Wednesday, September 19, 2007

Nigeria: Oil Rich, Dirt Poor

Wednesday, September 19, 2007
The case of Nigeria is a classic example of a rentier economy and a perfect illustration of the “paradox of plenty”. Because of its rich endowments of oil and gas resources, Nigeria should have been a gigantic economic reservoir of national and international importance. In reality, the country, especially the Niger Delta region, suffers from administrative neglect, crumbling social infrastructure and services, high unemployment, abject poverty, filth and squalor and endemic conflict.

Oil stands for the paradox of Nigeria’s underdevelopment; the frustrating riddle of how given its immense human and natural resources, its people are at the bottom of all the major human development indices. While the country is the largest oil producer in Africa and the 10th largest producer of crude oil in the world, producing an average of 2.6 million barrels per day of which 93 percent is crude oil and earning over $340 billion over the past 40 years, it is among the 15 poorest nations on earth. Its men and women can only expect to live for an average of 43 years; 71 percent of its people live on less than $1 a day; only 44 percent have access to sanitation; 60 percent have no access to electricity; and more than half of its people are illiterate and have no access to an improved water source. On top of this is the debtor status of the country – a nation with enormous earnings from oil but whose debts (a total of $25.8 billion in 2005) began, ironically, from borrowing from the oil revenues of other countries. The country’s oil dependence is overwhelming: petrodollars account for 83 percent of federal government revenue, 97 percent of export earnings and around 40 percent of the country’s Gross Domestic Product (GDP) and yet this vast oil wealth has scarcely trickled down far into the economy. (Human Development Report 2006; Gary and Karl 2003; US Energy Information Administration Nigeria Country Report 2004; Iyayi 2005).

Economic deterioration in Nigeria has been accompanied by political decay and instability. The country is included in the list of the world’s energy hot spots by the United States Energy Information Administration (2004) for its high rate of violent crime, large income disparity, tribal/ethnic conflict and protests and repeatedly suspended oil exports. Oil-related violence and human rights violations have been on the rise as political elites continue to better their lots through flagrant and uncensured plunder and corruption amidst acute social deprivation. The most common and vicious forms of conflict in the country are: 1) intercommunity conflict, which arises most often in struggles over the sharing of benefits from oil; 2) intercommunity conflict, being caused by the oil economy stressing traditional communal relationships; 3) inter-ethnic conflict, which results from the malicious deprivation of political rights and ethnic domination; and 4) conflict between communities and oil companies, arising from the dissatisfaction of communities with the consequences from oil operations, and expressed through violent demonstrations against oil companies, operation blockades, hostage-taking and the sabotage of oil installations. (Niger Delta Human Development Report 2006: 348-357) Linked to oil is “a cycle of activism, militancy and repression…as oil spills and other environmental problems result in the loss of livelihoods for many residents.” (Gary and Karl 2003: 27) It has been estimated that militancy and protest has cut onshore oil production by a third of the total. Furthermore: “oil companies have become a target for communities that see little from monies paid to federal, state and local governments. They complain of serious environmental damage and human rights violations and hold multinational companies partly responsible. Thus, security has become a major concern.” (Ibid.)

The brazen display of ill-gotten wealth from oil is one of the reasons why there is pervasive discontent, frustration, and indignation among the people in the country – leading to protest and violence. Conflict in the Niger Delta is directly related to the debates, ongoing since before independence, about the structure of the Nigerian polity. At the heart of the discontent among the oil-producing communities is an acute sense that wealth derived from their land is siphoned off by the federal government and never returned.

(From my paper last semester in SDS 202: Political Economy of Developing Countries)


Daddo said...

Will Smith said, you can never get 100% if you are content with 99%. Go for the 100% babe! Go for the Nobel Prize in Economics.

Angeli said...

aren't we all victims of unrealizable dreams?

Daddo said...

I haven’t given up my dreams.
I’d like to build a house by the beach with plenty of books to read, music to listen to, with the love of my life drinking Shiraz or merlot with no cares of the world. Occasionally, we would visit a museum in the urban jungle, see a day baseball game, go to exotic place, hike the Appalachia, camp under the stars, see a play or go to a concert, dinner at a small restaurant by the Windsor castle and lots of lots of laughter. And do it all over again. I know someday they will all come true. I can dream, can’t I?

Angeli said...


how beautiful all those are.

yes you can.

thank you.. you have just reminded me that i can still dream, too. :)

Daddo said...

No regrets, only dreams! ;)

My apologies for using your Economic Treatise as soapbox for dreams! ;)

Angeli said...

economic treatise? nah.. that was just a paper for to pass a penalty course.

please, no apologies. i like knowing about your dreams.

"Dreams come true. Without that possibility, nature would not incite us to have them." - John Updike

Daddo said...

I'd like you in my dreams, traipsing on the beach, teasing each others follies and you quoting famous dead people. ;)

Remember when I told you to write music for him and marry his brother. I am taking that back. I don't want you to write a music for him or marry his brother.

Hey young lady. Aren't you suppose to be working?

Angeli said...

"I'd like you in my dreams, traipsing on the beach, teasing each others follies and you quoting famous dead people. ;)"

why not? :)

hah! you quote dead people too!!!! :)

working? oh yes. (groan, groan, groan) am so deep into this bloody budget and plan review and everything else that any respite is welcome.

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