials, and abstract rules to guide them.

The unintended consequences of this policy of retrenchment and retirement of employees in the public sector is that it has exacerbated the already high rate of unemployment in the present Nigerian economy, creating social dislocations and loss of jobs among those groups without adequate social safety nets. The reductions in the overall level of public-sector employment have not been accompanied by increases in the private-sector job market in Nigeria. The weakness of this strategy thus calls for a rethinking of the management framework within which this policy is formulated and implemented and the need to consider other alternative policy development and management frameworks.68 The policy of downsizing not only contradicts one of the NEEDS’ basic objectives of employment generation, but it also has not improved the quality of public services. In spite of the government’s best intentions for the discharged officials in terms of

REFORMING THE RENTIER STATE: NIGERIA

245

transition to productive post-retirement life, it clearly has added to the large armies of unemployed, which continues to be a major national problem in both the public and private sectors. The social repercussions of the high level of unemployment have been manifested in the rise of poverty, crime, delinquent and anti-social behaviors, and a general state of insecurity about life and property in the country. While the current bureaucratic reform initiatives may have introduced some cosmetic changes in Nigeria’s public-sector management, the sustainability of these reforms over a longer term remains very much uncertain because of the problem of declining institutional capacity, poor motivation, low wages/salaries, and popular dissatisfaction—all of which have been exacerbated by the declining economic fortunes of the country.69 The federal government bureaucracy is still plagued by absenteeism, lateness, idleness, endemic corruption, and low morale.70 The militarization of the federal bureaucracy has done a great disservice to the once highly efficient administrative machine, which has shown progressive signs of decline, especially in the areas of technological and knowledge-based management and administration. More importantly, some senior elements of the public service have not only been resistant to complex governance reform programs being introduced by the government, but they also lack the suitable skills and expertise required to operate in an age of high-tech and information technology. The short in-service training and other professional development opportunities have not been able to fill this deficiency.71 Consequently, the quality of governance and public service has declined in every sphere of government endeavor, such as economic management, the health-care delivery system, education, and social services provision. The poor performance and low productivity is clearly evidenced in the mismanagement of governmental ministries and parastatals, for example, in the Power Holding Company of Nigeria. The state-owned utility has continued its inadequate production of electricity, making industrial development difficult and leaving the demand for business and residential electrical needs unfulfilled. The House of Representatives recently concluded an investigation into the alleged $16 billion spent on the rehabilitation of the power supply infrastructure in the country between 1999 and 2007. The investigation was undermined and no prosecutions resulted. For Nigeria to achieve accelerated economic growth and development, rapid progress is needed in improving the quality and quantity of electric power in the country. Most small and all medium to heavy machinery requires electricity to function. An uninterrupted power supply will improve industrial production and the domestic services so badly needed. The IMF correctly observed that a deficient power infrastructure dampens economic growth and weakens competitiveness, with detrimental effects on productivity. In fact, the power sector remained an immediate priority if the Nigerian Government’s Vision 2020 to become an industrialized nation is to be realized.

