Oil Politics and Economic Development of

BRACED states in Post COVID-19 Nigeria
  by
Presentedd
  
Professor Michael Nkong-nkan
University of Calabar, Nigeria
 
at South-South Economic Summit(SSES)
 
Holding at 
Senate Chambers,
University of Calabar, Calabar
 Date: Wednesday 15th – Friday 17th December 2021
 
 Table of content
1. Introduction

2. Structure of Production, Diversification Potentials

and Socioeconomic Indicators

3. Leadership and Good Governance

4. The Way Forward in Post COVID -19 Sustainable

Economic Development
 
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 Introduction
• The South-South states are the six states in the South
that constitute largely the Niger Delta region of
Nigeria.  Bayelsa, Rivers, Akwa Ibom, Cross River,
Edo and Delta (BRACED) states. The states are mostly
the oil producing states and the dominant oil revenue
earner of Nigeria.
• So important is oil in Nigeria economy that in 1992
the proportion of oil in total federally collected
revenue was 86%, rose to 88.6% in 2006, before
moderating downwards to 58% in 2018. In year 2000
oil export earnings was 98.7% of total oil export.
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• Regretably, inspite of the immense
contribution of the BRACED states to
economic development of Nigeria and to the
sustenance of democracy the region has
suffered the highest level of deprivations.
The region remains the least developed
geopolitical zone in the country both in
physical and in socioeconomic terms.

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• It fell to 94% in 2010 before moderating to 87.4% in 2020
(CBN 2020). No wonder it is often said that when the oil
sector coughs the Nigeria economy catches a cold.
•
• The region is home to vast oil reserves that makes the
country one of the world largest exporters of oil.

• Oil and gas production in the region is by multinational

corporations with Federal Government consent. The nature
of the relationship between the Federal Government and
the multinational companies is at the root of the problems
of BRACED states, their underdevelopment, poverty,
marginalization, oppression and inequitable treatment.

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• The oil companies have not brought the much
expected prosperity to the South South region,
nor better living conditions, nor governmental
attention and development. Rather, the regional
is characterized by absence of infrastructure,
social services, non-oil industries and even
petroleum products. The people are poor and
remain poor, underdeveloped and consequently
prone to violence and attendant loss of human
lives.

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• Oil exploration, exploitation and distribution has
created huge land and water scarcities that has
underpinned family, intra-communal, inter-communal
conflicts and war.
• The oil companies have disinherited and dislocated the
local people who are dependent on the primary
economies of farming, fishing and hunting. Oil spills
and gas flaring have contaminated, degraded and
destroyed the mangrove forests and water bodies of
the Niger Delta, thereby causing serious destruction of
its biodiversity over the years.

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• The objective of this paper is to presents the
structure of the economies of the BRACED states,
identify their potentials for economic
diversification, and articulate the challenges they
face including environmental degradation, falling
oil price, COVID-19 pandemic, and poor quality of
institutions and leadership.
• Arising from these challenges the paper
articulates ways to promote sustainable
economic development including institutional
reform and economic diversification.

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 2. Structure of production, diversification
potential, and socioeconomic indicators
• Beyond oil exploration and exploitation in the region, and the
challenges it presents to the region, the BRACED states have huge
economic diversification potentials.
• Economic diversification refers to the shifting of focus from a single
sector to multiple sectors; from a single income source to several
sources of income (Iwalehin, 2020). It offers the benefit of
rebuilding the economy, build human capital, explore new
opportunities, increase foreign investment profile, grow the
standard of living of the people and increase national
competitiveness (Suberu et al., 2015).
• Table 1 indicates the structural characteristics of the economies of
the BRACED states during the period 2013-2017. While the table
reveals that most of them are oil dependent it also identifies critical
sectors for diversification away from oil.

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• For example, the service sector has been growing steadily
in its contribution to GDP in Bayelsa state from 13.7% in
2013 to 27% in 2016. Thus, service sector cannot be
overlooked in any meaningful effort at diversification in
the state.
• Although the industrial sector has higher share of GDP in
2013 at 80.4%, its contribution has been declining. At
78.1% of GDP in 2014 it fell to 66.2% in 2015 before
making a marginal rebound to 72.9% in 2017.
• Its contributions in 2017 is still lower than the contribution
in 2013 at 80.4%. A declining or contracting sector in terms
of contribution to gross domestic product(GDP) cannot be
relied upon to provide meaningful for option for
diversification.
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 BAYELSA STATE
Bayelsa
2013 2913 2015 2016 2017
OIL 71.1 75 61.4 56.9 68.4
Nonoil 22.9 25 38.6 43.1 31.6

