Nigeria’s rise as an oil‑producing state transformed not only its economy but also its political landscape. Following the commercial discovery of oil in 1956 and especially after the civil war ended in 1970, petroleum revenue became central to federal finances. Control of these revenues reinforced the authority of successive military regimes, deepened centralisation, and reshaped governance structures in ways that have left a lasting imprint on the Nigerian state.
This article explores how oil wealth influenced military rule in Nigeria, how control of revenue strengthened federal power, and how these dynamics affected regional autonomy and social stability.
The Discovery of Oil and Economic Transformation
The first commercial oil discovery in Nigeria occurred in Oloibiri, in the Niger Delta, in 1956. By the early 1960s, after production commenced, oil exports were growing rapidly and gradually outpaced agricultural exports as the dominant source of foreign exchange earnings. By the mid‑1970s, petroleum revenues accounted for the largest share of federal government income. This shift marked a transformation from a primarily agriculture‑based economy to one overwhelmingly reliant on petroleum.
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Oil’s rapid rise in fiscal importance had profound implications for state capacity. Revenue from oil exports allowed the federal government to fund recurrent expenditures, public services, and infrastructure projects with fewer constraints from tax revenue. However, the centralised nature of petroleum revenue also concentrated power at the centre and diminished the fiscal autonomy of regional and local governments.
Military Rule and Centre‑Periphery Relations
Nigeria experienced extended periods of military rule between 1966 and 1999, with brief interruptions by civilian administrations. During these eras, the central government consistently sought to control Nigeria’s oil wealth.
A key moment in this process was the passage of the Petroleum Act of 1969, which vested ownership and control of all petroleum resources in the federal government. This legal framework empowered the centre to manage licensing, exploration, and revenue collection, and it significantly reduced the influence of regional governments.
Before oil’s dominance, Nigeria’s fiscal system included a principle of revenue sharing based on derivation, under which regions received a share of revenue from resources extracted within their territories. As petroleum revenue became the principal source of federal income, the share returned to producing regions declined. This shift reduced the fiscal independence of regions and strengthened the central government’s position.
Appointed military governors administered Nigeria’s states during this period. With most revenue generated in Abuja, regional leaders depended on federal allocations. This dynamic reinforced the prerogatives of the central military government and limited the capacity of regional authorities to pursue independent development strategies.
Oil Revenue, Patronage and Governance
Control of the federal budget under military regimes made petroleum revenues a powerful tool for governance and patronage.
Military governments under leaders such as Yakubu Gowon, Murtala Mohammed, Olusegun Obasanjo, Muhammadu Buhari, Ibrahim Babangida and Sani Abacha operated expansive state budgets funded largely by oil. These funds supported public services and development projects, but they also underpinned extensive patronage networks. Federal allocations funded government appointments, infrastructure contracts, and programmes that strengthened loyalty among political and military elites.
Because military rule curtailed parliamentary oversight and civic accountability, federal revenue spent on patronage often lacked transparency and institutional checks. This weakened mechanisms for democratic accountability and entrenched practices in which political loyalty and control over resources were closely linked.
The reliance on oil revenue meant that military regimes were less dependent on taxation for government income. This “rentier” character of the state reduced incentives for governments to broaden the tax base or cultivate mechanisms of civic engagement associated with taxation and accountability. Instead, governance often reflected the interests of those with access to oil rents, at times undermining institution‑building and civic oversight.
The Niger Delta and Local Resistance
Nigeria’s oil wealth is geographically concentrated in the Niger Delta, a region that has long experienced environmental degradation, socio‑economic marginalisation, and conflict.
The environmental impacts of oil extraction, including frequent spills and pollution, damaged farmland, fisheries and local livelihoods. Many communities in the Delta felt that they did not receive commensurate benefits from the resource wealth extracted from their land.
Tensions in the Niger Delta predate the post‑1999 militancy often associated with the region. In 1966, Isaac Adaka Boro led an armed declaration of an autonomous Niger Delta Republic to protest exclusion from oil rents. Although brief and ultimately suppressed, this uprising highlighted early grievances linked to resource control and political marginalisation.
In the late 1980s and early 1990s, organisations such as the Movement for the Survival of the Ogoni People (MOSOP) emerged to campaign for environmental justice and a greater share of oil revenue for host communities. Under the military regime of Sani Abacha, prominent MOSOP activists including Ken Saro‑Wiwa were executed after controversial trials in 1995, an event that drew international condemnation and intensified focus on oil‑related grievances in the Delta.
These conflicts reflected broader issues of revenue distribution, environmental stewardship, and the relationship between the federal government and peripheral regions. Military governments deployed security forces to protect oil infrastructure and maintain stability, often prioritising national oil production over community concerns. The result was a cycle of protest, resistance and repression that underscored the high stakes attached to control of oil wealth.
The End of Military Rule and Enduring Structures
Military rule in Nigeria formally ended in 1999 with the election of a civilian government. However, oil’s dominance in the economy and the centralised control of revenue flows remained entrenched. Civilian administrations inherited a political economy structured around petroleum rents and a fiscal architecture heavily skewed toward federal control.
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Subsequent reforms sought to modernise the oil sector and broaden participation in governance. Notably, the 2021 Petroleum Industry Act (PIA) introduced changes aimed at increasing transparency, streamlining regulation, and allocating additional resources to oil‑producing communities. While the Act represented a step toward addressing long‑standing structural issues, debates about revenue sharing, accountability and environmental justice continue.
The legacy of military‑era centralisation persists in contemporary politics. Nigeria’s federal system still relies heavily on oil revenue, and debates about fiscal federalism, resource control and equitable distribution remain central to political discourse. Civil society organisations, academic scholars and policymakers continue to grapple with how to balance national interests with regional equity in a context shaped by decades of petroleum dependence and centralised governance.
Author’s Note
Nigeria’s petroleum wealth fundamentally shaped military rule and governance. Centralised control of oil revenue strengthened federal authority, limited regional autonomy, and fostered patronage-based administration. Conflicts in the Niger Delta highlighted social and environmental costs, revealing the human impact of resource centralisation. The historical relationship between oil and military governance continues to influence contemporary politics, demonstrating how resource management can shape state power and societal outcomes.
References
Human Rights Watch The Price of Oil: Corporate Responsibility and Human Rights Violations in Nigeria’s Oil Producing Communities 1999
