PETRO-POLITICS, CORRUPTION AND POVERTY IN NIGERIA

(A CASE STUDY OF BAYELSA STATE)

By

CORONATION EDWARD

Presented To

Department of Political Science

ABSTRACT

The research is anchored on the prevailing politics in the Nigerian Petroleum sector, the inherent corruption and the attendant poverty in the country, with Bayelsa State as the case study. The Marxian Political Economy approach was adopted as the theoretical foundation of the study. The method and instruments of data collection was the primary and secondary sources. We therefore relied on field research and documented facts from existing literatures. Data was gathered from textbooks, journals, Newspapers, official gazettes, the internet and un-published materials relevant to the study. In the primary data collection method adopted, we used the instrumentality on closed-ended Questionnaires to elicit responses from respondents on questions posed to them.

The study tested the following hypotheses:

1. The more corruption remains prevalent in government institutions and agencies, the higher the degree of mass poverty in Nigeria.
2. The higher the revenue accruing from crude oil and gas, the higher the poverty rate in Nigeria.
3. There is a significant relationship between the laws governing the oil industry, poverty and underdevelopment in Nigeria.

The study is divided into five chapters. Chapter one dealt with an introduction to the problem, chapter two dealt with a review of existing literature on the variables of the study. Chapter three delved into Bayelsa State as the setting of the study and chapters four and five dealt with the presentation and analysis of data and summary, conclusion and recommendations respectively.

The study revealed the following findings: that corruption is endemic in the Nigerian oil industry; therefore the collective wealth of the Nation is corruptly diverted by a powerful few to the detriment of the mass. The prevalence of corruption in the oil industry has scuttled development, increased poverty and engendered

vi underdevelopment. Furthermore, the findings revealed that the increase in oil revenues have not translated into poverty reduction and promote development due largely to corruption and poor leadership. The laws governing the oil industry in Nigeria are oppressive and have been used to effectively de-empower the people and deny them access to their resources. Economic issues are highly politicised, thereby leading to high poverty rates in the country. Finally, the leadership of Bayelsa State over the years have not prudently managed the resources of the state for the benefit of the people, rather, they have used the resources to corruptly enrich themselves, a syndrome that is glaring at all levels of governance throughout Nigeria.

The study among others recommends that the anti-corruption laws in Nigeria should be strengthened and made more severe. As a country, we need to adopt the Chinese model in the fight against corruption. We therefore recommend that the death penalty or life in prison sentence be handed down to anyone who is found guilty of corrupt activities that run into millions of naira. The laws governing the oil industry in Nigeria are oppressive, and have dis-empowered the people economically. The laws have also denied the people access to their own resources. We recommend that the Land Use Act of 1978, The Oil Pipelines Act of 1966 and the Petroleum Act of 1969 be amended to give greater access or share of the resources to the owners.

TABLE OF CONTENTS

• Title page………………………………………………………………i
• Certification………………………………………………………… - ii
• Dedication……………………………………………………………..iii
• Acknowledgement…………………………………………………….iv
• Abstract………………………………………………………………..v-vi
• Table of contents………………………………………………………vii-viii
• List of tables…………………………………………… - - - - ..ix