Agriculture 5.8 6.1 9.1 10.3 7.1

Industry 80.4 78.1 66.2 62.7 72.9
Services* 13.7 15.8 24.7 27 20.1

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 RIVER STATE
Rivers
GDP 2013 2913 2015 2016 2017
OIL 57.5 49.3 40.5 34.3 44.4
Nonoil 42.5 50.7 59.5 65.7 55.6
Agriculture 8.5 10.2 12.6 13.9 10.4
Industry 67.6 62.7 52.6 49.4 57.6
Services* 24 27.1 34.8 36.7 32

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 AKWA IBOM

Akwa Ibom

GDP 2013 2913 2015 2016 2017

OIL 67.3 68.5 57.6 48.8 59.8

Nonoil 33.7 31.5 42.4 51.2 40.2

Agriculture* 14.6 12.8 20.9 22.5 16

Industry 71.1 72.6 58 53.9 65.4

Services* 14.3 14.7 21.1 23.4 18.6

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 CROSS RIVER
Cross River
GDP 2013 2913 2015 2016 2017
OIL 0 0 0 0 0
Nonoil 100 100 100 100 100
Agriculture
* 26.8 54 49.4 54.5 45.5
Industry 29.4 17.2 19.1 16.2 28
Services 43.8 28.8 31.1 29.3 26.4

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 EDO STATE
Edo
GDP 2013 2913 2015 2016 2017
OIL 14.3 11.3 6.4 6.38 9.11
Nonoil 85.7 88.7 93.6 93.62 90.88
Agriculture 24.9 24.3 24.2 25.3 24.9
Industry 24.7 20.4 20.4 17.6 20.5
Services* 50.4 55.3 55.3 57.1 54.5

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 DELTA STATE
Delta
GDP 2013 2913 2015 2016 2017
OIL 58.1 50.3 41.2 36.9 49.3
Nonoil 41.9 49.7 58.2 63.1 50.7

Agriculture* 9.5 12.5 14.6 18 13.6

Industry 71.7 63.5 56.4 49.2 59.2
Services* 18.8 24 29 32.8 27.2

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 Socioeconomic Indicators and COVID-19 Cases

• Table 2 indicates the population of the BRACED

states and the incidence of COVID -19. It shows
that of the projected population of the region in
year 2020 at 33.3 million, the population is more
than 16 % of total population of Nigeria.
• Rivers, Akwa Ibom, Cross River and Delta are the
more populous states. The table also shows that
COVID -19 pandemic which emerged in China in
November 2019 has affected Nigeria and hence
the BRACED states negatively in terms of health
implications and budgetary allocations.

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• The total number of cases on 5th December 2021 was
29,983 with 641 recorded deaths. By Monday 13th
December the number of cases had risen to 30,402 an
increase of 419 new cases.
• The BRACED states exhibits differential impact of the
COVID-19 pandemic. Rivers, Akwa Ibom and Delta states
have the largest number of cases at 13,076, 4,389, and
4,294 respectively as at Monday December 13th, 2021.
• The implication is that with the dwindling revenue from oil
arising from COVID-19 pandemic there will be greater need
for diversification into other revenue sources to meet the
increasing health demands and stimulate economic growth
and development in the subregion.

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 Table 2: Incidence of COVID-91 in BRACED
States (Dec. 2021)
State Cases Deaths Cases Deaths Cases Deaths
Populati 5/12/21 9/12 9/12 13/12 13/12
on* 5/12/21
Million
Bayelsa 2.70 1,249 28 1250 28 1,261 28
Rivers 7.68 12,956 154 12,994 154 13,076 154
Akwa 6.28 4,348 44 4,348 44 4,389 44
Ibom
Cross 5.68 667 25 667 25 690 25
River
Edo 5.28 6,612 280 6,633 280 6692 280
Delta 5.68 4,151 110 4,165 110 4294 110
Total 33.3 29,983 641 30,057 641 30,402 641
Nigeria 206.0 214,622 2,980 215,918 2,981 217,866 2,982
Percenta 16.2 14.0 21.5 14.0 21.5 13.95 21.50
ge%
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 University Education
• While it is important that BRACED states
invest in education, far more important is the
need to leverage on university education.
• Figure 1 shows that BRACED states between
2014 and 2015 have made significant
improvements in university admission
particularly Rivers (from 780 in 2014 to 2172
in 2015), Edo (from 2533 to 3328) and Delta
(from 3320 to 3862).

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 Figure 1: Admissions into Universities
by JAMB 2014-2015

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 3. Leadership and good governance

• Sustainable economic development goes beyond

economics. It involves state capacity to implement
reforms and sustain the reforms for the
improvement of quality of life of the people in an
atmosphere of adherence to the rule of law, justice,
equity and fairness.
• It has been said that the reason Nigeria
underperforms is lack of state capacity to deal with
complexities of governance. The nature of the state,
the public institutions through which legitimate
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• power is exercised and enforced is crucial to
sustainable development. Thus, the issue of state
capacity is central to understanding the Nigerian
socioeconomic malaise.

