Under new management
 

Nigeria’s new president has made a promising start on repairing the damage done by his predecessors. But he has a mountainous task ahead of him, reports Robert Guest

The trouble with Nigeria is simply and squarely a failure of leadership. There is nothing basically wrong with the Nigerian character. There is nothing wrong with the Nigerian land or climate or water or air or anything else. The Nigerian problem is the unwillingness or inability of its leaders to rise to the responsibility, to the challenge of personal example which are the hallmarks of true leadership.

SO WROTE Chinua Achebe, a Nigerian novelist, in 1983. Between then and now, his gloomy book, “The Trouble with Nigeria”, has been perhaps the best short account available of how his native country worked—or rather, how it did not work. Ruled by soldiers for all but six years since 1966, Nigeria has suffered one civil war, six violent changes of government, and the continual theft and squandering of public funds by its leaders. Blessed with fertile soil, floods of oil, and a huge, energetic, talented population, Nigeria should be Africa’s giant. That it is instead one of the poorest countries in the world is largely the fault of a succession of awful military dictators. But the sudden death of the most recent and perhaps worst of them, Sani Abacha, has given Nigeria a chance to recover.

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General Abacha, who seized power in 1993, died of a heart attack in June 1998. An interim government led by General Abdulsalami Abubakar promised to restore democracy in stages, with elections first for local governments, then for state governments, then for a national assembly and for the presidency itself. To many people’s surprise, he kept his word. The elections were marred by bribery—of which all parties were guilty—but the result is widely agreed to reflect the will of the Nigerian people. On May 29th 1999, Olusegun Obasanjo, a 62-year-old chicken farmer, was sworn in as Nigeria’s first democratically elected president since the toppling of Shehu Shagari in 1983.

The challenge facing Mr Obasanjo is daunting. His country is poor, indebted and riven by ethnic violence (which left 100 people dead in Lagos at the end of November). The roads are pitted with potholes and clogged with rubbish. Telephone and power lines work intermittently at best, and often not at all. Factories are idle. So, resentfully, are millions of urban youths. After a long spell of crude despotism, Nigeria has no tradition of democracy, nor of effective governance. For as long as most Nigerians can remember, the rewards for honesty and industry have been miserable, whereas corruption has paid magnificently. Nigeria had become “the open sore of a continent”, in the words of Wole Soyinka, the country’s 1986 Nobel laureate for literature.

Seven months after assuming power, Mr Obasanjo is hard at work applying ointment to that sore. He has some useful qualifications. First, although he was once Nigeria’s military ruler, he was not personally corrupt, and had landed the top job more by chance than by design. In 1976, after the assassination of the then ruler, Murtala Mohammed, Mr Obasanjo, as his deputy, took over. He stayed in office long enough to organise elections, and in 1979 handed over power to an elected civilian. It was not Mr Obasanjo’s fault that this civilian regime was corrupt, and was soon swept away in a coup.

This time he has a mandate to keep Nigeria democratic. To this end, he has subdued the military. More than 100 officers with links to the old regime have been retired, and non-political soldiers have been put in charge of the army. Some of those close to Abacha, including his son, are being prosecuted for an array of alleged crimes, including murder. Efforts to recover some of the money that the late dictator and his cronies stole have produced a haul of over $700m. There may be more to come.

Ordinary Nigerians, fed up with being robbed and bullied by their leaders, would probably like to see harsh punishments for the old regime, but Mr Obasanjo, a former political prisoner himself (he served three years of a 15-year sentence for allegedly plotting a coup against Abacha before the tyrant’s death set him free), is inclined to be gentle. Indeed, Nigeria today is a far less fearful place than it was a couple of years ago. General Abubakar began the good work by releasing political prisoners and stopping the security forces from harassing dissidents. Mr Obasanjo has continued in that vein (although his use of the army to crack down on terrorism in the Niger delta has recently caused concern). Journalists at Nigeria’s dozens of lively, opinionated newspapers, who once risked being roughed up or worse by the security forces, now work unmolested.