246

THE JOURNAL OF ENERGY AND DEVELOPMENT

Conclusion and Policy Recommendations

The overwhelming concentration of political and economic power in the executive branch, operating over decades of undemocratic governance, steered Nigeria into rentier statehood and the practice of predatory political economy. President Obasanjo’s regime (1999-2007), which promised a new era of good governance by eliminating corruption and poverty through the privatization of public enterprises, and in theory freeing the government to concentrate on governing, failed to meet expectations.72 It appears that as long as Nigeria continues to depend on rentier funds to meet most of its budgetary needs, Nigeria will continue to be plagued by the limitations of rentier statehood. Whatever the short-term successes that may be achieved from the present reforms, they are likely to be slowed—if not prevented—by Nigeria’s well-established governance problems such as personal rule, clientelism, patronage, and corruption. Thus, there is an urgent need to counteract the rentier incentive structures by strengthening the democratic institutions to provide a check on extra-legal activities by political interests as well as to govern the bureaucracy in ways that hold them accountable for achieving public ends. A sure path to good governance and sustainable development in Nigeria is through the establishment and promotion of effective democratic governance, in particular, institutionalized democratic mechanisms for increased accountability, transparency and oversight in order to curb arbitrariness and rent-seeking behavior in all government operations. It is necessary, therefore, to align the mission and vision of the public-service reforms with the imperatives of sustainable democracy, a dynamic market economy, and a vibrant private sector. By law, the federal government owns the oil and natural gas resources of Nigeria. As a result, the federal government has relied more on oil money to meet its financial needs, thus giving the federal government financial independence from its citizens; in short, it is not a government by the people and for the people. Privatization of public utilities is a step in the right direction. Were the federal government to recognize and hand over a greater proportion of the oil wealth to the local community, Nigeria would weaken the rentier state. Instead of spending vast time and human resources on the exploitation, management, and distribution of oil resources, the federal government could focus on oversight, monitoring, regulatory, and strategic functions. Somewhat like corporate governance, where the role of the ‘‘Board of Directors’’ is used to maintain order between the firm’s stakeholders and its top managers, the role of the federal government could help to enforce the contractual obligations of all the parties involved in the oil commercial transactions. This is the type of reform that Nigeria needs to stimulate healthy competition among the federating states and diversify the tax base for government revenue in order to reduce the country’s dependence solely on oil rents. In practice, this also would mean creating a highly robust fiscal federalism in which the federating units, with major responsibility, contribute to the common

REFORMING THE RENTIER STATE: NIGERIA

247

pool of the federation on the basis of an agreed upon principle or pay prescribed taxes to the federal government.73 The decentralization and devolution of power and responsibilities will not only empower the local communities’ participation in the fiscal management but also will facilitate the right incentives for governance that are currently missing. This would allow expenditures and tax decision making to be aligned more closely, thus improving prudent fiscal management that will help to mitigate rent-seeking behavior and to deal with the dilemmas of the rentier state. It could further ensure the flow of wealth from the source (local communities) through the state government to the federal government and better integrate the local institutions into the sub-national governance system, thereby enhancing their capacity, accountability, and performance. It would encourage a participatory and open budgetary process. However, a renewed commitment by the civil society groups to increased public oversight activities as related to tracking and monitoring of budget implementation should be encouraged and supported in order to monitor resource flows to oil–producing states and local government areas. This is to ensure that funds allocated to them do not end up in the foreign bank accounts of corrupt local elites and thus contribute to the process of transparency and accountability, which is intrinsic to good democratic governance in Nigeria.

NOTES Federal Government of Nigeria (The NEEDS Secretariat), Meeting Everyone’s Needs: National Economic Empowerment and Development Strategy (NEEDS) (Abuja, Nigeria: Nigerian National Planning Commission, March 2004), p. 63. Ahmed Al-Gazali, ‘‘The Role of Civil Service in National Development,’’ paper presented at the Participants of National Defense College Course One, Abuja, Nigeria, October 30, 2007, p. 4. O. Obasanjo, Inaugural Speech Delivered to the National Assembly, Abuja, Nigeria, 1999, quoted from Abdullah A. Sheikh, ‘‘The Civil Service Reforms,’’ in Nigeria’s Reform Programme: Issues and Challenges, eds. Hassan Saliu, Ebele Amali, and Raphael Olawepo (Ibadan, Nigeria: Vantage Publishers, 2007), p. 349. H. Beblawi, ‘‘The Rentier State in the Arab World,’’ in The Arab State, eds. H. Beblawi and G. Luciani (New York: Croom Helm, 1987), p. 85. See Axel Harneit-Sievers, ‘‘Reforming the Rentier State: Some Thoughts on NEEDS,’’ in Contexting NEEDS Economic/Political Reform in Nigeria, eds. Sam Amadi and Frances Ogwo (Lagos, Nigeria: Hurilaws & CPPR, 2004).
6 7 5 4 3 2 1

Ibid., p. xiii.

Kenneth Omeje, ‘‘Oil Conflict and Accumulation Politics in Nigeria,’’ Environmental Change and Security Project Report. No. 12 (Washington, D.C.: Woodrow Wilson International Center for Scholars, 2007), pp. 46-47.