CHAPTER ONE: INTRODUCTION

1.1. Background of the study……………………………………………….1-7

1.2. Statement of the problem……………………………… - - - - 7-14

1.3. Objective of the study………………………………………………….14

1.4. Scope and limitation of the study……………………… - - - - 14-15

1.5. Theoretical framework…………………………………………………15-17

1.6. Hypotheses and assumptions…………………………………………..17

1.7. Research Questions…………………………………………………….17

1.8. Research Methodology………………………………………… - - 18-19

1.9. Significance of the study……………………………………………… 19-20

References……………………………………………………… - - ..20-22

CHAPTER TWO- Literature Review

2.1 The concept of petro-politics…………………………………………..23-26

2.2 Understanding corruption………………………………………………27-30

2.3 Understanding poverty in Nigeria…………………………………… - 30-37

2.4 The politics of oil block allocation in Nigeria……………………… - .37-42

2.5 The politics of legislation in the Nigerian oil industry……………… - 42-45

2.6 The paradox of oil, corruption and poverty in Nigeria……………… - 45-52

2.7 Examining corruption in the oil industry: The fuel subsidy Report - .52-55

2.8 List of indicted oil marketers…………………………………………..55-62

Summary and conclusion………………………………………………52-63

References ……………………………………………………………..63-66

CHAPTER THREE

Research setting

3.1 Geographical profile of Bayelsa State………………………………….67-69

3.2 Historical profile Bayelsa State……………………………………… - 69-71

3.3 Socio-economic profile of Bayelsa State………………………………71-74

3.4 The poverty rate in Bayelsa state…………………………………… - .74-76

3.5 Corruption and the political economy of plunder in Bayelsa State - ..76-80

3.6 Summary and Conclusion…………………………………………… - 80-81

References…………………………………………………………… - 81-82

CHAPTER FOUR

Data presentation and analysis

4.1 Introduction…………………………………………………………….83-87

4.2 The relationship between corruption and poverty……..………………87-88

4.3 High Petro-dollars and the rate of poverty in Nigeria…………………88-94

4.4 Laws of the oil industry, poverty and underdevelopment in Nigeria….94-96

4.5 Summary of findings……………………………………………… - 96

References……………………………………………………………..97

CHAPTER FIVE

Summary, Conclusion and Recommendations

5.1 Summary of the study………………………………………………..98-100

5.2 Conclusion………………………………………………………… - 100-106

5.3 Recommendations………………………………………………… - 106-107

References………………………………………………………… - 107

Appendix……………………………………………………………..108-111

Bibliography………………………………………………………….112-128

No. Title Page

1:1 - National and zonal trends in poverty levels (%), 1980-2004 9

($1 per day poverty line)

2:1 . A table showing the refineries in Nigeria, their installed capacities 47

and their current production levels.

1: 3. Population of Bayelsa State by Local Government Areas. 69-70

2.3 Table showing sectoral allocations in the 2004 and 2005 Bayelsa 80-81

State Budgets.

1.4 Percentage Distributions of Respondents by Sex 85

2.4 Percentage Distribution of Respondents by Age 86

3.4 Percentage Distribution of Respondents by Marital Status 86-87

4.4 Percentage Distribution of Respondents by Religion 87

5.4 Percentage Distribution of Respondents by Education 88

6.4 Percentage Distribution of Respondents by Occupation 88

7:4 A table to test the relationship between corruption and poverty

in Nigeria.

8:4 A table showing the response scale to test the hypothesis that the 93

increase in oil revenues has not translated into poverty reduction.

9:4 A table indicating the extent to which the laws of the oil industry 97

has affected development and increased poverty in Nigeria.

1:5- A table showing the population size and land area size of 105

Bayelsa State

CHAPTER ONE

11 BACKGROUND OF THE STUDY

Marx and Engels contend that the character and dynamics of state operations are reflective of the prevailing mode of production as well as the dominant political class in control of state power As an instrument of class domination and control of property accumulation, the state in a capitalist society functions to protect the interest of those who own the means of production (Marx and Engels, 1977)

Ake (1981) has severally demonstrated the manner in which control rather than ownership has become a significant variable in a peripheral capitalist states such as Nigeria

Following the above analysis by Ake which is also corroborated by other Marxist scholars, and following a critical evaluation of the Nigerian state, particularly after the inflow of petro-dollar since the 1970s, several scholars have described the Nigerian state a exploitative, cruel and irresponsive (Ake 1981, Okowa, 2005, Okaba 2003), illegitimate, oppressive and repressive (Okowa, 2005, Okaba, 2003), weak, captured, dependent (Orugbani, 2005, Ibaba, 2004), ethnically factionalized and privatized by a class of kleptocratic elites to protect and promote their tenuous relationship to the productive forces (Efemini, 2002)

The fore-going depicts the character of the Nigerian state and the character of the ruling class The state in Nigeria has been immersed and dragged into the class struggle by the ruling class and has therefore been manipulated by the latter for the furtherance and consolidation of its inordinate interest

The state is at the centre of Political activity in the society It is within the state that the centrifugal and centripetal forces operate Thus, the resource (s) in the state becomes the centre of attraction which generates friction between and among the Bourgeois and proletarian classes

The Nigeria edifice has been sustained by crude oil and gas for several years Nigeria is the highest exporter of oil in Sub-Saharan Africa, with a production capacity of over 23 million bpd, a population of about 150 million people and Human Development Index of 148 out of 173 Nigeria's revenue earning is legendary, ranked only behind the world's oil giants like Saudi Arabia, Venezuela, Iran, and the United Arab Emirates