On the economy, too, Mr Obasanjo has made a reasonable start. He claims to have abandoned the statist philosophy he espoused in the 1970s, and to have embraced the market. He has relaxed exchange controls and promised to privatise, deregulate and fight corruption. For the first time in decades, there is a feeling of optimism in the air. Now that the country is no longer a pariah, America and Europe have pledged more aid. There is talk of debt relief in the future, and perhaps even a bit of foreign investment. For the Nigerian in the street, the most visible change is the easy availability of petrol. Under Abacha, pumps ran dry and the president’s friends made fortunes cornering supplies at the low official price and selling them at the much higher black-market rate. Day-long queues formed outside petrol stations. For the citizens of one of the world’s largest oil-producing countries, not being able to buy fuel was perhaps the worst humiliation. Mr Obasanjo all but ended it with a few honest appointments.

Mr Obasanjo comes closer than any of Nigeria’s recent presidents to providing the “true leadership” Mr Achebe called for. But his predecessors left Nigeria so horribly broken that it will take a lot of time and skill to mend it.

The last despot?
 

IN 1994, Wole Soyinka predicted that Sani Abacha would be Nigeria’s last despot. The man was so cruel, and so incompetent, Mr Soyinka argued, that after his passing Nigerians would never again submit to military rule. With luck, he may be proved right. Abacha gave the army such a bad name that hardly anyone in Nigeria now has a good word to say for the men in green. The most political generals have been sacked. Those who are not being prosecuted have retired to their estates to play with their Lamborghinis. Doubtless this leaves behind some ambitious junior officers who still hope one day to make their own fortunes in government. They may be biding their time, waiting for a suitable opportunity for a coup. Ethnic violence or an economic collapse might one day provide such a pretext. But for now, democracy is popular. Abacha’s parting gift to the nation he pillaged was to make Nigerians determined never to see his like again.

Most of Nigeria’s uniformed rulers have been heavy-handed. When General Muhammadu Buhari seized power in 1983, he decided that military-style discipline was the way to put Nigeria to rights. His thugs started enforcing orderly queuing and the flying of the national flag above every shop, from department stores to roadside fruit stalls. On the last Saturday of every month, all Nigerians had to stay home and clean up their neighbourhoods. Civil servants who arrived late for work were forced to do the “frog-jump”, leaping up and down in a squatting position with their hands on their ears. Some suffered heart attacks. General Ibrahim Babangida, who overthrew Buhari in 1985, was more crafty in his exercise of power, but more ruthless too. In 1990, he had 69 fellow army officers executed after trials before a military tribunal, for allegedly plotting a coup against him.

Abacha, who took over in 1993, brought Nigeria to new lows. Dissidents were beaten, hung upside down and starved to make them confess or implicate others. Political prisoners were tried in camera, before martial courts that rarely set them free. Common criminals, such as armed robbers, were whisked through swift summary courts and shot without the right to appeal. In 1995, Abacha had the novelist Ken Saro-Wiwa hanged even as leaders of the British Commonwealth, gathered in New Zealand for a summit, were trying to persuade him to show mercy. Nigeria was expelled from the Commonwealth the next day, and limp sanctions were imposed on it.

Abacha persecuted many of Nigeria’s most famous offspring. Olusegun Obasanjo, the current president, was jailed after a rigged trial for treason. Shehu Yar’Adua, who was Mr Obasanjo’s deputy in the 1970s, died in custody in 1997, some say of a lethal injection administered by Abacha’s hired killers. Moshood Abiola, a millionaire businessman who was set to win the 1993 presidential election before the army cancelled the vote count, was jailed for declaring himself president. When he died in jail within a month of Abacha’s death, apparently of a heart attack, some of his fellow tribesmen assumed that he had been murdered to prevent a Yoruba winning power. Many people died in the ensuing riots. In 1994, Abacha had Mr Soyinka’s Nigerian passport confiscated, driving the writer into exile in America—where many members of the Nigerian middle class had already emigrated in search of an easier life.

When Abacha died, the terror ceased. Abdulsalami Abubakar, the interim ruler, gradually released some 140 political prisoners, and oversaw the free and reasonably fair elections that elevated Mr Obasanjo to the presidency. The military budget is to be cut. Mr Obasanjo hopes that the UN will help to pay for Nigeria’s peacekeeping efforts in Sierra Leone and Liberia, which have cost an estimated $8 billion over the past decade. Abacha’s son Mohammed and four others face trial for the murder of Abiola’s wife, Kudirat, in 1996. An investigation into past human-rights abuses, loosely modelled on South Africa’s truth commission, has accepted 11,000 submissions. There are still reports of police and army brutality, but overall the state is incomparably more respectful of human rights than it was. Some Nigerians lament that the newly restrained police are not tough enough on thieves and hijackers. But most celebrate the death of despotism, and hope that it never revives.