248

THE JOURNAL OF ENERGY AND DEVELOPMENT

8 D. A. Yates, The Rentier State in Africa: Oil Rent Dependency and Neocolonialism in the Republic of Gabon (Trenton, New Jersey: African World Press, 1996), pp. 21-22.

See Daniel J. Smith, The Culture of Corruption: Everyday Deception and Popular Discontent in Nigeria (Princeton: Princeton University Press, 2007). T. L. Karl, ‘‘Ensuring Fairness: The Case for a Transparent Fiscal Social Contract’’ in Escaping The Resource Curse, eds. Macartan Humphreys, Jeffrey D. Sachs, and Joseph E. Stiglitz (New York: Columbia University Press, 2008), p. 264.
11 H. Mahdavy, ‘‘The Patterns and Problems of Economic Development in Rentier States: The Case of Iran,’’ in Studies in the Economic History of the Middle East, ed. M. A. Cook (Oxford: Oxford University Press, 1970), p. 443. 10

9

See H. Beblawi, op. cit., and Michael L. Ross, ‘‘Does Oil Hinder Democracy?’’ World Politics, April 2001, p. 330. Erika Weinthal and Pauline Jones Luong, ‘‘Combating the Resource Curse: An Alternative Solution to Managing Mineral Wealth,’’ Perspectives on Politics, March 2006, p. 36.
14 Mathias Okwe, ‘‘Taxation as a Springboard towards Economic Development,’’ The Guardian Newspaper, October 20, 2010. 15 16 13

12

D. A. Yates, op. cit., p. 33.

U.K. Department for International Development (DFID), ‘‘Eliminating World Poverty: Making Governance Work for the Poor,’’ White Paper on International Development (London: Her Majesty’s Stationery Office, 2006), available at http://www.dfid.gov.uk/wp2006/.
17 18

M. Humphreys et al., op. cit., p. 11.

The World Bank, Where is the Wealth of Nations? (Washington, D.C.: The World Bank, 2006), p. 65.
19 Kenneth Omeje, High Stakes and Stakeholders: Conflict and Security in Nigeria (Aldershot, United Kingdom: Ashgate, 2006) and ed., Extractive Economies and Conflicts in the Global South: Multi-Regional Perspectives on Rentier Politics (Aldershot, United Kingdom: Ashgate, 2008).

Charles McPherson and Stephen Macsearraigh, ‘‘Corruption in the Petroleum Sector,’’ in The Many Faces of Corruption: Tracking Vulnerabilities at the Sector Level, eds. J. Edgardo Campos and Sanjay Pradhan (Washington, D.C.: The World Bank, 2007), p. 192.
21 For effective states in the various manifestations, see Mick Moore, ‘‘Revenues, State Formation, and the Quality of Governance in the Developing Countries,’’ International Political Science Review, July 2004, pp. 297-319.

20

See H. Mehlum, K. Moene, and R. Torvik, ‘‘Institutions and the Resource Curse,’’ The Economic Journal, January 2006, pp.1-20; I. Korhonen, ‘‘Does Democracy Cure a Resource Curse?’’ Discussion Paper No. 18 (Helsinki: Bank of Finland Institute for Economies in Transition, 2004), available at http://www.bof.fi/boft/eng/6dp/04abs/pdf/dp1804.pdf; and Paul J. Stevens, ‘‘The Resource Curse and How to Avoid It,’’ The Journal of Energy and Development, autumn 2005, pp. 1-19.

22

REFORMING THE RENTIER STATE: NIGERIA
23

249

Federal Government of Nigeria, Meeting Everyone’s Needs: National Economic Empowerment and Development Strategy (NEEDS).
24 25

Ibid., pp. 44-53.

