| Urhobo Historical Society |
AN ACTION PLAN FOR POVERTY
REDUCTION,
PEACE AND SUSTAINABLE DEVELOPMENT IN THE NIGER
A Memorandum Submitted
to the
By Dr. Emmanuel Ojameruaye
Vice
President, Research & Program Development
International
Foundation for Education & Self-Help (IFESH)
5040
Tel: 1-602-595-6108 (H);
1-602-628-0792
(
1.
Definition
of the Niger
Not all oil producing communities belong to the Niger Delta in geographical terms and not all communities in the Niger Delta region are oil-producing or impacted by oil exploration and production activities. There is an urgent need to clearly define the area of interest (“Niger Delta region” or “Oil Producing Areas”?) in order to appropriately focus developmental interventions. Currently, there are various definitions of the NDR including the following:
•The area occupied by the Ijaws, the aboriginal tribe of the Delta. It spans the coast of the Bight of Biafra, from the Forcados River to the Opobo River and upstream to the tributaries of the Nun and Forcados Rivers…is about 10,000 sq. miles…population 2 million”
•The area from the bifurcation of the Niger River at Aboh, bounded in west by Benin River and east by Imo River; total area put at 25,900 sq. km by 1997 ERML report, 20,000 sq. km by 1995 World Bank report, between 40,000 and 70,000 by NDES Survey and 112,000 sq. km by the NDDC Regional Plan.
•Political Definition 1: The 6 states of South-South Geopolitical Zone.
•Political Definition 2: The 9 NDDC States:112,000 sq. km, 27 million people, 185 LGAs, about 13,329 settlements 94% of which have populations of less than 5,000.
Suggestion: The term Niger Delta should be restricted
to its
geographical/hydrological definition. The term “Oil Producing Areas or
Territory” should be used instead of “Niger Delta” region in describing
the
area of interest. Thus, the Ministry of Niger Delta should be changed
to
Ministry for the Oil Producing Areas and NDDC should be renamed
“Commission for
the Oil Producing Areas”(COPA
2.
A
Clear Definition of Poverty
3.
•A socio-economic condition characterized by deprivation or disempowerment or lack of access or unequal access to basic socio-economic necessities.
•A condition in which a person or community is lacking in the basic needs for a minimum standard of well-being and life, particularly as a result of a persistent lack of income.
•Deprivation of those things that determine the quality of life, including food, clothing, shelter and safe drinking water, as well as "intangibles" such access to education, health, basic rights, dignity, and respect.
1.
A
Clear Definition of Sustainable Human Development
2.
•“development that meets the needs of the present
without
compromising the ability of future generations to meet their own needs”
Brundtland Commission (1987)
•“Development that not only generates economic growth but distributes its benefits equitably; that regenerates the environment meets rather than destroys it; that empowers people rather than marginalizing them. It gives priority to the poor, enlarging their choices and opportunities, and provides for their participation in decisions affecting them ---Development that is pro-poor, pro-nature, pro-jobs, and pro-women ---growth with employment, growth with environmental friendliness, growth with empowerment, and growth with equity” (UNDP Administrator)
4. Current
State
of the Oil Producing Areas (Niger
·
“Poor, backward
and neglected”- 1958 Sir Henry Willink
Commission of Inquiry Report which advocated for special attention to
the
region to ensure that it catches up in development with other regions
of the Nigerian
federation. After 50 years, not much has changed! According to
the 2006
UNDP Niger
•Poverty
has become a way of lifein the Niger
•The
Human Development Index (HDI) scores for the Delta are almost as they
were in the
1992 and 1996 calculations…relative human development situation has
declined
•The
human development situation in Nigeria
as a whole has declined, although the drop off appears to be steeper
for the Niger
•Oil
wealth enriches Nigeria
•A
critical issue …is not only the increasing incidence of poverty, but
also an
intense feeling among the people that they ought to do better given the
enormous resources flowing from their region
•Social
instability, poor local governance, competition for economic resources
and
environmental degradation have taken a toll.
•The
delta today is a place of frustrated expectations and deep-rooted
mistrust.
•In
spite of the substantial flow of oil money to state and local
governments,
service delivery and development projects have been disappointing.
•Inadequate
infrastructure in the delta is the result of historical neglect
•Bad
governance and corruption have played essential roles in perpetuating
low
levels of human development
•The
Delta could have reached a different (better) outcome had the region’s
wealth
been used judiciously
•The
Niger
5.
Necessary Conditions for Poverty Reduction and Sustainable Human
Development
2.1
Peace
and Security
•Steady deterioration of the situation since the early 1990s; increase in the number, types and intensity of conflicts, criminality and general sense of insecurity; new dimensions – kidnapping, hostage-taking, wanton destruction of oil facilities, crude oil theft, militarization, etc.
•FG’s dual responses – physical development agency (OMPADEC/NDDC) and military suppression/ campaign/pacification- have proved ineffective.
•A military “surge” or “counter-insurgency” strategy is counter-productive. What is required is a more robust response strategy encompassing the underlying factors such as poverty reduction, jobs creation for youths, resource control and environmental abatement.
•Short-term solutions include resolution of the resource control issue, demilitarization, demobilization and reinsertion, and sustainable job opportunities for militia groups and other groups
•Implement a program that brings direct benefits of oil production to all the people, i.e. direct cash payment through a petroleum wealth dividend fund
•Establish inclusive peace and security network (PSN) at state and LG levels throughout the region and launch a P&S campaign. The PSN should be a Public-Private Alliance to promote peace and security and conflict resolution.
