How oil has been a CURSE to Nigeria

This issue has been addressed by a couple of scholars so I will directly delve into the key devastating effects which largely surpasses developmental effects of the oil boom of 1970 in Nigeria. I will be addressing this problem using the resource course theory as a theoretical framework of analysis. What do you understand by the resource curse theory? The definition can almost be derived from the literal appearance. The resource curse, also known as the paradox of plenty, refers to the paradox that countries and regions with an abundance of natural resources, specifically point-source non-renewable resources like minerals and fuels, tend to have less economic growth and worse development outcomes than countries with fewer natural resources. This excludes Norway, Australia, Chile, Canada and Botswana as a result of the fact that most of them had already attained development before discovering oil.

Nigeria is the largest oil producer in sub-Saharan Africa, receiving over 300 billion US dollars in oil revenue over the last twenty-five years. However, despite this natural resource wealth, Nigeria retains increasingly high levels of absolute poverty and high income inequality. In empirical terms, Nigeria is the world’s fifteenth poorest nation. Between 1970 and 2000, the poverty rate or the share of the population subsiding on $1 US a day – climbed from 36% to 70%. Similarly, equitable income distribution declined sharply from 1970 to 2000. By 2000, the top 2 percent of the population received the same income as the entire bottom 55 percent of citizens. These figures are expressions of the detrimental effect of oil in Nigeria which has only benefitted a few unscrupulous people. It has widened the gap between the rich and the poor.

 Oil has caused more damage than repairs in Nigeria. It bores down to the saying that when you give a million dollar to a monkey, it doesn't change who the monkey is. It will only improve the description of the monkey. A monkey will forever be a monkey. Unconsciously, Nigerian leaders were caught in the web of the ills of Oil. Nobody saw it as a gateway to the general development of the state. Most of the leaders saw it in the direction of their personal interests. This accounts for the terrible state of poverty that has rocked the country with virtually limited chances of success of her citizens. With the dwindling prices of oil in the international market, we have been found on the losing side nursing our wounds and facing a possible reality of an alternative to oil which the country isn't prepared for.

The devastating effects of oil in Nigeria are as follows:

Decline in agriculture:

Over forty-five years ago, Nigerian was socio-economically better than she is today, largely because agriculture formed the platform of her economy. At this time there were evidences of progressive internal and international roles played by cocoa in the West, groundnut and cotton in the North and oil palm in the East (Adedipe, 1999). Prior to the oil boom era in the 1970's, agriculture was the main pillar of Nigerian economy, contribution about 70% of the Gross Domestic Product (GDP). By 1980, agriculture's contribution to GDP declined to as low as 25%, giving way to the oil sector. The discovery of oil brought about a neglect of agriculture which became tagged as archaic. It should be noted that Malaysia developed today from investment in agriculture. With the dwindling prices of oil at the international market, Nigeria has been found struggling in her bid to look away from oil.

Accelerated corruption:

Due to the massive proceeds of oil, the focus of leaders changed from visionary goals to selfish ambitions. Leaders started the massive looting of funds from public offices. Military men that were saddled with the protection of the country against external aggression ventured into politics through coup plots which started in January, 1966. Since they are not trained to rule, they further complicated the problems of the country through the massive siphoning of state funds which were selfishly saved in foreign accounts. Till date, Nigeria is yet to recover all the funds stolen by late General Sanni Abacha, the Nigerian tyrant.

Weak institutions

Institutions of government became porous and weak due to the influx of unscrupulous people who saw political power as a gateway to wealth rather than selfless service to the people. The rate of accountability dropped since the focus was on oil. Oil took its toll on the civil service which should bridge the gap between the government and the people. The best brains were neglected since the goal of the civil service isn't for profitability. Institutions of government deteriorated with the politics of favouritism, nepotism and mass clientelism. This was a measure taken by those in power to pacify their supporters as well as opposing teams.

Disunity among the major tribes of the country

Nigeria is a heterogeneous state made of several tribes who speak in different voices in advocating for their interests. The major tribes are the Yorubas, Hausas, Igbos and the Deltans. The emergence of oil has deepened the feeling of disunity as each tribe is engaging in bitter rivalry with representatives of other tribes in order to avoid marginalization over oil proceeds which is called the ''national cake''. This accounts for the sole reason why the Igbos have been advocating on secession. We are no longer seen as one nation.

