ADOPT MARKET-ORIENTED DEVELOPMENT STRATEGY FOR NIGER DELTA DEVELOPMENT.

PURPOSE:

1. To provide you with advice on policy strategy for market-oriented development for Niger Delta development and a recommended course of action.

BACKGROUND:

2. Conflicts in Niger Delta have generated domestic and international concerns. For more than 20 years, Niger Delta has experienced recurring conflicts – often followed by violence – which have been inspired, largely, by broad range of economic factors (for example, increased sense of marginalization, exploitation and injustice by the Niger Delta people, and increased poverty and inequality), political factors (for example, long-lasting corruption, mismanagement of allocated resources, and insensitivity of government to the needs and concerns of the Niger Delta people), environmental factors (for example, land degradation and other environmental disasters) and socio-cultural factors (for example, poor value orientation, particularly amongst the youth).
3. Conflicts in Niger Delta have revealed a paradox in the economic development of the region. Niger Delta has remained the driving force of Nigeria’s oil and gas wealth, having the second highest recognized oil reserves in Africa and being the eight largest oil exporter in the world. Despite the abundance of natural resources, particularly oil and gas, in Niger Delta, and the huge amount of financial resource allocations from the federal government to, and financial investments by oil companies and donor agencies in, the region, Niger Delta has continued to produce disappointing economic development results.
4. There has been a complete disconnection between the level of socio-economic developments in Niger Delta and the amount of financial resources that government, donor agencies, and oil companies operating in Niger Delta have invested in the region. These huge financial resources do not reflect in the living standards of the Niger Delta people; hence they have had insignificant impact on economic development in the region.
5. The paradox in the economic development of Niger Delta has stimulated difficult development challenges, most especially as the conflicts between communities and oil companies, and government, as well as amongst communities, over resource allocations continue to manifest. Though the past governments have adopted many intervention programmes, through various government agencies, which have, indeed, helped to stabilize security situation in the region and created opportunity for economic development engagements, however, the fundamental causes of conflicts have not been tackled.
6. The fundamental causes of conflicts reside in chronic poverty and inequality in Niger Delta. These are still largely deep-rooted in the region’s checkered history of marginalization and deprivation, and are connected very much with the continuing forms of instability in the region.

ISSUES:

7. The key issue is the paradox in the economic development of Niger Delta. Development results in Niger Delta have been disappointing, despite the abundance of natural resources in the region, and huge amount of financial resources that government, oil companies and donor agencies have invested in the region (See Attachment A in the Appendix).
8. Another issue is the continued difficult development challenges in Niger Delta, for example, administrative oversight, deteriorating socio-economic infrastructures, increasing poverty, inequality and unemployment, declining value orientation amongst young people, and long-lasting conflicts, despite government’s interventions. These development challenges have continued to undermine intervention programmes by various government agencies. As a result, the fundamental causes of conflicts in Niger Delta have remained unsolved.
9. These issues have revealed the imperative for a market-oriented economic development strategy. This is particularly important now that the security situation in the region has been stabilized to a large extent. The premise is that for the economic challenges in Niger Delta to be solved, development strategy needs to capture what the Niger Delta people perceive to be their interests, concerns and needs.
10. The precept is that the federal government should focus on providing co-dependent elements of market-oriented development, for example, creating enabling environment for private sector participation in infrastructure development, while the private sector and donor agencies should assist the government in building the capacities of the Niger Delta people and strengthening the policymaking environment.

ANALYSIS:

11. Conflicts in Niger Delta have, historically, been framed on resource allocations. In all the conflicts, government has always been blamed for not returning to Niger Delta the proceeds that are derived from the sale of resources produced in the region. In recent years, as part of government’s intervention programme to develop the region, government has set up agencies, for example, the Niger Delta Development Commission (in 2000), the Ministry of Niger Delta Affairs (in 2009), the Presidential Amnesty Programme (in 2009), and the Hydrocarbon Pollution Restoration Programme (in 2012). Through these agencies government has channelled funds for the development of the region.
12. Available data shows that between 2010 and 2014, federal government has allocated about NGN7.4 trillion to Niger Delta. This amount came from different sources, for example, statutory oil revenue allocation, federal allocations to Niger Delta states, budgetary allocations to the Federal Ministry of Niger Delta Affairs, Niger Delta Development Commission, Presidential Amnesty Programme, Hydrocarbon Pollution Restoration Programme, and Ecological Fund, Pipeline Security Contracts for the Nigerian National Petroleum Corporation, allocations from the Millennium Development Goals, financial contributions from international oil companies, and financial support from development donors (See Attachments A & B).
13. What these mean is that the fundamental problem with the development of Niger Delta is not lack of agencies to implement development plans, or allocation of funds to the region, but managing the funds allocated to the region. The processes for managing the funds allocated to Niger Delta have been deficient in transparency and accountability. The issues with the management of funds allocated to the region speak volumes about the poor governance structures and processes of various development plans.
14. Findings from the reports published by the National Bureau of Statistics and Nigeria Extractive Industries Transparency Initiative between 2010 and 2013 have shown that there is presence of overlap and duplication of projects amongst agencies that are involved in Niger Delta development. The overlap and duplication are as a result of absence of a coherent development plan that is shared by the agencies. This has created inefficiency in project delivery, as resources are unevenly distributed. For example, while many projects are abandoned for lack of funds, other projects are duplicated.
15. Other findings from studies done on states and local governments in the Niger Delta region have shown that there is lack of community engagement in the design and implementation of development programmes, as well as in budgeting processes for infrastructure projects. Many development projects do not include the preferences of the communities; hence the projects are often not tailored to the needs of the people.

OPTIONS:

There are three options to consider:

16. Option A: Adopt a coherent market-oriented economic development strategy for Niger Delta development.
17. Option B: Review the effectiveness of all the existing development plans that have been developed by various government agencies involved in Niger Delta development, and integrate the relevant initiatives into the strategy in option A.
18. Option C: Recommend to Mr President to mandate all the relevant government agencies involved in Niger Delta development to collaborate and consolidate efforts towards developing the strategy in option A.

RATIONALES:

19. The current development plans for Niger Delta do not work for the vast majority of the poor people in the region because of the reasons (and more) stated in the analysis above. Therefore, the region needs a coherent market-oriented economic development strategy that will focus largely on tackling the fundamental issues – poverty and inequality. Niger Delta development requires market-based systems that benefit the people, include the people in policy/decision making processes, have efficient governance structures and processes for managing funds allocated to the region, and can be sustained.
20. The proposed strategy is not a new plan, rather an operational instrument, with a unified governance framework that is shared by all agencies involved in Niger Delta development, for implementing the existing development plans.
21. To support Option A, the following cases are made:

• Case 1: Market systems must be beneficial to the poor: This makes the case that the market systems must be all-inclusive; well-organized; represent the interests of the poor; and sustainable in order to work for the poor.
• Case 2: Markets are integral part of people’s livelihood: The underlying principle here is that poor people rely largely on the market systems for their means of livelihood. Thus, people’s lives can be improved significantly through functional and sustainable market systems.
• Case 3: Social inclusion is essential for reducing poverty and closing inequality gap: This presents the case that the key to reducing poverty and closing inequality gap facing Niger Delta is enhancing the opportunities for people to participate in policy/decision making processes.
• Case 4: Access to the market systems: The guiding principle here is that access to the market systems creates an economic virtuous circle, where people’s standard of living is improved, productivity is enhanced, incomes are increased, food security is strengthened, and hunger and poverty are reduced.

FINANCIAL IMPLICATIONS:

22. The activities that will be carried out in respect of Options A and B will be funded from the budgetary allocations of the government agencies that will be involved in the processes. There is enough scope within their budgets to undertake the activities. Option C has no financial implications.

RECOMMENDATIONS:

The Honourable Minister is graciously invited to:

23. Agree to adopt the strategy proposed in this brief to ensure consolidation of the gains from the stabilized security situation in, and development of, Niger Delta.
24. Note that the proposed strategy is not a new plan, but an operational instrument, with a unified governance framework, for implementing the existing development plans.
25. Agree to direct for a review of all the existing development plans developed for Niger Delta development.
26. Agree to recommend to Mr President to direct all the relevant agencies involved in Niger Delta development to collaborate and consolidate efforts towards developing the proposed strategy.