A tale of two giants

Why Indonesia has beaten Nigeria hands down

TO UNDERSTAND the scale of Nigeria’s failure, it is helpful to compare it with Indonesia. The two countries are superficially similar. Both are huge, populous (Indonesia has 200m people; Nigeria perhaps 100m), and ethnically diverse. Both countries have suffered military rule and, at times, terrible violence. At independence, in 1945 and 1960 respectively, both Indonesia and Nigeria were extremely poor; most of their people were subsistence farmers. But then both struck oil, and after the sudden quadrupling of the oil price in 1973-74 both were deluged with floods of petrodollars.

Nigeria has received some $280 billion in oil revenues since the early 1970s. Through foolish investments, graft and simple theft, this vast fortune has been wholly squandered. In fact, because successive Nigerian governments borrowed billions against future oil revenues and wasted that money too, it is fair to say that Nigeria blew more than its entire oil windfall. Nigerians are, on average, poorer today than they were in 1974, despite the recent surge in the oil price, and the country is saddled with debts of about $30 billion. Income per head in 1998 was a wretched $345, less than a third its level at the height of the boom in 1980.

Indonesia, which has not always been a model of good governance either, has fared much better. GDP per head rose from under $200 in 1974 to over $1,000 in 1996 and 1997. A currency crash brought it tumbling down to below $500 in 1998, but it bounced back to an estimated $700 last year. Indonesia’s cake not only grew fast; it was also, despite the depredations of the Suharto family, more fairly sliced than Nigeria’s shrinking one. In the mid-1990s, the poorest fifth of Indonesia’s people accounted for 8% of national income, compared with about 4% for the bottom fifth in Nigeria. By 1997, according to the United Nations Development Programme (UNDP), Nigerians were more than twice as likely as Indonesians to be illiterate or to die before the age of 40, and seven times as likely to lack access to basic health care.

What could account for such disparities? Corruption was undoubtedly a factor. Bad in Indonesia, it was much worse in Nigeria. Raconteurs in Lagos bars tell it this way:

A Nigerian and an Indonesian attend a foreign university together in the 1960s and become friends. After graduation, each returns home to join the government. Several years later, the Nigerian visits his colleague in Jakarta, and finds him living in a big, luxurious house with a Mercedes car parked outside. ‘How can you afford such a nice house on a politician’s salary?’, asks the Nigerian. ‘Do you see that road?’, replies the Indonesian, pointing to a magnificent highway outside. ‘Ten per cent.’ Some time later, the Indonesian goes to visit his Nigerian friend, and finds him living in a vast palace with ten Mercedes cars parked outside. Amazed, he asks where the money had come from. ‘Do you see that road?’ asks the Nigerian, pointing to a thick tangle of rain forest. ‘A hundred per cent.’

A recent World Bank study* puts it more soberly: “Indonesia turned oil income into productive investment, whereas Nigerian oil income was either siphoned abroad or used for prestige projects.”

The oil money came so suddenly, and in such vast quantities, that the government did not know what to do with it. In 1960, oil accounted for 1% of federal government revenues. Since then it has risen to about 95% (see chart). It was easy money. Foreign firms found and extracted the oil; the Nigerian government simply opened its coffers and watched the dollars gush in. The generals, assuming that the boom would last forever, spent carelessly. They also helped themselves and their friends to a big wad of the cash.

Most of Nigeria’s rulers have been crooked, but Sani Abacha was probably more crooked than the rest. Whereas his predecessors usually made at least some effort to disguise their thieving, for example by laundering the loot through dummy companies, Abacha simply grabbed it straight from the treasury and stashed it in his offshore accounts. His most blatant scam was the Petroleum Trust Fund (PTF), set up in the mid-1990s, ostensibly to channel the extra revenue from an increase in the domestic fuel price into infrastructure and other investments. The fund was not independently audited, and almost none of the money that sloshed through it was properly accounted for. It was a vehicle for Abacha and his friends to spend at will a sum that in 1996 was equivalent to a quarter of the federal budget. Some went on padded contracts for friends. Some was stolen. Abacha himself, ever nervous of his position as an unelected, unpopular leader, spent lavishly on his personal security, and handed out bricks of banknotes to bigwigs whose support he wanted to buy.