Petro-dollar averagely accounts for over 85 percent of federal Government revenue, more than 95 percent of export earnings and approximately 40 percent of GDP However, as a classical example of the paradox of plenty, Nigeria in the midst of this wealth records an over-whelming level of poverty (with 70 percent living on less than a dollar per day), 40 percent lack sanitation and safe drinking water, 82 percent lacking access to regular power supply and 46 percent infant mortality rate (Okaba, 2005)

Petro-politics in the Nigerian oil industry manifest in the form of the existence of mega corporate monopolies such as:

• The Nigeria Agip Oil Company (NAOC);
• Shell Petroleum Development Company (SPDC);
• Chevron- Texaco Nigeria Unlimited;
• Exxon-Mobil etc

These corporate giants have a monopoly of technology and finance capital for the exploration and exploitation of crude oil and gas

More so, the Nigerian national Petroleum Corporation (NNPC) has also become part of the mega corporate monopolistic player and has therefore not done any significant thing to improve the living standard of the people Because of the inherent corruption in the NNPC, the four refineries they operate are either shut-down for one reason or the other, or they are producing way below their installed capacities, thereby making importation the only way to cushion the local need of refined products in the country

The logical outcome of this is the massive reliance on importation of finished petroleum products and the corresponding hike in the prices of the products, which also culminates in massive corruption as exposed by the findings of the Ad Hoc Committee of the House of Representatives on Subsidy Regime Probe in 2012 This has occasioned a high cost of living and poverty in the country that is seemingly blessed with abundant natural and mineral resources

Another dimension of petro-politics manifests in the manipulations of the derivation principle of revenue allocation From 1960-1970, the derivation principle was 50 per cent However, this was reduced to 45 per cent (1970-1975), 20 percent (1975-1980), 2 per cent (1980-1983), 15 per cent (1984-1992), and then increased to 3 per cent in 1992 and 13 per cent in 2000 (Mbanefoh and Egwaikhide 1998, Ibaba 2005, Jega 2007)

The increase from 15 per cent to 3 per cent and later 13 per cent followed agitation and protests from the people Paradoxically, this has become an incentive for violence, as it is expected that it will lead to further increase in the derivation component

The consequence of the personalisation of the state is the use of the state as instrument for primitive accumulation of wealth (Ekekwe 1986), leading to corruption Between 1960 and 2006, the country received US$50956 billion in oil revenues (Nafziger 2008), the trend of which can be seen in Figure 2 Similarly, the Niger Delta States have received huge sums of money since the year 2000, when the 13 per cent oil derivation fund was implemented For example, in 2007 alone the six Niger Delta States received US$4 billion out of the total of US$11 billion that was allocated to the 36 states of the federation (SPDC 2008) However, these huge oil revenues have not benefited the people adequately; because of corruption, budgetary appropriations are often structured to enrich those who control state power (Enweremadu 2008, p 450)

‘White elephant' projects such as airports and new government lodges are given more importance than the social and economic infrastructure Expenditures for travel and entertainment benefiting government functionaries receive huge allocations For example, in 2006 the Rivers State Government budgeted US$216 million on transport and travel allocation to the office of the governor and US$54 million for travel expenses of the legislature Similarly, the legislature received US$28 million as sitting allowances, excluding salaries (Enweremadu 2008, p 453)

From 2010 after the recovery of the world economy from the global economic melt-down, the price of oil has risen significantly Consequently, in Nigeria, a lot of revenue has accrued to the Federal Government from crude oil and gas This same period has also witnessed about the highest volume of production of over 23 million barrels per day and an international price of between 85- 120 dollars per barrel However, the paradox is that there is a corresponding decline in the quality of life of the people who live in abject poverty that is aggravating on daily basis According to Amnesty International, 70 percent of the over six million people in the Niger Delta live off of less than $1 per day (Amnesty International, 2006, Nigeria: Oil, Poverty and Violence)

Much of the labour in the oil industry in the past had been imported To a growing degree now, the labour force for the oil companies is coming from Nigeria, but discrimination is still rampant and for the most part, locals are discriminated against

The adverse effects of the corruption in the oil industry results in the following:

i As the government officials siphon off all the money generated from oil sales, infrastructure suffers;

ii Most of the villages do not have electricity or even running water;

iii They do not have good access to schools or medical clinics

iv The poverty level is increasing amidst a reported growth of the economy

of about 62 percent annually (Junger S 2007)

