BusinessDay

Resource control: Nigeria needs ownership or derivation system that works

The heated altercation between three of Nigeria’s most prominent elder statesmen over the long-running issue of resource control climaxed the year that just ended, 2021. Specifically, in December last year, former President Olusegun Obasanjo, Chief Edwin Clark, leader of the Pan Niger Delta Forum (PANDEF), and Cardinal Anthony Olubunmi Okogie, archbishop emeritus of Lagos, exchanged open letters in which they strongly espoused their views on ownership of the oil wells in the Niger Delta. For context, let’s recount the arguments.

President Obasanjo stirred up the hornet’s nest. At a summit on December 13, Obasanjo said that the oil found in the Niger Delta belonged to Nigeria, not the Niger Delta, banging his fist on the table to bring the point home. Enraged by what he saw, Chief Clark fired off an open letter to Obasanjo on December 22, questioning his position on the issue and accusing him of showing hatred toward the Niger Delta people.

Characteristically, Obasanjo fired back, taking no prisoners. In an open letter to Chief Clark on December 28, Obasanjo denied hating the Ijaw people but reasserted his position on the issue of resource control. “The territory of Nigeria is indivisible, inclusive of the resources found therein,” he said, adding: “No territory in Nigeria, including the minerals found therein, belongs to the area or location.” He said it was “the most basic constitutional fact” that “you cannot have two sovereign entities within a state.”

What’s the purpose of saying “Nigeria is indivisible” when it’s internally convulsing and utterly unstable, due to inequity and abuse of indigenous rights?

The irrepressible archbishop emeritus of Lagos, Cardinal Anthony Olubunmi Okogie, could not resist joining the fray. On December 31, he issued a statement titled “Who owns the oil?” In the statement, Cardinal Okogie challenged Obasanjo’s view on the ownership of the Niger Delta oil wells. “The owner of the land own whatever is on the land or under the land,” adding that “to deprive them of that right is to be patently unjust.” He concluded: “Contrary to President Obasanjo’s declaration, the oil in the Nigeria Delta does not belong to Nigeria.”

No one can accuse any of these elder statesmen of frivolity, of not believing in the positions they espoused. Of course, they do. The efforts they put into crafting their well-written open letters, and the depth of their analyses, show that their views are firmly held. Thus, the best way to approach the debate is not to dismiss their positions out of hand but, rather, to understand where they are coming from, and then start the analysis from there. So, where were they coming from?

In jurisprudence, there’s a distinction between “what is” and “what ought to be”, between prescriptive or positive law and normative principles. Obasanjo anchored his position on what is, based largely on the 1999 Constitution. Indeed, in his open letter, President Obasanjo said that his position on resources “is the legal and constitutional position.” By contrast, Chief Clark and Cardinal Okogie based their arguments on what ought to be, and, in fact, on what used to be, drawing on the pre-independence system and the 1963 Constitution.

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Well, in my view, President Obasanjo’s position is flawed. By focusing on what is, and defending the status quo, he puts positivism above normativism, legality above legitimacy and Nigeria’s corporate existence above its internal cohesion. What’s the purpose of saying “Nigeria is indivisible” when it’s internally convulsing and utterly unstable, due to inequity and abuse of indigenous rights?

In the UK, which supposedly practises a unitary system, there exist both English law and Scottish law, and an act of the UK parliament defined the UK North Sea Maritime area as being under the jurisdiction of Scottish law, putting 90 percent of the UK’s oil resources under Scottish jurisdiction, with Scotland reaping huge revenue from its oil resources.

So, you may not have “two sovereign entities within a state”, as Obasanjo said, but you can have an internal arrangement that accords due recognition to each part of a state for resources derived within its territory.

That was the situation in the pre-independence era when the three regions had control over revenue accruing from the export of their produce – the North (groundnut), the East (palm oil) and the West (cocoa) – and made contributions to the centre for the maintenance of common services. It was also the situation under the 1963 Constitution where the Federal Government owned no resources but acted as “agent” of the regions concerning export and the collection of export duties, because it controlled customs and, thus, export trade. But once it collected the export duties, it must, under s.139, pay the duties, after deducting drawbacks and refunds, to the region where the export commodity was derived.

Under this arrangement, each region was required to make contributions to the Federal Government towards the maintenance of the department of customs and excise for the services it rendered to the regions in collecting various duties. But the Federal Government itself did not own or control the commodities derived from any of the regions.

For proof that the Federal Government didn’t own anything produced by any region, see s.139(4), which says: “For this section, any amount of a commodity that is derived from the federal territory shall be deemed to be derived from Western Nigeria.” In other words, because the federal territory was based in Lagos, any commodity derived from there belonged to Western Nigeria. That was genuine federalism in action!

Now, the same principle of regional ownership of commodities should apply to mineral resources. However, with minerals, only the Federal Government could grant licences and extraction rights and collect royalties and rents. Thus, the 1963 Constitution put minerals in the exclusive legislative list. But, under section 140, the Federal Government must pay 50 percent of royalties and rents to each region for any minerals extracted from that region. It is hard to argue that this was not an acknowledgement of the primary ownership of natural resources by the regions that produced them.

Of course, as we know, the military jettisoned the 1963 Constitution and the regional autonomy and federal system that underpinned it. The subsequent military-imposed 1979 and 1999 constitutions gave the Federal Government ownership of natural resources. The Land Use Decree of the Obasanjo regime in 1978 vested land in state governments but gave the Federal Government ownership of any minerals found under the land.

Obasanjo framed the resource control issue as having multiple sovereign entities within a state. But that’s not true. Rather, it’s about property and indigenous rights. It’s also about genuine federalism, with proper recognition of regional autonomy within a federal system.

There are two possible solutions. First, the federating units should control resources within their territory and make contributions to the Federal Government. Second, if the Federal Government wants to control natural resources found within a federating unit, presumably “in the national interest”, then it must pay a substantial percentage of the revenue from the natural resources to the region that produced them, under the derivation principle.

Sadly, neither the ownership principle nor the derivation principle works in Nigeria. Think about it. Over 90 percent of Nigeria’s exports and over 70 percent of government revenues come from oil extracted from the Niger Delta. Yet, the region is one of the most deprived in Nigeria. The current 13% derivation or even the 18% recommended by the Committee for Goodness of Nigeria won’t tackle the injustice done to the Niger Delta.

But the issue goes beyond the Niger Delta. Every region is rich in natural resources. What Nigeria needs is an ownership or a derivation system that allows each region to benefit meaningfully from resources within its borders. That won’t happen under Nigeria’s current anomalous Constitution, but a Constitution similar to that of 1963.

Happy New Year everyone!

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