How much did Nigeria’s military rulers steal for their own use? Newspapers in Lagos bandy about numbers in the tens of billions of dollars, but the true total will probably never be known. Visitors to Kaduna, a town in northern Nigeria where a number of retired generals live, cannot fail to be impressed by their huge mansions, complete with private mosques and satellite dishes bigger than many poor people’s houses. Senior officers often own several such houses, not to mention dozens of the sort of snazzy sports cars seen parked outside the Kaduna polo club.

But even more harmful to Nigeria than the generals’ thieving was the way military governments squandered money they were legally entitled to spend. Visitors to the Ajaokuta steel plant, for instance, are surprised to see goats grazing among the gantries and children playing by the silent rolling mills. Nigeria flushed away a total of $8 billion trying to build a steel industry at Ajaokuta and elsewhere. The idea, first proposed in the 1970s, was that the country would become the Japan of Africa by industrialising heavily. Steel mills would turn local coke and iron ore into shiny metal, which would then be used to build railways. Contractors from the Soviet Union, tendering to build Ajaokuta, produced a 21-volume feasibility study, but it was never translated from Russian, and probably never read by any Nigerian decision-makers. They wanted a steel industry whatever the cost, partly as a matter of national pride, and partly because big projects brought big kickbacks. Ajaokuta has yet to produce a single bar of steel, and it will probably never be able to do so at a profit. Other steel mills in Nigeria operate fitfully, at a loss, and usually at a small fraction of capacity.

Another example of how corruption bred waste in Nigeria is the cement scandal that broke under the civilian regime of Shehu Shagari in the early 1980s. President Shagari announced a grand public housing project, for which his government ordered vast quantities of cement—more, it turned out, than Nigeria’s ramshackle ports could cope with. Ships loaded with cement formed a queue stretching for miles outside Lagos harbour, creating a spectacle that commercial pilots would take a detour to gawp at, and racking up months of demurrage fees. Meanwhile the officials responsible were making a fortune from selling cement import licences.

Perhaps the most egregious example of pointless extravagance is the capital city itself. Abuja was conceived as a symbol of national unity, a new capital in the centre of the country, unburdened by connections with any of Nigeria’s many squabbling ethnic groups. Instead, it became a symbol of the profligacy of the regime of General Ibrahim Babangida (1985-93), which sank billions into the project and produced a glittering ghost town. No ordinary Nigerian can afford to live there, but no state governor can afford not to make regular begging trips to the capital.

In the world corruption rankings compiled by Transparency International, a Berlin-based consultancy, Nigeria has consistently been among the worst offenders. Last year it was rated the second most crooked country, beaten only by neighbouring Cameroon. The pilfering continued right until the end of General Abubakar’s transitional government. In the last months of military rule, a flurry of public contracts went to well-connected firms. Nigeria’s foreign-exchange reserves shrank from $6.7 billion at the end of 1998 to $4 billion at the end of March 1999.

The new democratic government seems determined to clean up this mess somehow or other. But having sacked a few powerful thieves is not enough. The whole Nigerian political system, built up in a series of unfortunate steps over the past 40 years, tends to encourage corruption. To curb it, Mr Obasanjo must change the system itself.

*“Nigeria and Indonesia: The Political Economy of Poverty, Equity and Growth”, by David L. Bevan, Paul Collier and Jan Willem Gunning. Oxford University Press, 1999.

The stony road to reform

So much to do, so hard to do it

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But can Obasanjo deliver?

FOR a crusader against corruption, Nigeria’s new president has fine credentials. When he was last in charge of the country, he kept his fingers out of the till. Until last year, he was chairman of Transparency International’s advisory council. Since assuming office, he has done many of the right things. Besides forcing the retirement of the army officers who most obviously grew fat on their links with the Abacha regime, he suspended government contracts dating from the last three months of General Abubakar’s transitional administration, pending a review. He has appointed more able and honest men to run public agencies such as the petroleum refineries, and launched a probe into past wrongdoings.

