The Presidential Amnesty Programme of 2009 and Nigerian Oil Production: a disaggregate econometric analysis

• Author: W.D. Walls,Adegboyega During
• Date: 01 March 2020
• DOI: http://doi.org/10.1111/opec.12168
• Published date: 01 March 2020

The Presidential Amnesty Programme of

2009 and Nigerian Oil Production: a

disaggregate econometric analysis

W.D. Walls and Adegboyega During

Department of Economics, University of Calgary, Calgary, AB, Canada. Email: wdwalls@ucalgary.ca

Abstract

We analyse the impact of the Presidential Amnesty Programme on crude oil production in Nigeria.

The President of Nigeria instituted an amnesty programme in June 2009 to end the disruptive

protests in the oil-producing Niger Delta. Between 2006 and 2009, it is estimated that crude oil

production losses exceeded 650,000 barrels per day, dramatically reducing government revenue.

The amnesty programme provided militants a state pardon, educational training and a monthly

stipend in exchange for the surrender of weapons. In this research, we use disaggregate oil-well-

level data to estimate a difference-in-difference model of Nigerian crude oil production. The

estimates reveal that the Presidential Amnesty Programme increased the oil output in the Niger

Delta by about 40 per cent above the level that would have been achieved in the absence of the

policy.

1. Introduction

The Niger Delta region, the centre of Nigerian crude oil production, has witnessed

numerous protests by its citizens over resource wealth and control. Crude oil has been

and remains the backbone of Nigeria’s economy: it accounts for over 80 per cent of the

Nigerian government’s revenue, 95 per cent of export receipts and 90 per cent of foreign

exchange earnings (Norom and Odigbo 2015; EIA 2016). Citizens in the past have led

peaceful protests to raise awareness about economic hardship in the region and the

pollution of their land and water resources. The government’s neglect of this region and

the use of military force to suppress peaceful protests contributed to the rise of militancy

in the Niger Delta, particularly between 2006 and 2009 (Obi, 2010). At this time, despite

the large contribution of crude oil from the Niger Delta to government revenue

collections, the region had a poverty rate of 43.4 per cent (National Bureau of Statistics,

2010).One result of the militancy was a shortfall in daily crude oil production of about

650,000 barrels per day (Asuni, 2009). The direct impact of militant activities on

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government oil revenues—which accounted for some 90 per cent of the country’s export

earnings at the time—stimulated the development of an alternative solution to the Niger

Delta crisis called the Presidential Amnesty Programme.

The Presidential Amnesty Programme was a local form of disarmament,

demobilisation and reintegration (DDR).

1

This policy, devised by the government’s

technical committee to respond to the disruptive protests in the Niger Delta, was

adopted by the government of Nigeria to restore peace. The programme was announced

by then-President Umaru Musa Yar’Adua on 25 June 2009. Amnesty was offered in all

states in the Niger Delta; however, it specifically targeted the militants from the core

Niger Delta states of Bayelsa, Delta and Rivers. Militants were asked to surrender their

weapons in exchange for a full state pardon, vocational or educational training funded

by the government, and a monthly stipend of 65,000 nairas (approximately USD $428

at the time).

2

The research presented in this paper is the first systematic quantitative analysis to

evaluate the causal impact of DDR programmes on economic outcomes. Nearly all prior

research studying the impact of DDR programmes focused on implementation and

technical issues, or on qualitative macro-level outcomes (Schulhofer-Wohl and

Sambanis, 2010; Francis et al. 2012). Little empirical evidence has been presented to

determine whether DDR programmes have successfully facilitated demobilisation and

reintegration (Humphreys and Weinstein, 2007). In this paper, we quantify the effect of

the Presidential Amnesty Programme on Nigerian crude oil production using highly

disaggregated oil production data. To determine the impact of the Presidential Amnesty

Programme on oil production, we employ a difference-in-differences econometric

analysis. This methodology captures the impact of the amnesty programme on oil

production by comparing average crude oil production before and after implementation

of the programme in the treatment states and the control states. The empirical results

indicate that the amnesty programme led to about a 40 per cent increase in quarterly

crude oil production in the states of the Niger Delta region relative to the level that would

have been achieved in the absence of the policy. In comparison with the baseline, the

amnesty policy increased oil output as militants embraced amnesty and ceased militant

activities that had caused production disruptions.

The following section provides the institutional and historical context of the research.

Section 3 describes the data and the methodological approach that will be employed to

quantify the effectiveness of the Presidential Amnesty Programme on Nigerian

petroleum industry output. Estimation results, along with a series of robustness checks,

are presented and discussed in Section 4. Conclusions and policy implications,

limitations of this research, and suggested directions for future research are summarised

in Section 5.

OPEC Energy Review March 2020 ©2020 Organization of the Petroleum Exporting Countries

28 W.D. Walls and Adegboyega During