Goodluck Jonathan Reveals How Poor Legal Frameworks at Oil Discovery Hurt Nigeria’s Development
Former President Goodluck Jonathan has revealed that Nigeria’s failure to establish strong legal frameworks at the time of oil discovery in 1956 has had long-lasting negative consequences on the country’s development. Speaking at the Champions of Nigerian Content Awards Dinner in Yenagoa, Bayelsa State, Jonathan highlighted how the lack of early legal protection allowed foreign powers to dominate Nigeria's oil sector for decades.
This revelation sheds light on one of the most critical turning points in Nigeria’s oil industry history and highlights the importance of local participation and legislation in managing natural resources. The event, which honored achievements in Nigerian content development, served as a platform for Jonathan to reflect on past mistakes and share insights from his leadership journey.
Nigeria's Oil Discovery: A Missed Opportunity Due to Weak Legal Protections
In 1956, crude oil was discovered in commercial quantities in Oloibiri, in present-day Bayelsa State. This was a monumental moment in Nigeria’s economic history. However, according to Goodluck Jonathan, the country was ill-prepared from a legal standpoint to manage and benefit from this natural resource.
“If at the beginning of the oil discovery we had laws designed to protect us, Nigeria would have gone further than this. But we didn’t have those kinds of laws,” he said.
Jonathan noted that the few existing laws at the time were the Mineral Oil Ordinance of 1886 and the Mineral Oil Ordinance of 1914—both colonial-era laws established before Nigeria’s independence in 1960. These ordinances were primarily designed to serve British colonial interests, not the Nigerian people.
Jonathan emphasized that Nigerians had little or no input in drafting these laws. It wasn’t until 1969—13 years after oil was discovered and nearly a decade post-independence—that Nigeria passed the Petroleum Act, which finally laid down some structure for the oil industry. Unfortunately, by then, foreign oil companies had already established dominance in the sector, often at Nigeria’s expense.
Learning from Other Nations: The Ugandan Example
During his speech, Jonathan shared a powerful anecdote from a conversation he once had with a Ugandan official. That conversation deeply impacted his views on how countries should prepare before entering oil agreements with foreign corporations.
According to Jonathan, the Ugandan told him that his country had taken time to develop essential skills and put strong legal safeguards in place before signing any contracts with international oil companies. This, the Ugandan explained, helped Uganda avoid the exploitation and mismanagement that Nigeria had suffered.
This comparative experience underlined a major flaw in Nigeria’s oil sector governance: the lack of preparedness at the time of resource discovery. While Nigeria rushed into deals with international oil giants, other countries took time to ensure their interests were protected through legislation and capacity building.
The Push for Nigerian Content: How China Inspired Jonathan
Jonathan also shared the backstory behind the landmark Nigerian Oil and Gas Industry Content Development Act, commonly known as the Local Content Act, which he signed into law in April 2010.
He traced the roots of his advocacy for local participation in the oil and gas sector back to a visit to China in 2000, while he was serving as Deputy Governor of Bayelsa State. During a tour of Daqing, one of China’s major oil hubs, he and his delegation witnessed firsthand how China had built a self-reliant oil industry.
Jonathan was impressed to see that China, which discovered oil just two years after Nigeria (in 1958), had by 2000 developed the capacity to manufacture most of its oil industry equipment locally. This stood in stark contrast to Nigeria, which continued to rely heavily on foreign companies and imported machinery despite decades of oil production.
“What is the story about the Nigerian content, or what’s popularly called the local content? I signed that law in April 2010 because of the experience I had in the Year 2000,” Jonathan said.
The visit to China made him realize the urgent need for Nigeria to localize its oil and gas industry, create jobs, and retain more value within the country.
How the Local Content Act Changed the Game
When the Local Content Bill was presented to Jonathan as Vice President by the then Minister of Petroleum, he was already convinced of its necessity. He revealed that the bill initially started as a private member bill sponsored by Senator Lee Maeba. However, Jonathan threw his full support behind it because of the structural reforms it aimed to introduce.
The Local Content Act, signed into law in 2010, has since become one of the most transformative pieces of legislation in the history of Nigeria’s oil sector. It mandates that Nigerian companies and personnel be given priority in oil and gas projects. This includes everything from engineering and construction to procurement and consultancy services.
The law has helped increase local participation, create jobs, and develop technical expertise within the country. It also aims to reduce Nigeria’s dependence on foreign firms and ensure that a larger share of the wealth generated from oil remains in Nigeria.
Jonathan proudly noted that this legislation helped to correct decades of structural imbalance in the oil sector.
He emphasised that the passage of the Local Content Act was critical in correcting the structural gaps that had long undermined Nigeria’s oil sector, ensuring that more opportunities and value creation remained within the country.
Conclusion: A Call for Future Reforms and Vigilance
Former President Goodluck Jonathan’s reflections are a wake-up call for Nigeria and other resource-rich African nations. His account shows that oil discovery alone is not enough to guarantee national prosperity. What matters even more is the legal, institutional, and human capacity built around the management of that resource.
As Nigeria looks to the future—especially with the shift towards renewable energy and dwindling fossil fuel relevance—it must ensure that it learns from past mistakes. There is still a lot to do in reforming existing laws, promoting transparency, and enhancing local capacity in the energy sector.
For those concerned about the future of Nigeria’s oil industry, Jonathan’s insights offer a blueprint: legal protection, local participation, and long-term vision are non-negotiable pillars for sustainable development.
