By Olakunle Agboola – In most nations, the role of government is clear: to provide governance that promotes the welfare of its citizens, encourages development, and maintains transparency. In Nigeria, however, this fundamental expectation has been overshadowed by a governance model that mirrors corporate profiteering, where citizens are treated as customers and the ruling elite operates with the mindset of a business enterprise.
Nigeria, blessed with vast natural resources, particularly oil, has been engulfed in a governance structure that enriches a select few, leaving the majority of its population to struggle. This report examines Nigeria’s oil sector, highlighting the corruption, mismanagement, and inequality that have come to define it.
The Oil Sector: Nigeria’s Golden Goose
Since the discovery of oil in Oloibiri, Bayelsa State, in 1956, Nigeria has become heavily dependent on its oil industry, which now accounts for about 90% of the country’s export revenue. As one of Africa’s largest oil producers, Nigeria generates billions of dollars annually from oil sales. Yet, this wealth has not translated into improved living conditions for the majority of its citizens. Instead of fostering national development, the oil sector has created a wealth gap, benefiting a small circle of elites while millions remain in poverty.
What should have been a catalyst for growth and progress has, in reality, become a curse. Nigeria’s oil industry, rather than being a source of national pride and success, operates as a personal business empire for the powerful. The country’s vast oil wealth is controlled by a small group of individuals who treat it as their inheritance, leaving ordinary Nigerians excluded from the benefits.
Citizens as “Customers” in Their Own Nation
The relationship between the Nigerian government and its citizens increasingly resembles that of a corporation and its clients. Citizens are not the ultimate beneficiaries of the country’s resources but rather unwilling participants in a profit-driven system. They bear the brunt of erratic fuel prices, poor infrastructure, and a lack of basic amenities—all consequences of a government disconnected from the needs of its people.
Global oil price fluctuations immediately impact Nigerians. In other oil-producing countries, governments often subsidize fuel or create social programs to buffer citizens from market volatility. In Nigeria, the opposite occurs. Rising international oil prices serve as a justification to raise domestic fuel costs, further burdening an already struggling population. When global prices fall, however, the government maintains high fuel prices, pocketing the difference rather than easing the pressure on citizens.
The removal of fuel subsidies in May 2023 under President Bola Tinubu’s administration is a clear example of this disconnect. The removal led to a sharp rise in fuel costs, forcing citizens to cut back on essential goods and services. Although the policy was presented as a necessary reform, it highlighted the government’s lack of concern for the suffering of ordinary Nigerians. The government’s behaviour resembles that of a corporation maximizing profits, with its citizens as the captive customers of a system they cannot escape.
The Web of Corruption
At the heart of Nigeria’s oil sector dysfunction is a pervasive corruption complex. The Nigerian oil industry has long been notorious for its lack of transparency and accountability. Despite numerous reforms aimed at cleaning up the system, corruption continues to thrive, costing the nation billions in lost revenue every year.
The Nigerian National Petroleum Corporation (NNPC), tasked with overseeing the oil sector, has been accused of corrupt practices ranging from failing to remit oil revenues to the government to engaging in fraudulent contracts. A 2022 audit revealed that the NNPC failed to remit $4.6 billion in crude oil sales over four years. Additionally, the corporation has been implicated in oil theft, dubious fuel subsidy claims, and other corrupt dealings, making it one of the largest state-owned enterprises globally.
Oil companies operating in Nigeria most especially foreign companies have also contributed to this corruption, with accusations of bribing government officials to secure lucrative contracts. International oil firms, eager to tap into Nigeria’s oil wealth, have reportedly paid kickbacks to government officials, fueling the cycle of corruption. As a result, the sector operates in secrecy, with vast sums of money disappearing into private pockets while the nation suffers.
Another manifestation of corruption is the rampant oil bunkering (illegal tapping of pipelines and crude oil theft) in the Niger Delta. This illicit activity has resulted in substantial revenue losses for the country while enriching a network of corrupt military officials, politicians, and oil traders. Meanwhile, oil-producing communities are left to deal with environmental degradation and poverty, receiving little benefit from the wealth extracted from their land.
Governance or Business
The Nigerian government’s handling of its oil resources raises serious questions about the nature of governance in the country. In a true democracy, the government is accountable to its citizens and acts in their best interest. In Nigeria, however, the ruling elite seems to regard the country as a personal business venture, with the oil sector serving as their primary product.
Until the advent of Dangote’s refinery, Nigeria had consistently imported the majority of its refined petroleum products due to the poor condition of its local refineries. Successive governments have pledged to repair these refineries, but little progress has been made. Instead, the country spends billions of dollars annually on fuel imports, benefiting a small group of middlemen and contractors who profit from the inefficient import system. As a result, Nigeria’s oil sector remains one of the most inefficient in the world, with citizens bearing the financial burden of this ongoing failure.
A Path Forward
To reform Nigeria’s oil sector, the government must shift from treating it as a personal business venture to operating with transparency and accountability. This will require a complete overhaul of the NNPC and other regulatory bodies, with independent audits and public accountability measures to ensure that oil revenues benefit the entire nation, not just a select few.
The government must also invest in local refining capacity beyond Dangote’s refinery. If Dangote becomes the primary supplier of refined petroleum in Nigeria, it risks dominating the market and controlling prices. The Nigerian government should enforce antitrust laws and create policies that encourage competition, preventing any one entity from monopolizing the market.
Until these reforms are implemented, Nigeria will continue to function more like a business empire than a nation, where the government and its cronies profit from the nation’s oil wealth while ordinary citizens are left to bear the burden. Only when the government recognizes that its primary duty is to serve the people not enrich itself will Nigeria’s oil sector truly benefit the country as a whole.
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