The fore-going is captured in Thomas Friedmann's First Law of Petro-politics which states that ‘the idea that political freedoms diminishes in oil producing states as oil prices increases' ‘The Paradox of Plenty,' ‘the Resource Curse,' ‘Resource Wars,' Dutch Disease' and so on In states where oil is a national resource (established through statutory monopolies), the combination of its geography (where it is located) coupled with the centralization of oil revenues through the state venture creates new sorts of governable spaces characterized by a ferocious struggle for access to and control over oil rents (or oil wealth in a variety of forms, from monies allocated to government, to community development funds of the companies and to the contracts and tenders that oil revenues fund) The challenge is to make sure that we do not slip into a sort resource determinism- oil or diamond causes X, Y and Z, and in so doing, vests a resource, even a global and strategic resource like oil and gas, with Olympian powers that it does not possess Does oil in otherwords cause poverty or violence? Or does it compound or exacerbate pre-existing social and economic forces that make violence and poverty more likely or more debilitating? (Michael Watts; In a Conference entitled- The Nigerian State, Oil Industry and the Niger Delta, 2008)

Oil politics works through complex forms of dispossession The decentralization of corruption, the rise of powerful cabals and machine politicians, generates and produce hyper-corruption and mass poverty in the country This also results in horizontal and vertical inequalities and the rise of powerful armed militias and powerful criminal gangs

According to Wikileaks Publication titled; High Level Corruption in Nigeria Oil Industry-Role of Abubakar Yar'adua, Turai Yar'adua, Rilwanu Lukman and Aondoaka,' compiled by (Pickard at Elombahcom), states: ‘On corruption…the Nigerian entities control the lifting of many oil cargoes and there are some ‘very interesting' people lifting oil Oil buyers would pay NNPC GMD Alhaji Abubakar Yar'adua, Chief Economic Adviser Yakubu and the First Lady, Turai Yar'adu

large bribes to lift oil Pickard also reported an instance where the Attorney- General, Aondoaka allegedly solicited a $20 million bribe to sign a document (Wikileaks, 2011)

Obviously, this powerful cabal that operated during the Musa Yar'dua administration, the ones preceding it and the ones after it as revealed by the fuel subsidy report have perpetrated various corrupt acts to enrich themselves and their families at the expense of the majority of the population They live in luxury and affluence while the masses could hardly afford a good meal for the day

Ibrahim Babangida was said to have looted $125 billion oil windfall and is yet to face trial for it just like many other leaders carted away billions of dollars from the Nigerian treasury Over $11 billion was said to have been spent on the power sector by the Obasanjo administration from 1999-2007, but the existential reality shows that most Nigerians have no electricity and therefore resort to using generators for home and industrial use In spite of the calls by civil society organizations to probe these patently corrupt leaders, the Federal Government has not mustered the courage to do it

The probe into the management of the 2011 subsidy funds by the House of Representatives Ad hoc committee set up to unravel the corruption in the oil industry in Nigeria brought very shocking revelations to the lime-light This prompted the call for the removal of the group managing director of the Nigerian National Petroleum Corporation (NNPC), Mr Austen Oniwon, the Executive Secretary of the Petroleum Products Pricing and Regulatory Agency (PPPRA), Reginald Stanley; Director of the Department of Petroleum Resources (DPR), Oluyemisi Olorunsola; and the Managing Director of Pipelines and Products Marketing Company (PPMC), Mr Haruna Momoh, for their role in the management of fuel subsidy which was found to have been characterised by irregularities

The minister of petroleum resources, Mrs Diezani Alison-Madueke, was also listed among those who should be removed or suspended The decision to move against their continued stay as heads of the organisations has been prompted by their alleged complicity in the revelations of high-level fraud in the oil and gas sector of the country During the hearing, the PPPRA alluded to the mismanagement of the nation's resources when Reginald Stanley (the Executive Secretary) informed the lawmakers that, contrary to the 35 million litres of fuel the Minister of Petroleum Resources, Diezani Allison-Madueke told the Committee Nigeria was consuming, Nigeria pays for 59 million litres, thereby wasting funds on 24 million litres that, most likely, would end up being smuggled to neighbouring countries The committee also discovered companies being paid money for subsidy on products that they did not deliver and such companies even went ahead to get allocations to supply more products!" (Leadership Newspaper February 22, 2012)