Hausas widely believe power is their birth right. Politics is now practiced across tribal affiliations. This has affected even development in Nigeria and encouraged sectional development. This act has put national unity at risk.

Severe internal crises

The Niger Delta militancy is still fresh in the memories of Nigerians. The root of it all is oil as the people of the South-South region felt they were being marginalized in the exploration of the resources of their land while they bear the consequences of oil presence. These agitations calmly started in the early 1990s. Oil has reportedly affected their farmlands, polluted their water bodies and rendered it unsuitable for agriculture or even habitation.

The conflict in the Niger Delta arose in the early 1990s over tensions between foreign oil corporations and a number of the Niger Delta's minority ethnic groups who feel they are being exploited, particularly the Ogoni and the Ijaw. Ethnic and political unrest continued throughout the 1990s and persisted as of 2013 despite the conversion to democracy and the election of the Obasanjo government in 1999. Competition for oil wealth has fueled violence between many ethnic groups, causing the militarization of nearly the entire region by ethnic militia groups as well as Nigerian military and police forces (notably the Nigerian Mobile Police).

Nigeria till date has spent billions of naira on the amnesty programme to pacify the militants who kidnapped, maimed, destroyed government properties and even killed oil workers in the region.

Elections have become a do or die affair in Nigeria due to the enormous wealth attached to power. Making reference to a recent case of desperation for power, the All Progressive Congress (APC) lost 56 of its members during the presidential election in Portharcourt and also more than 16 of them during the gubernatorial elections. Politicians are blindly driven by selfish interests and pressure from financiers/Godfathers who pump money heavy into elections to secure political power at all costs.

Lastly, the emergence of Boko haram is more political than religious. Making reference to the infamous statement by the former National Security Adviser in Nigeria, Late Andrew Owoye Azazi, the political fractions in the PDP brought about Boko haram insurgence. This was in a bit to discredit the government in power. This bores down to selfish interests. What a game of blood and oil!

Envy/conflict from neighbouring countries

Oil yields unhealthy rivalry among neighbouring countries that see a particular country with vast resources basking in affluence while they struggle with national debts, natural disasters and an ever rising population to feed. This is a cold war which can be subjectively traced to the initial lack of cooperation Nigeria got from Niger republic, Cameroun and Chad in the fight against Boko haram. The insurgence strived strongly on the porous borders of these three countries making it difficult for the Nigerian government to nip at the bud. The Niger President, Mahamadou Issoufou also publicly said he will not disclose the location of the world renowned terrorist and Boko haram leader Abubakar Shekau to Nigerian authorities if he gets a wind of it. This same man deported 3,000 Nigerians from his country virtually on the 6th of May, 2015 which is another indication of hostility.

Furthermore, what about the conflicts of the oil-rich Bakassi peninsular? For several decades, neither Nigerian nor Cameroonian ruling elite showed any interest in the Bakassi peninsular. Neither has shown any concern nor initiate any programme that is capable of ameliorating the deplorable conditions of mass poverty, squalor and destitution in which most Bakassians live. As at 1975, when Nigerian military ruler, General Gowon signed what is now termed is now termed ‘Marona declaration ceding Bakassi peninsula to Cameroun to compensate for President Ahidjo’s neutrality during Nigerian civil war, it was not yet discovered it was oil rich.

But interest over the ownership of Bakassi by Nigeria and Cameroun began immediately it was discovered that the peninsular is floating on reserves of crude oil. It was only then that the elites of the two countries started making serious claims and counter-claims over the territory. In essence, the struggle by the Nigerian and Cameroonian ruling classes for ownership of the peninsular is not dictated by any so-called national interest or concern for the well-being of the residents of Bakassi. The primary motive is the rich oil reserves and fishing grounds found in the area and its strategic location in the Atlantic Ocean. If the peninsular were to be of very little economic or strategic value, neither Nigerian nor Cameroonian capitalist elite would have shown any serious interest in the territory.

