Corruption is a broad
term which has been defined in various ways by different people but despite the
difference in words used in defining corruption, it is seen as any conduct,
action, or behaviour that is abnormal, not just or an act that deviates from
the laid down or established laws or rules, procedures and practices. Corruption poses to be the biggest threat to
any nation because it impedes on the nations socio-political and economic
development and it also affects the operation of the various organs of
government. Corruption has been identified as a major obstacle militating
against rapid growth and development of the Nigerian economy (Nagari, Umar
& Abdul 2013). Corruption undermines good government, fundamentally
distorts public policy, leads to misappropriation of resources, harms private
and public sectors development and it affects the poor ( Ajao, Dada &
olaoye, 2013). Corruption is and will always be a major problem to any nation because
one way or the other it affects humans and it will continue to affects
generations to come.
Ribadu (2006) as cited
in Ajao, Dada and olaye (2013) says that the history of corruption is strongly
rooted in over twenty nine years of military rule, after forty six years of her
statehood since 1960. According to Ribadu, successive military regime subdued
the rule of law, facilitated the wanton, looting of public treasury,
decapitated public institutions and free speech and instituted a secret and opaque
culture in the running of government business. The result was total insecurity,
poor economic management, and abuse of human rights, ethnic conflicts and
capital flight Nigeria.
The oil and gas sector is one of the
biggest sector in the world and it is the most important sector to Nigeria’s
economy and it also has a great impact on its politics because it is where most
of our revenues are generated. Oil was discovered in Nigeria on 15 January,
1956 at Oloibiri (Bayelsa state) in the Niger Delta after half a century of
exploitation by Shell-BP, oil has remained a major source of energy and income
in Nigeria. Note; In Nigeria after the civil war which took place in 1967-1970,
oil became a prominent source of revenue to its economy. Oil was founded at the
beginning of the century.
According to Nigeria
Extractive Industries Transparency Initiative (NEITI), Nigeria is one of the
largest oil and gas producers in Africa and among the top ten globally. In
2017, according to Nigerian National Petroleum Corporation (NNPC), Nigeria
ranks has Africa’s largest producer of oil and the sixth largest oil and
producing country in the world. According to Organisation of Petroleum
Exporting Countries (OPEC), Nigeria is the second biggest oil and gas exporter.
Nigeria ranks the ninth position in gas production in the world (OPEC).
Corruption in the oil
and gas sector as a hindrance to revenue generation in Nigeria simply means the
fraudulent or dishonest conduct by entrusted officials or public powers in the
oil and gas sector which in turn affects the revenue generation in Nigeria. . Due
to the discovery of oil and gas in Nigeria, corruption became the order of the
day. Nigeria depends highly on this sector, any corrupt practice carried out
from this sector automatically affects all other sector of the economy because
the revenue generated from this sector is used to support other sectors of the
economy. Albeit, corruption is found in every phase and sector of the Nigerian
socio-political economy but it is more pronounced in the oil and gas sector in
The oil and gas sector is a very strategic
sector to Nigeria’s economy because this is where much of its revenues are
generated. The country’s major balance of payment, 35 per cent of gross
domestic product, petroleum exports revenue and exchange rate policy, monetary
and fiscal policies are dependent on revenue from oil and gas. Revenue from oil
and gas has played a vital role in the execution of various national
development plans and still does so.
It has been brought to
light that eighty percent of the corruption
in Nigeria is either happening in or out of the proceeds of the oil or gas
sector due to the fact that a lot of money is generated from this sector.
Revenue generated from oil and gas amount is about 70% -90% of the total
foreign earning from export activities annually (NNPC 2016). The activities of
the oil and gas sector (acquisition, exploration, production and development
cannot be controlled alone by Nigeria due to the lack of enough capital expenditure,
high technological expertise and to some extent the ability to manage investment
risks and this lead to the granting of license to explore and to develop oil in
oil rich developing countries to foreign oil companies who have the sufficient
capacity over the (e.g. Nigeria). Nigeria oil and gas industry have experienced
high amount of capital inflow from Foreign Direct Investment (FDI). Truly,
Nigeria gains a lot from the foreign direct investment and this is supposed to
be a positive impact in its economy but due to the lack of accountability,
transparency and high spread of corruption in the Nigeria, this ultimately lead
to a retarded economy.
In the oil and gas sector, a huge sum of money
is acquired, the dollar (naira) volume in the industry is a lot but the very
small fractions of transaction values in the sector can equate to very large
sums of money, which will definitely lead to temptation to corruption. Although
the fractions are small but they are a lot of money and they are difficult to
detect if they go missing and so this encourages corrupt practices. Despite the
efforts of anti-corruption agencies in Nigeria (EFCC, ICPC, CCB, CCT, ACEP,
EOCO, etc.), the level of corruption still prevailing in Nigeria is still high.
According to Adomako (2008), there is an historical symbiotic relationship that
exists in oil and gas and corruption in Nigeria.
However the focus of
this project is on corruption in the oil and gas sectors in Nigeria and its
effects on the revenue generation in the country which in turn affects the
growth of the country and also to proffer solution to the problem of corruption
in the sector.
Statement of the problem
Despite the increase in
the effort of anti-corruption agencies in Nigeria especially in the oil and gas
sector, it is obvious that corruption is still at an increase pace in Nigeria
especially in the oil and gas sector. However, due to the mismanagement of
revenue generated from this sector by successive government, it has led to the
retard of economic development this can be seen in the countries level of
economic and social infrastructural development/ facilities on ground such as
roads, health facilities etc. It is noted that the large proceeds obtained from
the oil and gas sector acts as multipliers to other sector of the economy
through government expenditure. Corruption is highly endemic in the oil and gas
sector and it has been wiping away all the generated money and this leaves the
country with little money which affects the development of the country.
However this study will investigate the level
of corruption in the oil and gas sector and its effects on Nigeria.