With the increase in the pump price of premium motor spirit (PMS) by the Federal Government on the 1^st of January, 2012, from N 65 per litre to N 145 per litre, the inflation rate has risen tremendously and the masses have become even more impoverished

12 STATEMENT OF THE PROBLEM

Several societies in the world today owe their development to the wealth generated from mineral and natural resources found in their environment Oil and gas are very strategic resources that power the economies of even the most sophisticated economies of Europe and America Oil and gas constitute the primus inter pares of the present day industrial production, manufacturing, transportation, aviation etc This is because petroleum accounts for over 65 percent of the energy requirement for production, manufacturing and transportation even though there are alternative sources like solar energy, wind turbines, hydro-power etc Also, the myriads of products generated from crude oil are used for the production of many products such as vehicle tyres, magnate, asphalt, etc (Journal of Oil and Gas, 2005) Without oil and gas, the global economy may collapse

The United Arab Emirate (UAE) for instance has utilized the wealth generated from oil and gas to substantially develop their society Prior to the first export of oil in 1962, the UAE economy was dominated by Pearl production, fishing, agriculture and herding Since the rise of oil production in 1973 however, the petroleum sector has dominated the economy and accounts for most of its export earnings which has also provided significant opportunities for investment The UAE has huge proven oil reserves, estimated at 978 billion bpd in 2011, with gas reserves estimated at 2142 trillion cubic feet; at present production rates These supplies are estimated to last well over 150 years

According to the World Bank, the UAE Federal budget for 2011 stood at 41 billion AED (United Arab Emirate Dirhams) or approximately 11 billion US Dollars Economy (World Bank data)

• GDP (2009): 9143 billion AED (approximately $248 billion dollars)
• Annual growth rate (2007): 63%;
• Per capita GDP (2008): over $53,400 dollars;
• Natural resources: oil and natural gas;
• Petroleum (2008 estimate) 368 % of GDP;
• Mining, manufacturing and construction, of which manufacturing was 122% of GDP in the 2008 estimate;
• Services: 561% of 2009 GDP;
• Trade (2006 estimate): exports-$157 billion dollars; petroleum products- imports $1266 billion dollars- machinery, chemicals food

With these, they have built the world's choice tourism destination with some of the most expensive hotels on earth For example, the Burj Al Arab Hotel costs $1000 per night with 202 bedroom suites and the Royal suite is the most expensive at $28,000

dollars per night (Design of Burj Khalifa: burjkhalifaaecom/world's ten tallest cities' ultrapolis project) Dubai has also constructed a $389 billion dollar Dubai Metro which runs through the heart of the city This is reputed as the first urban train network in the Arabian Peninsula  (Will Metro Change Dubai Car Culture? at BBC News, September 11, 2009)

The United Arab Emirate and many other countries have utilized their oil wealth to drastically improve virtually every facet of their people's lives Their oil wealth has been used to transform and propel manufacturing, commerce, services, transportation, tourism etc

In Nigeria however, the reverse is the case as the huge wealth generated by crude oil and gas has not translated to improved quality of life, rather, it has culminated in abject poverty and general underdevelopment due to the endemic corruption in the system Corruption has gone on un-abated since Nigeria's Independence in 1960 till date and seems to be getting even more sophisticated by the day

According to (Ribadu in March 2007 on Thisday Newspaper), 85 percent of Nigeria's oil revenue accrues to only 1 percent of the population while 25 percent has gone missing According to him, in 2003 alone, 70 percent of the country's oil wealth was stolen or wasted During the period 1965- 2004, the per capita income fell, income distribution deteriorated markedly over thesame period; the number of people subsisting on less than a dollar per day grew from 36 percent to more than 70 percent, from 19 million to a staggering 90 million According to the International Monetary

Fund (IMF), oil did not seem to add to the standard of living and could have contributed to the decline in the quality of life (Martin and Subraman, 2003:4)

Table 1:1 - National and zonal trends in poverty levels (%), 1980-2004

($1 per day poverty line)

Source: Nigeria, National Bureau of Statistics, 2005 and UNDP, 2006b:35

From the table above, it can be deduced that the poverty trend is increasing with the passage of time This is in spite of the fact that the economy is said to be growing at the rate of 67 percent yearly