In 2001, the federal government issued new policy guidelines for procurement and award of contracts in government ministries/parastatals (Circular F. 15775 of June 27, 2001). See The Obasanjo Reforms: Due Process Mechanism (Abuja, Nigeria: Federal Ministry of Information and National Orientation Publication, 2007). See O. Obasanjo, ‘‘Due Process Saves Nigeria N102bn,’’ ThisDay, July 13, 2004; S. O. Akande and Ade S. Olomola, eds., Consolidating and Sustaining the Gains of Reforms in Nigeria: Proceeding of a Workshop (Ibadan: Nigerian Institute of Social and Economic Research, 2007), pp. 5-6; and Richard L. Sklar, Ebere Onwudiwe, and Darren Kew, ‘‘Nigeria: Completing Obasanjo’s Legacy,’’ Journal of Democracy, July 2006, p. 112. N. Okonj-Iweala and P. Osafo-Kwaako, ‘‘Point of View: Nigeria’s Shot at Redemption,’’ Finance and Development, December 2008. Federal Government of Nigeria, Meeting Everyone’s Needs: National Economic Empowerment and Development Strategy (NEEDS). N. Okonj-Iweala and P. Osafo-Kwaako, Nigeria’s Economic Reforms: Progress and Challenges (Washington, D.C.: The Brookings Institution, 2007), p. 13, also available at http:// www.brookings.edu/papers/2007/0323globaleconomics_okonjo-iweala.aspx. Federal Government of Nigeria, Meeting Everyone’s Needs: National Economic Empowerment and Development Strategy (NEEDS), p. 92.
31 Mark Bevir, Key Concepts in Governance (Thousand Oaks, California: Sage Publications, 2009), pp. 92-93. 30 29 28 27 26

Thomas Weiss, ‘‘Governance, Good Governance, and Global Governance: Conceptual and Actual Challenges,’’ Third World Quarterly, October 2000, pp. 795-814. United Nations Development Program (UNDP), Corruption and Good Governance. Discussion Paper 3 (New York: UNDP, 1997), pp. 2-3. See Christiane Arndt, ‘‘Politics of Governance Ratings,’’ International Public Management Journal, July 2008, pp. 275-97. Also see World Bank, ‘‘Measuring the Quality of Governance,’’ Development News, July 14, 2003; Daniel Kaufmann, Aart Kraay, and Pablo Zoido-Lobato, ´ ‘‘Aggregating Governance Indicators,’’ Policy Research Working Paper no. 2195 (Washington, D.C.: World Bank, 1999); and, R. I. Rotberg and R. M. Gisselquist, Strengthening African Governance—the Ibrahim Index of African Governance: Result and Rankings 2008 (Cambridge, Massachusetts: Program on Intrastate Conflict, Harvard University, 2008).
35 36 34 33

32

Daniel Kaufmann et al., op. cit.

World Bank and the U.K. Department of International Development (DFID), Country Partnership for the Federal Republic of Nigeria, 2005-9 (London: DFID, 2005). Nigeria was ranked 40th out of 53 countries surveyed in the 2010 Mo Ibrahim Index of African Governance, a drop

250

THE JOURNAL OF ENERGY AND DEVELOPMENT

from 35th position in 2009. The index ranks countries based on the 88 indicators related to economic and political governance and scores them on a scale of zero to 100. Nigeria scored 42.65 out of 100 against 2009’s 46.5 (Sun News Publishing, October 20, 2010). In 2009, Nigeria also was ranked low in budget transparency by the influential International Budget Partnership and was among 25 countries in the 85 countries studied that provide scant or no budget information to enable the public to hold the government accountable for managing their money. See ‘‘Nigeria Ranks Low in Budget Transparency,’’ ThisDay, February 4, 2009. See Samuel Famakinwa, ‘‘Nigeria’s Anti-Graft War Weak, Says Transparency International (IT),’’ ThisDay, April 19, 2007.
38 39 37

The Guardian Newspaper, October 2, 2010.

Alexandra Gillies, ‘‘Reforming Corruption Out of Nigerian Oil,’’ U4 Brief February 2009 (Bergen: CMI Chr. Michelsen Institute, 2009), available at www.u4.no/themes/natural-resources/.
40 I. Kolstad and Wiig Arne, ‘‘Transparency in Oil Rich Economies,’’ U4 Issue 2 (Bergen: CMI Chr. Michelsen Institute, 2007), available at www.u4.no/themes/natural-resources/.