Decline in the competitiveness of other

economic sectors:

 The oil boom made tradable sectors e.g. manufacturing and agriculture less

competitive in world markets. The appreciation of naira damaged other sectors, leading to a compensating unfavorable balance of trade. As imports became cheaper, internal employment suffered in Nigeria and with it the skill infrastructure and manufacturing capabilities of the nation. This problem has historically influenced the domestic economics of large empires including Rome during its transition from a Republic, and England during the height of its colonial empire. To compensate for the loss of local employment opportunities, government resources are used to artificially create employment. The increasing national revenue will often also result in higher government spending on health, welfare, military, and public infrastructure, and if this is done corruptly or inefficiently it can be a burden on the economy. While the

decrease in the sectors exposed to international competition and consequently even greater dependence on natural resource revenue leaves the economy vulnerable to price changes in the natural resource. The above is currently faced in Nigeria today due to the failure of the private as well as public sector to successfully accommodate the size of the labour market.

Neglect of internal revenue generation sources such as tax etc

Tax evasion in the United Kingdom is a heinous offence but on the other hand this is handled with levity in Nigeria with purposely no strict measures to enforce tax collection. This is due to the ultimate focus on the proceedings of oil. UK puts up stringent measures of tax collection simply because she is not a producing state; UK offers much of services which are not as lucrative and resourceful as oil. Tax has been intentionally ignored partly by some corruption regimes in order to prevent any revolution from the masses as well as probe. Any tax payer will automatically demand accountability from the current administration.

Labour shift

The resource boom affected the Nigerian economy in two ways. In the "resource movement effect", the resource boom increased demand for labour, which caused production to shift toward the booming sector, away from the lagging sector. This shift in labour from the lagging sector to the booming sector is called direct-deindustrialization. However, this effect can be negligible, since the oil sector tends to employ few people. On the other hand we have the "spending effect" which occurred as a result of the extra revenue brought in by the resource boom. It increased demand for labour in the non-tradable sector (services), at the expense of the lagging sector. This shift from the lagging sector to the non-tradable sector is called indirect-deindustrialization. The increased demand for non-traded goods increases their price. However, prices in the traded good sector are set internationally, so they cannot change. This amounts to an increase in the real exchange rate.

And also, the oil industry tends to pay far higher salaries than what would be available elsewhere in the economy. This tends to attract the best talent from both private and government sectors, damaging these sectors by depriving them of their best skilled personnel.

Environmental pollution and degradation

Nigeria is the world's tenth largest oil exporter. This abundance in oil reserves has resulted in widespread exploitation. The Niger Delta region encompasses about 8% of Nigeria’s landmass. The Niger Delta is the largest wetlands region on the African continent. Oil drilling in the region began in the 1950s. In the beginning, the oil drilling in the region really stimulated Nigeria’s economy and was extremely beneficial to the country. Numerous multinational corporations established oil operations in the region and made a conscious effort to not violate any environmental or human rights regulations. Shell began drilling in the Niger Delta region in 1956. Over time, Shell’s presence in Nigeria has become more and more detrimental.

This negative consequence is a result of thousands of oil spills, human rights violations, environmental destruction, and corruption. Over the past half century, Nigeria has become a plutocracy. The political power is concentrated solely in the hands of the socioeconomic elite. Shell’s strong presence has played a major role in the absence of democracy in Nigeria. According to the documentary "Poison Fire," one and a half million tons of oil has been discharged into the Delta's farms, forests, and rivers since oil drilling began in 1956. This is equivalent to 50 Exxon Valdez disasters. Hundreds of kilometers of rain forest have been destroyed due to the oil spills. When petroleum is discharged into the soil, the soil becomes acidic which disrupts the photosynthesis process and kills the trees because their roots are not able to attain oxygen. Moreover, the fish population has also been negatively affected by oil drilling. The region is home to over 250 different fish species, 20 of these species are found nowhere else in the world. (World Wildlife Fund, 2006).

In conclusion, 112.519 million Nigerians live in relative poverty conditions according to the National Bureau of Statistics in 2012. Although the World Bank Nigeria's poverty rate to 33.1% in 2014; it is still a shame on the 6th largest producer of crude oil in the world. Oil has over time served the interests of the ruling class and some economic opportunists rather than the entirety of the masses. It’s on the basis of my above points that I submit oil has been more of a curse to Nigeria than a blessing.

I am the village town crier,

 Osayimwen Osahon George

Online Editor and Political Scientist (M.sc)

Jetheights Services Limited.