Nigeria is a paradox; so wealthy, yet so poor; so endowed, yet so deprived Nigeria makes more money than many countries of the world but unfortunately is ranked as the world's 20th poorest country apparently because most Nigerians (over 90 per cent) live below the poverty line as they subsist on less than two dollars (N320) a day According to the Nigerian Bureau of Statistics (NBS), no fewer than 33 million Nigerians are unemployed, many of them university graduates, while the 2010 Global Monitoring Report of the United Nations Education, Scientific and Cultural Organisation (UNESCO) puts the number of out of school children at over eight million Infant mortality rate is 858 of 1000 live births, under-five mortality rate is 1379 of live births, malnutrition prevalence is 41 per cent, and insecurity rate is alarming, while life expectancy at birth is 481 years So, for most Nigerians, poverty has made life not just boorish but also hellish

Nigeria, despite its head start ahead of many countries at the outset (we beat France to having a television station in 1959), has since been relegated to the backwaters of under-development with poverty in the country steadily on the rise Shortly after independence in 1960, according to the Nigerian Bureau of Statistics, about 15 per cent of the population was poor This rose to 28 per cent in 1980 By 1985, it had risen to 46 per cent, dropping to 43 per cent in 1992 However, by 1996 the poverty incidence had gone up to 66 per cent before climbing further to the current rate of 92 per cent This rise in poverty rate in the country has been inversely proportional to the petro-dollar wealth of the country; it seems Nigeria makes more money to get Nigerians poorer; the richer the country, the poorer the citizens This is what has led some experts to submit that the country is steadily sliding from relative to absolute poverty Relative poverty is a measure of income inequality It is measured as the percentage of population with income less than a fixed proportion of median income Absolute poverty, however, is "a condition characterised by severe deprivation of basic human needs, including food, safe drinking water, sanitation facilities, health, shelter, education and information It depends not only on income but also on access to services" (National Bureau of Statistics, 2005 and UNDP, 2006 Reports)

There are many known causes of poverty in Nigeria but official corruption stands out as the major cause of poverty in the country Every year, funds are voted to address certain needs in the country but such money is hardly channelled to the intended projects but is instead diverted to personal use of the state officials in charge of such projects An example is the issue of electricity Between 1999 and 2007, $10billion (about N16trillion) was voted for electricity power generation improvement but the bulk of the money was not used for what it was voted for This has two major effects on the populace; the first is that the commonwealth of the people had been converted to personal use of a few The import of this is that while a handful of the people get stupendously rich, the vast majority is discomfited; the gain of a few becomes the loss of the majority

Whenever the government plans to revisit the issue of fixing electricity, fresh funds have to be sought for it; this is money that could have been put to other use had the first one been properly used

Then, the opportunity cost of the corrupt enrichment of the state officials that failed to use the money judiciously is the pains of the populace as a result of the failure to get facilities for which money was voted

The inability of the state to ensure regular electricity supply has been partly responsible for the growing poverty in the country The cost of doing business in the country has hit the roof with the effect that many Multi-National Companies have relocated to other countries The consequence of this is that a number of Nigerians that would have been employed have lost that opportunity to nationals of other countries Then, many cottage industries that would have sprouted had electricity supply been regular have remained mere dreams and business plans Again, this has reduced the number of people that could be employed It is this non-employment of able-bodied and skilled people that results in exclusion that produces poverty Most of those who are unemployed are skilled but corruption has excluded them from employment

Commenting on the nexus between corruption and poverty, Professor Marshal Owolabi, a Texas, United States of America-based economist, said the strongest hindrance to poverty reduction in the country was corruption

According to him, "Take the Sagamu-Benin express road for instance We all know how many times money has been budgeted for the rehabilitation of that road For a moment, take your mind away from the money but look at the number of people who have lost their lives on that road Those are the lucky ones Those who did not die are the unlucky ones because for many of them and their families, especially those who are their families' bread winners, it is a plunge into poverty If a self-employed man is involved in an accident and has to spend six months or one year in the hospital, it means for that period, there is no income for him despite the fact that he has to keep spending money Let's not forget the cause; it is because some people stole money meant for the repair of that road on which the accident occurred" (Nigerian Tribune, Tuesday, February 21, 2012)

The investigation by the House of Representatives Ad hoc Committee on the petroleum subsidy regime opened a large dairy of official and monumental corruption in Nigeria In their report, they found out that the subsidy regime as operated between 2009 and 2011, were fraught with endemic corruption and entrenched inefficiency Much of the amount claimed to have been paid as subsidy was actually not for the volume of PMS consumed Government officials made nonsense of the PSF guidelines due mainly to sleaze and in some cases, incompetence