O. Obasanjo, ‘‘Nigeria: From Pond of Corruption to Island of Integrity,’’ Lecture delivered to the 10th Anniversary of Transparency International, Berlin, November 7, 2003, p. 1. Neopatrimonial is a form of political order based on the fusion of personal rule and legalrational institutions but private interests are pursued within a political structure that is ordered less by institutions than by personal authority and power. Variously described as clientelistic, corrupt, or predatory, neopatrimonial states may use the rhetoric of development, but often merely to mask their real intent—to use the state resources for personal benefit or for the benefit of personal associates. Michael Bratton and Nicolas Van de Walle, Democratic Experiments in Africa: Regime Transitions in Comparative Perspective (Cambridge: University of Cambridge, 1997); Richard Joseph, Democracy and Prebendal Politics in Nigeria: The Rise and Fall of Second Republic (Cambridge: University of Cambridge Press, 1987); and Peter Lewis, ‘‘Economic Reforms and Political Transitions in Africa: the Questions for Politics of Development,’’ World Politics, October 1996, pp. 92-129
43 44 42

41

Richard L. Sklar et al., op. cit., p. 107.

Publish What You Pay/Revenue Watch Institute, Eye on EITI: Civil Society Perspectives and Recommendations on the Extractive Industries Transparency Initiative (New York: Revenue Watch Institute, October 2006), available at http://www.revenuewatch.org/files/EyeonEITIReport.pdf. J. McCoy and H. Heckel, ‘‘The Emergence of Global Anticorruption Norm,’’ International Politics, March 2001, pp. 65-90.
46 In 2008, the Transparency International (TI) Corruption Perception Index (CPI), ranked Nigeria 121 out of 180 countries assessed by the organization, a marked improvement over the previous years’ scores. In The Africa Competitiveness Report, Nigeria’s public institutions— measured by degree of corruption and rules of contract and law—ranked next to last of the 21 African countries assessed, and third to last out of the 80 countries assessed globally. See Ernesto Hernandez-Cata, Klaus Schwab, and Augusto Lopez-Claros, The Africa Competitiveness Report, ´ ´ 2004 (Geneva, Switzerland: The World Economic Forum, 2004). 45

REFORMING THE RENTIER STATE: NIGERIA

251

47 Federal Government of Nigeria, Meeting Everyone’s Needs: National Economic Empowerment and Development Strategy (NEEDS), p. 63.

Peter Lewis, ‘‘Growth without Prosperity in Africa,’’ Journal of Democracy, March 2008, pp. 101-02. The model of ‘‘prismatic society’’ is where the traditional and modern values and behaviors coexist in the same organization. For negative effects on public administration in the developing countries, see Fred Riggs, Administration in the Developing Countries: The Theory of Prismatic Society (Boston: Houghton Mifflin, 1964), pp. 227, 423-24, 426-27.
50 See Ben Rawlence and Chris Albin-Lackey, ‘‘Indicting the Opposition: Nigeria’s War on Corruption Seems to be Turning into a Political Witch Hunt,’’ The Guardian, March 22, 2007, available at http://www.guardian.co.uk/commentisfree/2007/mar/23/despiteeightyearsofcivilia. 49

48

NEPAD-African Peer Review Mechanism (APRM) Nigerian Secretariat, NEPAD-APRM Nigeria: Country Self-Assessment Report (CSAR), Executive Summary (Abuja, Nigeria: Government Printing Press, May 2007), available at http://www.nepadaprmnigeria.org.
52 53

51

Nigerian Tribune, November 28, 2007.
st

The World Bank, Can Africa Claim the 21 Century? (Washington, D.C.: The World Bank, 2000), p. 74. Xavier Sala-i-Martain and Arvind Subramanian, ‘‘Addressing the Natural Resources Curse: An Illustration from Nigeria,’’ Working Paper WP/03/139, Washington, D.C., International Monetary Fund, May 2003. Tom Christensen and Per Laegred, New Public Management: The Transformation of Ideas and Practice (Aldershot, United Kingdom: Ashgate Publications, 2001).
56 For a more detail discussion of the seven pathologies of the rentier state, see Mick Moore, op. cit., pp. 306-08. 55 54

