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Neo-colonialism Fuels Your Car

Since Colonial times, oil and connected international corporations have had a major influence over the nations of Nigeria and Equatorial Guinea. Following the discovery of oil in Nigeria in the 1950s by Shell-BP, a British oil company,  the British colonial government bolstered a system of Nigerian oil extraction tailored to foreign, mainly western corporations through a series of heavy concessions by the British government in Nigeria to foreign oil corporations that granted complete control over Nigeria’s resources to multinational corporations. As Nigerian author Bade Onimode argues, this system was bolstered by “political manipulation… market control and… collaboration with imperialists. This “concessionaire era” lasted from the 1950s until 1971 when the newly-independent Nigerian government enacted its 1969 Petroleum Decree, assuming greater control of Nigerian natural resources.

Yet, the situation in the 1960s and 1970s looks eerily similar to that of the present day. Both the Nigerian and Equatorial Guinean economies were, and continue to be heavily reliant on the hydrocarbon sector.  In 1976, Oil accounted for 90% of Nigeria’s foreign exchange earnings, and almost half of its GDP. Today, the statistics for Nigeria look almost identical.  In 2008, almost one hundred percent of Equatorial Guinea’s exports and government revenues derived from the oil sector. Although the Nigerian and Equatorial Guinean governments nominally have control over all Nigerian and Equatoguinean oil and gas reserves, these nations are tied to a mono-product economy dominated by foreign corporations who hold strong influence on their governments.  Oil companies dispossess resources from the hands of locals to powerful, majority Western corporations. Furthermore, neither Nigerian nor Equatorial Guinean citizens have power over the resources on their own land. Both governments retain complete control over the entire nation’s resources, much of which is funnelled to western corporations. Oil rigs, offshore and onshore drilling present a catch-22 for host countries: though it represent a profitable enterprise, the hydrocarbon industry has had severe economic, environmental and health impacts on citizens of Nigeria and Equatorial Guinea, and has constructed an environment of dependency on a single resource. The hydrocarbon industry therefore perpetuates systems of exploitation, appropriation and neocolonialism in West Africa.

Both Nigeria and Equatorial Guinea are among the two top oil producing countries in the world. Although both have colonial histories, as Nigeria was a colony of England and Equatorial Guinea was colonized by Spain, the two nations vary along important metrics. Nigeria’s population size and GDP dwarf those of Equatorial Guinea.  While oil extraction began in Nigeria in the 1950s under colonial rule, extraction in Equatorial Guinea only began in 1996, nearly 30 years after independence. These two nations demonstrate how Neo-imperialism by majority Western corporations have similar impacts on host nations regardless of size and GDP. Additionally, Nigeria and Equatorial Guinea demonstrate how oil extraction, even if it commenced after independence, continues to be steered by the legacy of colonialism and contemporary neo-imperialist actions.

Western and Chinese corporations continue to invest enormous sums of money into Equatorial Guinean and Nigerian oil industries. For example, American, European and Chinese oil companies have invested billions of dollars into Equatorial Guinea’s and Nigeria’s oil and gas sectors, in the form of Foreign Direct Investment (FDI) which are characterized by direct control from the investor, especially over the decision-making aspect of a foreign business or industry. As a result, much of the oil production in Equatorial Guinea and Nigeria is controlled by foreigners. The 18 multinational oil companies that operate in Nigeria account for 99% of crude oil production in the entire nation. As Nigeria is a mono-product state, investors in the oil industry maintain large roles in the direction of the Nigerian government.

Much of the revenue from the Nigerian Oil industry does not return back to the Nigerian government or the Nigerian people. In fact, the Nigerian National Petroleum Corporation (NNPC) receives only 57% of profits from Nigerian oil (in the form of production entitlements and taxes/royalties), while multinational oil companies (MNCs) and MNC contractors receive “almost half” of these profits in Nigeria and routinely exclude Nigerian contractors from the industry. In both Nigeria and Equatorial Guinea, most of the money accrued from oil does not improve the lives of their citizens. Equatorial Guinea for example has curtailed 80% of government revenue into large infrastructure projects overseen by contractors with connections to the government, while a mere 2-3% of the total budget has gone to education or health. Similarly in Nigeria in 2008, 37% of the entire government budget was dedicated to infrastructure projects. In this way, the impact foreign corporations have on the management of government resources, and consequently on citizens, is visible.

Although not formerly a colonizer of African nations, it is necessary to include China when discussing neo-imperial powers in the continent. From January to November 2005 alone, China invested a whopping $175 million on primarily oil exploration and extraction infrastructure in African nations such as Nigeria and Equatorial Guinea. Since then, the Chinese government has invested huge sums of money into hydrocarbon industries across the African continent, quickly becoming the continent’s top trading partner, and is the world’s largest net importer of oil. Although espoused as a “South-South” relationship, characterized by mutual development, the relationships between China and Nigeria and Equatorial Guinea are also unbalanced. Chinese infrastructure projects in the African continent, similar to Western corporations, often only employ Chinese workers, returning millions of “invested” dollars back to Chinese corporations. By spending much of its foreign aid on the African continent, China is boosting industry across the continent, and has thus garnered the approval of many African citizens (such as 70% of Nigerians in 2014).