Thus, contrary to the earlier official figure of subsidy payment of N 13 Trillion, the Accountant-General of the Federation put forward a figure of N16 Trillion, the CBN N17 Trillion, while the Committee established subsidy payment of N2, 587 087 Trillion as at 31^st December, 2011, amounting to more than 900 percent over the appropriated sum of N245 Billion This figure of N2 587 087 Trillion is based on the CBN figure of N844944 Billion paid to NNPC, in addition to another figure of N847, 942 Billion reflected as withdrawals by NNPC from the Excess Crude Naira Account, as well as the sum of N894201 Billion paid as subsidy to the marketers The figure quoted above strongly suggests that NNPC might have been withdrawing form two sources especially when the double withdrawals were also reflected both in 2009 and in 2010

However, as at the time of the Public Hearings, there were out-standing claims by NNPC and the Marketers in excess of N207 Billion as subsidy payments for 2011 (Report of the House of Representatives Ad hoc Committee on Fuel Subsidy 2012)

These are the corrupt activities that have bedevilled the Nigerian oil sector which has become a free for-all pecking order These activities have engendered poverty, underdevelopment and other negative activities amidst a purportedly growing economy

13 OBJECTIVE OF THE STUDY

The objective of this study is to carefully and critically examine the following, and make necessary recommendations that would contribute to the reduction of corruption and poverty in the Nigeria:

1. The study shall examine the role of crude oil and gas in national development vis-à-vis the existential realities in Nigeria
2. It shall also examine the nexus between corruption and poverty with a view to establishing the irony of poverty in the midst of plenty in Nigeria, and make recommendations to avert the trend
3. Nigeria is blessed with abundant natural and mineral resources, but its people are among the poorest in the world This study shall therefore provide a roadmap for those in leadership positions to meticulously utilize the country's resources to the benefit of the mass

14 SCOPE AND LIMITATION OF THE STUDY

The study shall cover the following areas:

4. The issues and politics in the Nigerian oil industry and reasons why oil the huge wealth has not translated into improved standard of living for the people
5. The incidence of corruption, poverty and underdevelopment in Nigeria shall also be examined, with a view to proffering solutions
6. The study shall delve into the politics of legislation in the Nigerian oil industry
7. It shall briefly touch on the leadership question in Nigeria

The territorial scope shall be the whole country with particular reference to Bayelsa State

The main limitation of this study is lack of adequate finance to enable me carry out an extensive research on the subject matter, especially as it concerns the primary method of data collection because the collected should be representative enough by covering a large proportion of the population of the research setting (Bayelsa State)

15 THEORETICAL FRAMEWORK

The theoretical framework adopted in this study is the Marxian Political Economy Approach The term political economy was first used by Atoine De Montchretein in 1615 in his book, ‘The Laws of Political Economy' The use of the word was strengthened by Adam Smith and James Mill in their ‘Interpretation of Laizzer Fairre' (Ibaba S Ibaba, 2005:59)

The political economy approach is used for studying the capitalist system (society) and its contradictory relationships The fundamental basis of political economy is rooted in ‘Dialectic Materialism' As a scientific framework, it maintains that the material base of reality (including society) is constantly in a state of flux in a dialectic process, governed and propelled by the laws of unity and conflict of opposites, the negation of the negation (Frolov 1981:4)

Marxian Dialectics sees history as a cumulative activity of human beings, the complex producer of the deliberate effort of individuals to satisfy their material needs; the consequences of such activities is otherwise the pursuit of man's economic necessity (Orugbani 2002: 23)

The theory further postulates that the conflict between classes is essentially dependent on the economic sub-structure of society which is the driving force of

history, development and underdevelopment because of the dialectic transformation it heralds (Anikpo 1996, Ake 1981)

Political economy and dialectical materialism is rooted in the ideology that man is first and foremost a material being, and our material existence determines and shape our consciousness Therefore, meeting the material needs is a primary condition for man's existence-and this is what informs and shape our ideas and consciousness

Drawing from this therefore, the use of this approach is very appropriate for this study The political class in Nigeria lacks an economic or productive base and therefore use political power to promote their personal interests They corruptly use public resources to enrich themselves; they build and sustain their economic empires for themselves, their children and grand children