Brian Levy, ‘‘Governance and Economic Development in Africa: Meeting the Challenge of Capacity Building,’’ in Building State Capacity in Africa: New Approaches, Emerging Lessons, eds. B. Levy and S. Kpundeh (Washington, D.C.: World Bank Institute, 2006), p. 11. Pierre Englebert, State Legitimacy and Development in Africa (London: Lynne Rienner Publisher, 2002), p. 180.
59 United Nations Economic Commission for Africa (UNECA), Governance Report (Addis Ababa: UNECA, 2005), p. 197. 58

57

J. Robinson, R. Toorvik, and T. Verdier, ‘‘Political Foundations of the Resource Curse,’’ Journal of Development Economics, February 2006, pp. 447-68. High Level Panel of the African Union, Audit of the African Union (Addis Ababa: African Union, December 18, 2007), p. 23. M. Ross, 2001, op. cit., and M. Ross, ‘‘Does Taxation lead to Representation?’’ British Journal of Political Science,’’ March 2004, pp. 229-49.
62 61

60

252

THE JOURNAL OF ENERGY AND DEVELOPMENT

63 The Nigerian Constitution is based on the doctrine of separation of powers, which implies that there are three branches of government (the legislature, executive, and judiciary), and which should be separated from one another in functions and composition of their respective members while, at the same time, each branch should be able to check the other from oppressive and arbitrary rule. In practice, this is only partially true in Nigeria. 64

S. O. Akande and Ade S. Olomola, op. cit., p. 11.

65 Akomuvire Mukoro, ‘‘The Impact of the Environment of Nigeria’s Public Administration,’’ Journal of Human Ecology, February 2005, p. 121.

Adebayo O. Olukoshi, The Elusive Prince of Denmark: Structural Adjustment and the Crisis of Governance in Africa (Uppsala: Academic Literature, Nordic Africa Institute, 1998), and M. Minogue, ‘‘Changing the State: Concepts and Practice in the Reform of the Public Sector,’’ in Beyond the New Public Management: Changing Ideas and Practices in Governance, eds. M. Minogue, C. Polidano, and D. Hulme (Cheltenham, United Kingdom: Edward Elgar, 1998), p. 33.
67 68

66

Mark Bevir, op. cit., p. 95.

Sam Agere and Ibbo Mandaza, Rethinking Policy Analysis: Enhancing Public Development and Management in the Public Service (Toronto: University of Toronto Press Inc., 1999). See Brian Levy, ‘‘Are African Economic Reforms Sustainable? Bringing Governance Back In,’’ in Democratic Reform in Africa: Its Impact on Governance and Poverty Alleviation, ed. Muna Ndulu (Athens, Ohio: The Ohio University Press, 2006).
70 Mohammed Salisu, ‘‘Incentive Structure, Civil Service Efficiency and the Hidden Economy in Nigeria,’’ in Reforming Africa’s Institutions: Ownership, Incentives, and Capabilities, ed. Steve Kayizzi-Mugerwan (New York: United Nations University Press, 2003). 69

The late President Yar’Adua’s administration clearly acknowledged some of these deficiencies in the public service management. See The Guardian Newspaper, December 18, 2008. Afrobarometer Survey of March 14, 2006, had reported that the overwhelming majority of Nigerians preferred democratic governance than any other form of government. It also noted that there is a yawning gap between popular expectations of good governance in a democratic system and the unsatisfying reality of broken promises since the transition in 1999 to civilian rule. See http://www.afrobarometer.org/results/PressReleaseNigeriatermLimits3.pdf.
73 It was the Federal Military Government’s enactment of Decree 51 (Petroleum Decree) in 1969 that dispossessed all regional and state governments of any share in revenue from oil. The 13 percent that is currently allotted to derivation is much lower than the 50 percent that existed in the pre-civil war period. This may explain the current agitation for resource control by some of the oilproducing areas. 72

71

Sign up to vote on this title
UsefulNot useful