Only the biggest offenders will be prosecuted, according to Christopher Kolade, who also used to work for Transparency International, and whom Mr Obasanjo put in charge of probing the contracts awarded under General Abubakar. Punishing everyone who took bribes in the past would mean sacking virtually the entire civil service, thereby bringing government to a standstill. Mr Kolade argues that what matters is to let people know that from now on graft will no longer be tolerated. But moral admonitions will not be enough. It is traditional for Nigerian rulers to announce a clean-up soon after taking office. In the past, this has usually meant locking up a few big shots from the previous regime, which may not necessarily have curbed baksheesh but was a handy way of getting rid of potential rivals.

This was why Britain refused to extradite Umaru Dikko, the man in charge of the notoriously corrupt rice task force under President Shehu Shagari. When Mr Shagari was overthrown on new year’s eve in 1983, Mr Dikko fled to Britain. He was hunted down by the new regime, drugged, gagged and put in a diplomatic crate bound for Nigeria. Suspicious British customs officials found and released him. He was not sent back because Britain felt he would not receive a fair trial.

So far, Mr Obasanjo’s anti-corruption drive seems admirably non-vindictive, but to have a chance of reducing corruption in Nigeria to a tolerable level Mr Obasanjo needs to make two drastic changes. First, he must reduce the temptation to seek bribes by paying bureaucrats adequately. Second, he must loosen the state’s grip on the economy. This is not only desirable in itself, it will also reduce the power of officials to extort rents from Nigerian business.

Given the government’s precarious finances, paying public servants properly will not be easy. In the past, civil-service salaries were reviewed only occasionally. Typically, they would be lifted to a fairly generous level when the oil price went up and then frozen for several years, so that Nigeria’s high inflation rapidly reduced them to less than a living wage, even if they managed to get paid. Civil servants had the choice of taking an extra job or trousering bribes. Many chose bribes. Mr Abubakar’s transitional government approved a substantial pay increase, but how much of this extra money will reach civil servants remains to be seen .

Lower-rung government employees are used to being paid late or not at all. Central-government revenues fluctuate wildly with the oil price. These fluctuations are reflected in the payments that trickle down to teachers, nurses and so on, and can be exacerbated if the officials in charge of disbursing their salaries are dishonest. Many state and local governments have not published audited accounts for 10-15 years, so a lot of money seeps away as it passes through the system. This is one reason why so many schools and clinics in Nigeria barely function. Unpaid staff are reluctant to show up for work. Those who do turn up often find that there is no budget for day-to-day running costs.

One way to free up funds to pay civil servants properly would be to reduce their number, starting with the unknown but certainly huge number of “ghost” workers who get paid even though they are dead, or who never existed in the first place. Their salaries are pocketed either by relatives or by the officials who invented them. This kind of graft will be hard to curb until regular payroll records are kept.

To reduce the opportunities for corruption, fundamental changes will be needed to the way the Nigerian economy works. The instincts of the generals who have ruled Nigeria for most of the time since independence have been dirigiste. In the late 1960s and early 1970s they absorbed the ideas that were then fashionable: that governments of developing countries should seize the commanding heights of the economy, that the state should direct investment into “strategic” sectors such as heavy industry, and that all sorts of subsidies and controls were necessary to nurture and protect domestic agriculture and nascent manufacturers. Doubtless they sincerely believed all this. Their belief may have been reinforced, however, by the discovery that they could also direct money into their own pockets.

Contracts for building strategic factories were often parcelled out among firms owned by members of the tender board. Controls imposed costs that businessmen were prepared to pay bribes to avoid: in Nigeria, getting a licence to do more or less anything productive has for decades been conditional on handing over large amounts of cash. Subsidies were generally stolen before they reached their intended beneficiaries. Monopolies led to dreadful service and a tradition of demanding bribes to make it less so: a few thousand naira to have a telephone line installed in days rather than years, a few thousand more to get power lines mended.

Past attempts at reform have failed, not least because so many Nigerians in top positions have benefited personally from bad policies. For example, in 1986, a year in which oil prices halved and Nigeria’s finances accordingly fell into disarray, Ibrahim Babangida, the then ruler, tried to liberalise his way out of the mess. He adopted an IMF-style “structural adjustment” programme which involved setting the exchange rate free, abolishing import licences, slashing tariffs and removing most price controls. The programme failed, for two reasons. First, General Babangida was too preoccupied with political problems to follow through his reforms, and second, vested interests resisted any kind of liberalisation. When one opportunity for graft was closed (such as import licences), officials created another, such as embezzling the government’s windfall from devaluation. The fiscal deficit ballooned to almost 10% of GDP. Ordinary Nigerians agitated for democracy. General Babangida called an election in 1993, but annulled it as soon as it became clear that his candidate had lost. When Sani Abacha, his defence minister, grabbed power, he re-imposed many controls on the economy.