However, the influx of Chinese workers, products and corporations in the African continent have had detrimental impacts, leading to severe job loss and industry shut-down in Nigeria and other African states. Chinese actions in the African continent have been labeled by many observers as neocolonialist, including Nigerian central-bank governor Lamido Sanusi, citing China’s focus on raw material extraction, and unbalanced power relations.  Although China’s influence in the African continent does not carry the weight of colonial history, Chinese involvement in the African continent is marked by asymmetrical relationships similar in nature to those constructed by Western nations, and it therefore can be included in discussions regarding neo-imperialism in the African continent. China remains an example of neocolonialism alongside its Western rivals, yet also proposes a slightly better strategy of foreign relations. Nonetheless, the skewed balance of power between majority Western investor nations and Nigeria and Equatorial Guinea strongly mirrors previous colonial practices.

Many of the oil rigs that operate off the coast of Nigeria and Equatorial Guinea are internationally labelled as vessels, and operate under “flags of convenience.” This means that these vessels are registered to nations such as Panama and the Marshall Islands with lax policies that consequently enable these enterprises toevade prosecution for environmental damage like oil spills… and poor labor conditions.” These unequal relationships between corporations and host countries have tangible impacts. In Equatorial Guinea, American and European workers not only work the best jobs in the industry and are the highest paid, they also live in gated residential communities equipped with their own septic, electricity and food systems. Equatorial Guinean workers, on the other hand, are indefinitely kept at “trainee” level jobs, and during their offshore life live in cramped bunks. Onshore, Equatorial Guineans live in disease-ridden areas with a lack of running water and electricity.

The rise of the hydrocarbon industry has left Nigeria and Equatorial Guinea’s formerly booming agrarian sectors neglected.  The sharp decrease in funding and staffing of the agricultural sector has bolstered Nigeria’s reliance on foreign imports, and consequently decreased local self-sufficiency. In combination with disastrous environmental, social and health effects. According to Roseline Okene, an activist from the Niger Delta, the common practice of gas flaring has caused cases “bronchial, chest, rheumatic and eye problems” to surge in number. Nigerian and Equatorial Guinean people therefore suffer from the effects of the oil industry.

The Equatorial Guinean and Nigerian governments feed huge sums of government revenue back into the oil extraction economies due to these governments’ long-standing connections with such foreign enterprises. Although some scholars argue that the root cause of inadequate education and stagnant economies is the corruption of local governments, it is necessary to look at the modern-day situation within its historical context and acknowledge that these nations are incredibly dependent upon the funds generated by the activities of Western corporations on Nigerian and Equatorial Guinean soil. Without the infrastructure, investments, and money brought in by foreign companies to exploit Nigeria and Equatorial Guinea’s hydrocarbon industries, these nations’ economies would plummet, and would virtually lose all foreign trade or governmental revenue. As such, these governments are obliged to maintain strong connections to multinational corporations at the expense of their own people.

Unless western corporations end exploitative practices with regard to Nigeria and Equatorial Guinea, these nation’s economies will remain volatile. Oil is not a sustainable resource (Nigeria’s oil reserves are predicted to dry up within the next 25 to 30 years), and without a diversified economy, Nigeria and Equatorial Guinea’s economies will be severely harmed. When all oil is depleted, the economic deprivation of Nigeria and Equatorial Guinea will be harmful to multinational oil corporations as well. The Nigerian and Equatorial Guinean governments’ reliance on the fluctuating hydrocarbon industries will only continue to bolster corruption and dependence on foreign powers. Although Nigeria’s oil industry has technically been nationalized, it continues to rely on foreign powers. Therefore, nationalization must not be the only step taken.

Despite reservations from many western scholars regarding China’s approach to trade with African nations, such as its principal of non-involvement and subsequent permittance of human rights violations,  China’s “aid-for-oil” strategy has garnered much approval on the continent. Through investments and loans, China has built factories, railroads, energy and health infrastructure, and trained workers throughout the continent in occupations such as telecommunications.  Additionally, the majority of Chinese aid has not gone to building up the oil and gas industries, but rather to services or manufacturing. In this way, China has helped in part to diversify and improve the economies of the nations with which it trades. Western corporations have widely invested solely into the hydrocarbon sectors. Western corporations should take Chinese enterprises’ example and conduct similar “aid-for-oil” programs, albeit with concern for human rights abuses and autonomy of these nations. “

“Aid-for-oil” programs can shift Nigeria and Equatorial Guinea away from dependence on hydrocarbons, which largely contributes to systems of neocolonialism in these states. If these industries, like telecommunications, construction, education and healthcare, employ local workers and service local people, Nigeria and Equatorial Guinea’s economies will experience job growth and consequently a higher standard of living. As Western corporations amass egregious sums of money, while drawing resources and funds from citizens, it is their responsibility to stop this vicious cycle. By implementing aid-for-oil programs, multinational corporations can play a role in ending neocolonialism.

Photo: Image via Democracy Chronicles (Flickr)