‘BUNKERING’ SOCIAL & ECONOMIC CHANGE Political Economy of Nigeria’s Reform

Image: VOA News

‘Bunkering’ is a local practice in Nigeria employed to steal oil from established pipelines by tapping it along its course in Niger delta. Chatham House estimates that about 10% of Nigeria’s annual oil production is lost to bunkering. The information here is based on Nigeria The Political Economy of Reform: Strengthening the incentives for economic growth by Pat Utomi, Alex Duncan and Gareth Williams, The Policy Practice, UK

170 Million people

50% Urban

7.2% growth (2012)

Giant of Africa Capital: Abuja ; Largest City: Lagos

Former British colony Independence – 1960 Oil discovered – 1956 Federal structure 36 States 746 LGAs

Nigeria today

- civil war for oil revenues - environmental degradation by - oil industry - political assertion by ethnic groups

- completely oil dependent (with no refining capacity) - all other sectors of economy in crisis – fall out effects like piracy & financial fraud

Resource curse? Indonesia vs Nigera – both strike oil around the same time but stand wide apart today – Policy choices & Institutional performance

Nigeria’s dependence on trade (oil?) Nigera vs India – on Trade as a % of GDP

Analyze factors that drove reform

REFORMS

How to sustain these reforms and

improve

1. Greater fiscal discipline and transparency FRA (2007); NEITI (2007)

2. Privatization 3. Lower fuel subsidies 4. Banking consolidation 5. Anticorruption

EFCC; ICP Commissions

1. Obasanjo’s election 2. 7 years of continuous growth 3. High oil prices 4. Business interests of political elite – dismantled

public enterprises & patronage networks 5. External factors – OECD, Multilateral agencies

1. Accelerated speed in passing legislations 2. Strengthening accountability systems 3. Generating wider benefits from reforms 4. Extending reforms from Fed to State & LGA 5. Strengthening technical capabilities

Political Economy Context Ethnic groups – Oil dominated industry – Nollywood 2nd largest employer

Akintunde Akinleye/REUTERS

A man carries refined oil in buckets at an illegal oil refinery site near river Nun in Nigeria's oil state of Bayelsa.

Features of Nigerian Political Economy

Striking feature –

“recursive” nature of Nigeria’s political economy

PERSONALIZED POLICY PROCESS

INCENTIVES

WEAK STATE – SOCIETY RELATIONSHIP

EASY EXIT OPTIONS (for businesses & elites)

VALUE SYSTEM

Discussion