The above corroborates Ake's postulation that the African political class lacks an economic base and therefore resort to the capture of political power to consolidate economic gains This according to Ake leads to what he called the ‘Politics of Anxiety,' which involves a desperate struggle for power, a win by all means mentality (Ake in Alapiki 2004)

As a result of the expected economic gains, the political class in Nigeria has made politics a normless exercise The following characteristics are observable in Nigerian politics:

1. Politics is a zero-sum game in Nigeria;
2. It is characterised by malpractices, fraud, rigging, and violence;
3. Politics in Nigeria is normless;
4. The institutions concerned with election matters from the political parties to the umpire (INEC) are apparently compromised
5. It is very expensive in terms of money involved in electioneering activities; and

6. Lastly, politics is seen as an end in itself as gaining power provides the ultimate economic gains, social security and immunity from prosecution

The quest for material cravings by the political class engenders corruption, poverty, violence and underdevelopment in Nigeria

It is for the above reasons that the Political Economy Approach is the most appropriate theoretical framework for explaining the politics in the oil industry, corruption and poverty in Nigeria

16 HYPOTHESES AND ASSUMPTIONS

This study shall test the following hypotheses:

8. The more corruption remains prevalent in government institutions and agencies, the higher the degree of mass poverty in Nigeria
9. The higher the revenue accruing from crude oil and gas, the higher the poverty rate in Nigeria
10. There is a significant relationship between the laws governing the oil industry and poverty in Nigeria

17 RESEARCH QUESTIONS

The study shall provide answers to the following questions:

1 Are Nigerians better-off with more revenues accruing from crude oil and gas?

7. To what extent do corruption and bad governance cause poverty and underdevelopment in Nigeria?
8. To what extent do legislations in the oil industry dis-empower the people from whose land oil and gas are explored and exploited?
9. Is the development of Bayelsa State commensurate with the huge amounts of money allocated to the state since 1999?

18 RESEARCH METHODOLOGY

The study shall rely on both the PRIMARY andSECONDARY sources of data In doing this, the questionnairemethod of primary data collection shall be adopted Questionnaires shall be administered to respondents with closed-ended questions and answers elicited

The bulk of data however shall be collected from the secondary source and existing materials on the Nigerian oil industry, the corruption profile and poverty in the country The library research method shall therefore be the primary focus

TYPE OF DATA

The study shall source data from documented facts and information shall be drawn from textbooks, academic Journals, News Magazines, Public lectures/ Seminar papers and Un-published materials

SAMPLING DESIGN AND PLAN

The population of this study shall be the whole country with specific reference to Bayelsa State However, a sample size of 400 persons on the ratio of 50 from each of the Eight Local Government Areas shall be selected to represent the whole population

Each item of the questionnaire shall have a nominal scale of multiple responses The questionnaires shall be retrieved and collated for analysis

DESIGN OF DATA COLLECTION INSTRUMENT

The data collection instrument shall be a questionnaire A questionnaire is an organised paper bearing the same questions in all respects for all respondents It shall bear the personal profile of the respondents and various questions drawn from the subject matter under study The information is decoded and frequency counts taken for presentation and analysis

METHOD OF DATA ANALYSIS

The data shall be analysed through frequency tables Numerical values assigned to the response scale as follows:

• (A)… - Agreed
• (SA)… Strongly Agreed
• (U)……Undecided
• (D)……Disagreed
• (SD)… - Strongly Disagreed

Frequency counts and simple percentages shall be computed which shall be corroborated with documented facts for analytical purposes

19 SIGNIFICANCE OF THE STUDY

Corruption, bad governance and poverty are the major problems confronting the Nigerian State and seem to have brought the country to the brinks In 2006 for instance, Nigeria was rated by Transparency Watch as the second most corrupt country in the world after Bangladesh In view of this endemic corruption and poor governance, poverty is also widespread

Thus, this study is very significant because it shall unravel the root cause (s) of corruption, poor leadership, poverty and underdevelopment in Nigeria with a view to making useful recommendations and suggestions that could turn the situation around for good

It is therefore instructive to read through the lines of this work to understand the fundamental basis of corruption and the vicious cycle of poverty in Nigeria The study is very useful as it gives an insight into the contradictions arising from the increase in oil prices and the corresponding increase in poverty

The recommendations in this study shall provide a blue-print to engender development and reduce poverty in Nigeria