• Clapham(2002) identified structural and contextual

variables that enhance the vulnerability of most
states like Nigeria. Generally, government of these
states lack the political will to initiate or sustain
structural transformation or embark on sound
economic reform to position the state for
greatness(World Bank 1997).
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• Thus, no matter the upsurge of globalization
or COVID-19 pandemic, the expectation is for
states to take decisive role in socioeconomic
transformation and put aside any act inimical
to improved livelihood of its citizens.

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 Benthamian Utilitarian theory
• Benthamian utilitarian theory posits that
governance should be people centered (ujamaa
or ubuntu) or public interest oriented as opposed
to self-interest. The pursuant of self-interest and
ethnicity is at the root of governance crisis in
Nigeria.
• The situation has degenerated to the point where
the state is not able to provide minimal social
security for its vulnerable population.
• Usually the state is necessary to resolve or
manage conflicts between groups within a
society by making decisions which are
enforceable without necessarily using force.
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• This makes the organization of society for the
ultimate good of all- public good. Government
has the responsibility to maintain security of
life and property, ensure equity, justice and
promote fundamental human rights.
• Can we say that the governance at both
federal level and state level in South-South
geopolitical zone have operated above
average?

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• While Agbaje, Onwudiwe & Diamond (2004)
refers to Nigeria as “ a rich country of poor
people” Suberu(2004, p.31) maintains that
Nigeria is the greatest single developmental
tragedy in the world today . . . the metaphor
for a failed developmental experience”.
• Its unsuccessful socioeconomic reform, like
the oil sector reform, and the criminally
dubious fuel subsidy regime are indicative.

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• According to Shanum(2013) the “progress of
any nation rests on the stature or standard of its
leadership and how they bring these to bear on
the welfare of the people”. Thus, the state is
expected to perform service delivery
responsibilities.
• Once the political arrangement is dominated by
visionless leaders, the country will perpetually
struggle to attain peace and sustainable
development. Leadership failure is one of the
strongest roots of state incapacity in Nigeria.

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4. The way forward in post COVID -19
Sustainable Economic Development
• It is true that Nigeria and by extension the
BRACED states is a tale of poor governance and
insecurity, lop-sided appointments in critical
position government, and high incidence of
poverty in the midst of plenty. Poor governance
has led to the categorization of Nigeria among
“the 19 poorest, unhappiest, unhealthiest and
most dangerous nations in the world”(National
Assembly’s Amendment CCB Act Cannot stand”
p.24, 2016).

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• Sanctity of the rule of law principle is germane to
effective governance, and security of life and property.
The rule of law underpinned by an independent
judicial system implies a functional legal framework
helps to ensure settlement of conflicts between the
state and individuals on the one hand and among
individuals or groups on the other.
• It also helps to ensure respect for property rights and
contracts, while preventing the government and
influential individuals from acting capriciously
(Adamolekun 2016).

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• Given the fact that oil is a wasting asset, and Nigeria can
not continue to rely on oil, the BRACED states must
leverage on their competitive advantage to diversify their
economy, particularly in the context of competitive
capabilities.
• This paper has shown that Akwa Ibom and Delta have
competitive capabability to diversify in Agriculture and
services; Cross River in Agriculture. Edo, Bayelsa and
Rivers in service sector. Diversification in the service sector
is particularly attractive because structural transformation
in India is driven by expansion in the high productivity
activities within the service sector largely information
technology(IT) and business process outsourcing (BPO)
services.

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• Service sector jobs require a wide range of
skills from artisans in traditional services to
Information communication technology(ICT)
experts in modern services.
• Estimates of employment elasticities suggest
Nigeria’s services sector has the highest
employment potential at 0.5, relative to
agriculture's -0.1 and manufacturing's 0.3
(PWC 2018).

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• Promoting rule of law is one of the
institutional reforms to implement economic
diversification, otherwise arbitrary power,
authoritarianism and dictatorship will prevail
with its attendant dire consequences. The
successes of such oil rich countries like Oman,
Laos, Indonesia in economic diversification is
indicative that BRACED states can also
successfully diversify their economies.
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• Economic diversification is the key to the political
and economic survival of the BRACED states for
sustainable growth and development and avoid
over reliance on oil revenue to strengthen their
economies.
• This paper has identified the different sectors for
economic diversification in the BRACED states
and the supporting policy reforms for sustainable
economic development in post-COVID-19
Nigeria’s economy.

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• Thank you for listening!

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