•Improve security through improved law
enforcement,
enhanced capability of police (e.g. logistics and improved conditions
of
service); establishment of more humane and reformatory prisons in
remote
locations (e.g. isolated islands), arrest and long-term incarceration
of
criminals in a remote prisons, abolish bail for criminals.
2.2
Resolution
of the Resource Control Issue
•“Resource control” (RC) is more robust than increasing mineral (oil) derivation percentage.
• “Derivation is
the recognition of a prior beneficial right that was subsequently
expropriated…
the principle of derivation is a form of compensation and /or
reparation for an
expropriated interest. That is why the proviso to section 162(2) of the
1999
Constitution directs that not less than 13 per cent of the revenue
accruing to
the Federation Account directly from any natural resources located in
the state
should be paid to same. On the other hand, resource control is the
desire of
the state to control any natural resource found within its boundaries.
Thus, it
is not being recompensed for anything even though it will be paying tax
to the
centre for its common protection and administration of the federation”.
Given
the political economy of
•There are three options to be considered in resolving the RC issue, viz:
i. Abandon RC in its true sense and increase derivation to progressively to 50% through either: a) Incremental derivation or b) Differential-incremental derivation.
ii. Replace derivation with equity holding –i.e. allocation of equity to oil-producing state and local governments.
iii. Combine
derivation and equity holding
In order
to capture the “voices” of the people and ensure a binding decision,
there is
need to conduct a referendum in all the oil-producing areas to adopt
one of the
above options.
5.2.1.
Mathematical Model
for Incremental and Differential-Incremental Derivation
•GOR
= COGX + DCOS
+PPT + ROY
•D = JVCC + EDS
•NOR = GOR – D
•MOD = {a + b(t – 2009)NOR (Incremental Derivation models)
•FG = cAD
•SG = eAD
•LG = fAD
•MOD2
= {g + h(t-2006)}(COGX + DCOS + PPT + OOR)
+ {k + m(t-2006)}ROY
GOR = Oil Revenue accruing to the federation account; COGX = Revenue from sale of crude oil
DCOS =
Domestic Crude Oil Sales; PPT =
Petroleum Profits Tax; ROY
AP = Average price of crude oil; D = Deductions; JVCC = Joint Venture Cash Calls; EDS = External Debt Service; NOR = Net oil revenue; MOD = Oil Derivation Fund
Incremental
Derivation:
Increase
oil derivation percentage from 13% to 20% in 2009, and subsequently on
an
incremental basis (5% point p.a.) to 50% by 2015.
Year
|
2008
|
2009
|
2010
|
2011
|
2012
|
2013
|
2014
|
2015
|
% Derivation to Oil Producing State and LGs
|
13
|
20
|
25
|
30
|
35
|
40
|
45
|
50
|
Differential-Incremental
Derivation
Apply
different derivation percentages to the various components of oil
revenue -
crude oil/gas exports (COGX), domestic crude oil sales (DCOS),
petroleum profits
tax (PPT), royalties (ROY) and “other” oil revenue (OOR). The FG should
get the
bulk of PPT, COGX, DCOS and OOR. On the other hand, the oil-producing
state and
local governments should get that the bulk of royalties (ROY). To
ensure
gradual adjustment, the percentages should be increased incrementally.
Derivation Accruable to Oil Producing State
& LGs
|
2009
|
2010
|
2011
|
2012
|
2013
|
2014
|
2015
|
% COGX
|
5
|
9
|
13
|
17
|
20
|
23
|
25
|
% DCOS
|
5
|
9
|
13
|
17
|
20
|
23
|
25
|
% PPT
|
5
|
9
|
13
|
17
|
20
|
23
|
25
|
%
|
50
|
60
|
70
|
80
|
90
|
95
|
100
|
% OR
|
5
|
9
|
13
|
17
|
20
|
23
|
25
|
5.2.3
Establish A Petroleum
Heritage Trust Fund (PHTF) for Oil Producing Areas
•50% of the allocation to PHTF will be prudently invested in the stocks, bonds, other financial assets and real estate to yield income
•50% of the allocation to PHTF (plus 50% of income from investment) will accrue to a Petroleum Dividend Fund which will be distributed (as direct cash payment) to all eligible resident (and registered) indigenes of oil-producing LGAs on an annual basis (similar Alaska Petroleum Dividend Fund )
5.2.4
Establish Agency for Development of the
Oil-Producing Area (ADOPA) to replace NDDC
The ADOPA will focus on job creation, sustainable livelihoods and limited physical development programs.
5.2.5
Distribution of the
Derivation Fund and Funding of PHTF and ADPA
The (Incremental)
Oil Derivation
Fund should be allocated among the oil producing state and local
governments as
well as the PHTF and ADOPA as follows:
Year
|
2009
|
2010
|
2011
|
2012
|
2013
|
2014
|
2015
|
% Derivation
|
20
|
25
|
30
|
35
|
40
|
45
|
50
|
% to Sate Govts
|
10
|
11
|
12
|
13
|
14
|
15
|
16
|
% to Local Govts
|
5
|
6
|
7
|
8
|
9
|
10
|
11
|
% to PHTF
|
2
|
3
|
4
|
5
|
6
|
7
|
8
|
% to ADOPA
|
3
|
5
|
7
|
9
|
11
|
13
|
15
|