Mr Obasanjo has taken effective action to start expunging the virus of state intervention from the Nigerian economy. Most important, he has liberalised the exchange rate again. Under Abacha, the naira was grossly overvalued, but only the ruler’s cronies could buy hard currency at the official rate. They could thus make millions in minutes by buying dollars cheaply and selling them expensively on the black market to businessmen who needed them. Now, although the naira is not yet fully convertible, its rate is set daily at more or less market levels, and oil companies are allowed to sell dollars direct to anyone who wants to buy them. So the gulf between the official and the black-market exchange rate has all but vanished, and with it the opportunity for arbitrage. Mr Obasanjo has also ended the scam whereby officials deliberately created petroleum shortages to drive up the black-market price, thus enabling them to make a huge profit on reselling fuel bought at low official prices. The price at the pumps is still fixed by the government, but no longer at absurdly low levels.

The new president professes to have embraced market economics, but he does not seem to have conquered his statist instincts entirely. The Petroleum Trust Fund has been abolished, but Mr Obasanjo still has a minister in charge of “special projects”. He seems to believe that corruption can be eliminated by appointing honest men. This is clearly a good idea, but so is the introduction of checks and balances that make it harder to waste or steal public funds. Worryingly, Mr Obasanjo has promised to re-introduce fertiliser subsidies. He rightly points out that stimulating agriculture is the quickest way to raise large numbers of Nigerians out of poverty, and that lots of rich countries also subsidise farming. Yet when the fertiliser subsidy was tried before in Nigeria, it was a spectacular failure. The entire subsidy was swallowed by middlemen, and fertiliser supplies became erratic because so much was smuggled abroad.

For Nigeria to recover, Mr Obasanjo must create a climate conducive to doing business. Neither foreigners nor Nigerians (many of whom have a lot of money squirrelled away abroad) will invest in Nigeria just because the president tells them that it is their moral duty to help rebuild a battered nation. The obvious place to start promoting investment is in the oil sector.

Oil alone doesn’t make you happy
 

You also have to know how to manage it

IT HAPPENS almost every week. Youths burst into the offices of a foreign oil company, waving sticks and machetes, and take a few employees hostage. Their demands: money for their community, and jobs for themselves. In any other part of the world, this would not be a good way of making a job application. But in the Niger delta it sometimes works.

About 2m barrels of oil are pumped out of the delta’s mangrove swamps every day, providing Nigeria with a variable but large chunk of its GDP (see chart), over 90% of its export earnings and almost all its tax revenue. Since the 1970s, the delta has generated hundreds of billions of dollars, but the people who live here have barely benefited. Despite all the energy the region produces, many of them have no electricity. Their nights are lit only by the gas flares atop the oil rigs, which spew out pollutants that cause acid rain.

What the central government did not grab, local politicians stole or wasted. Complaints addressed to the old regime often landed the complainants in jail, or worse. When Ken Saro-Wiwa, a writer and champion of the Ogonis, a small delta tribe, was hanged in 1995, people got the message, and took to raising their grievances direct with the oil companies.

The quickest way to capture an oil firm’s attention is through violence. Since President Obasanjo came to power, dozens of oil workers have been kidnapped. Most are released unharmed. The oil firms insist in public that they do not reward extortion. “The best security is to be welcomed by the local community,” insists Bobo Brown, a spokesman for Shell, the Anglo-Dutch firm that handles about half Nigeria’s oil production. But the truth is that kidnapping pays. Oil companies in the Niger delta spend millions of dollars a year on community relations, on things like building schools and jetties in areas where they operate, and compensating those whose land is polluted by oil spills. Locals have found that they are more likely to win a share of such goodies if they invade a rig or capture a company helicopter, and that their claims for compensation are processed faster. Thugs who apply for jobs by brandishing machetes are sometimes put on the payroll. Often they draw wages but fail to show up for work. The oil companies prefer it that way: oil-drilling is a skilled and not particularly labour-intensive task, and having untrained people on site could be dangerous. Paying this kind of protection money is just one of the costs of doing business in the delta.

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But Nigeria doesn’t have money to burn

Mr Obasanjo declared last year that solving the problems of the Niger delta would be one of his first priorities. A clause in the new constitution offers a guarantee that at least 13% of federal oil revenues will be returned to the states where the oil is produced, compared with 3% previously. Mr Obasanjo hopes that this will kick-start development and gradually ease tensions. But calming this region will be difficult. The oil industry employs only about 100,000 people, so if the delta’s wretched unemployment is to be reduced, other types of work will have to be found. Agriculture and fishing are the obvious traditional alternatives, but oil is bad for both of them. Leakage from ill-maintained pipes kills fish and renders arable land barren. Since the compensation paid for ruined land often exceeds the likely returns from farming it, locals sometimes puncture the pipes themselves. Shell estimates that, of 131 spills in 1998, 51 were caused by sabotage. Vandalising pipes carrying inflammable liquid is hazardous. In one incident in 1998, about 1,000 people were burned to death as they scooped up free fuel from a large spill near the town of Jesse.

Throwing money at the Niger delta may actually aggravate tensions there, as rival ethnic groups fight each other to claim bigger portions of the new, larger pie. To take one incident among many, about 50 people were killed in November when members of the Oleh and Olomoro tribes squabbled over some water pipes that Shell was trying to donate to their communities.

Violence in the delta escalated after the “two-million-man march” in 1998, when Sani Abacha, in an effort to buy a bit of legitimacy, bused people from around the country to Abuja and paid them to rally in favour of his rule. For youths from the Niger delta who took part in this extravaganza, the sight of Nigeria’s capital was a revelation. They goggled at the smooth roads, the gleaming hotels and the splendid houses that oil money had bought for their rulers. They noted that whereas the delta has thousands of rivers but almost no bridges, Abuja has hundreds of bridges but no rivers to speak of. They realised for the first time how badly they had been robbed, and have nursed an implacable sense of grievance ever since.

Oil firms have yet to see any real results from the money they have spent on community development. In the past, their goodwill money was channelled largely through traditional tribal chiefs, and often went no further. “We’d give a village a boat to set up a ferry business, and the chief would just grab it and use it as his personal transport,” complains one oil executive. Ken Saro-Wiwa was hanged because he was said to have had some of those crooked chiefs murdered. The trial was a charade and the writer died protesting his innocence, but the animosity between Saro-Wiwa’s followers and traditional Ogoni chiefs was real and often bloody.

Shell, which wants to ensure that the $38m a year it hands over to secure local goodwill is well spent, recently recruited two dozen experts from development agencies to monitor its community programmes. But there is a limit to how much the multinationals can do without better local government. At a recent meeting between Shell representatives and a dozen local politicians from delta states, the deputy speaker of the Rivers State assembly put his priorities as follows: “Shell must give us water and light. The federal government must give us more money. Foreign investors must come. Then we will have development.”

Against this turbulent background, President Obasanjo is determined to increase Nigeria’s oil production from 2m to 4m barrels a day by 2010, and proven reserves from about 25 billion to 40 billion barrels. In the past, one of the blocks to the investment needed to meet these targets was the federal government itself. The government claims ownership of all Nigerian oil. Foreign oil firms must operate as minority partners in joint ventures with it. The foreigners bring most of the know-how; the government’s only obligation is to shoulder its share of the investment. In the past, it often failed to pay up.

Under Mr Obasanjo, payments have been prompt, but hefty arrears remain. The new government is trying to find alternative forms of finance. This means that the oil companies will cover more of the up-front costs of exploration and drilling, and will in return receive a greater share of the profits. They also plan within the next decade to stop wastefully burning off the natural gas that is found with the oil. Instead, this gas will be turned into fertiliser, or liquefied and sold as fuel. This rather obvious strategy was first mooted 30 years ago, but never implemented.

“The government is serious about oil,” says Egbert Imomoh, the senior Nigerian director at Shell. “We are confident that things will get better.” But doing business in the Niger delta will continue to be hair-raising for years to come. “Community disruptions”, as Shell calls them, have grown more frequent. In 1997 the firm suffered 106 such incidents, last year almost twice as many. In November Mr Obasanjo sent troops into the delta to quell unrest. The violence regularly prevents oil firms from honouring commitments to buyers. And spare parts are hard to come by in a region which some foreign suppliers shun for fear of being kidnapped.