Nigeria the political economy of oil pdf

It is widely acknowledged that many oilrich countries face the challenge of macroeconomic instability due to the highly volatile nature of oil prices. Following the 200809 global financial crises, the banking sector was effectively recapitalized and regulation enhanced. Nigeria is a multiethnic and culturally diverse federation which consists of 36 autonomous states and the federal capital territory. Mehlum, h, moene, k and torvik, r 2006 institutions and the resource curse, the economic journal, 116, 120.

Jun 26, 2015 thus, in the quest to understand the economic predicates of nigerias current security challenges, this paper provides a general description of nigerias political economy and its tendency to fuel violenceincluding terrorism, as presently observed in the country and threatening its very existence. Positive and negative contribution of petroleum to. Nigeria has remained a country of political unrest. After many years of control and uncertainty surrounding the sale and purchase of petroleum products in nigeria, the government is now deciding to emulate other. A series of world oil price increases from 1973 produced rapid economic growth in transportation, construction, manufacturing, and government services. Although nigeria is the largest petroleum producer in africa, the story of its political economy remains one of gross indebtedness and inefficiency. The political economy of oil and rebellion in nigerias. Pdf the political economy of oil stabilisation funds in. For more information, the following are good places to start. Abuja, may 19, 2017that the current uptick in nigerias economy relies largely on its oil sector puts its chances of lasting at risk, according to fragile recovery, an economic update produced recently by the world bank. The current account is projected to remain in surplus in 2020, benefiting from improved oil revenues. Doi link for the political economy of oil and gas in africa.

The escalation in armed attacks on nigeria s oil industry and the massive expansion in oil theft generated a veritable industry in the study of the political economy of war dominated by public. The political economy of oil deregulation in nigerias fourth republic. Prospects and challenges nenpominyi sarah adelabu political science department univesity of jos, plateau state. In terms of the ethnicity, the dominance rests with the wazobia group and to some extent, the peoples of the nigerdelta. After independence, the nigerian economy seemed very promising. Nigeria is now one of the worlds greatest producers of oil, and its economy dependent upon the oil sector. This book uses the political economy approach to examine the relative failure of federalism in nigeria. Political economy of oil resources management in nigeria munich.

With the current glut in the oil market, the revenue coming to the country has come down drastically. Representatives of political and military elites are believed to have accumulated hundreds of billions of nigeria s oil dollars in foreign bank accounts. As highlighted above, nigerias economy was sorely dependent on agriculture before the discovery by shell darcy of oil in commercial quantity at oloibiri in 1956 in the niger delta region of the country. Nigeria has many opportunities to transform its economy, particularly in agroprocessing. Apr 12, 2007 nigeria has made progress since its return to democracy in 1999. Nigeria s problem is further problematised by the slide in the oil price. Although their economy was doing well, 35 percent live in absolute poverty.

The impact of oil on nigeria s economic policy formulation preamble economic policy is the actionstatement of the government pertaining to particular sectors of the economy, describing the intended objectives and how to achieve them. Nigeria is considered a key power in africa, not only because of its size, but also because of its political and economic role on the continent. The awardwinning documentary, drilling and killing by amy goodman, jeremy scahill and dred scott keyes assassins in foreign lands. Nigeria is the fourteenth largest oil exporting country in the world. For instance, the united states agency for international development 2006 notes the association between sharp rise in oil production in nigeria in 2003 and decline in agriculture as a percentage of gdp from 29% in 2003 to 16% in 2004. The political economy of oil and gas in africa book. The relatively slow pace of nigerias development has often been attributed to the phenomenon of the resource curse whereby the nature of the state as a. There are several manifestations of underdevelopment in the political economy and, in general, the governance of several countries in africa. The nigerian ruling class has assaulted the masses with physical psychological violence thwarted their aspirations particularly their escape from underdevelopment poverty. World bank rising oil prices will not be sustained in the long term as oil production increases globally and demand stagnates. Britain eventually gained control of nigerian administration. Nigeria has the appropriate credentials for greatness. Colonialism is a major feature of the economic history of nigeria. The political economy of oil deregulation in nigerias.

Sarah ahmad khan although nigeria is the largest petroleum producer in africa, the story of its political economy remains one of gross indebtedness and inefficiency. The economic context of nigeria economic and political. Nigeria as a country has been a mono economy with total dependence on oil revenue. Because this led to a great influx of rural people into the larger urban centres. Fluctuating prices leave nigerias oildriven economy vulnerable to external shocks the oil production curve continues to slope downward and below the 2 mbpd. In 1983, nigeria relied extensively on crude oil for about 92 percent of its foreign earnings1. Many saw nigeria, with 15% of africas population, as an emerging economy. Fight continues for nigeria oil spill victims, al jazeera, june 8, 2010. But a political system crippled by corruption and dogged by ethnic tensions threatens to derail the country from its path toward. Pdf political economy of the petroleum sector in nigeria. At the heart of nigerias instability is its oil dependent political economy which has cultivated a national and international elite embedded in a rent. But the economic policy of the obasanjo administration is hinged on partial release. A series of unfortunate political and economic events have stalled nigerian growth. Feb 14, 2016 nigeria s political economy has always been predominantly elitist, patriarchal and theist.

The political economy of oil oxford academic journals. In addition to abandoning the ag ricultural sector, state expenditure rose dramatically from 8. Its economy was booming from the oil industry in the niger delta, and was said to become the leading economy in africa by 2020. A thorough study of the oil and gas industry in nigeria a mustread for any potential investor. Corruption and fraud are present throughout the value chain, and the countrys dynamic and crowded political economy drives competition for looted resources. The political economy of nigerias foreign policy under. Economic implications of petroleum policies in nigeria. While politics and the process of politicking do not necessarily give rise to the social. This excellent collection of essays fills an important gap in the contemporary study of nigeria, pulling together data on political developments and economic development which add up to the most complete picture available of africas troubled giant. Since then, nigerias economic growth has been driven by growth in. Sectoral contribution to gross domestic product gdp sector 1960 1970 1980 1990 2000 2002 agriculture 64.

For years it has been struggling to decrease unemployment, income inequality and its dependence on oil. The political economy of oil subsidy in nigeria citeseerx. This country is a great example of a postcolonial developing nation and its developmental history contains very important lessons about the political and economic retardation of the developing world. This book provides a thoroughly researched guide to the nigerian oil and gas industry. We show that both downstream and upstream oil sectors in nigeria started out deregulated and that regulation came through three streams. The indicators of structural dependence of nigeria s economy on crude oil show that the failure to. The literature on corruption in nigeria nigeria is the most populous country in africa and a very important oil producer. Political economy of the petroleum sector in nigeria. Political economy of oil and other topical issues in nigeria. The african nation of nigeria has long been a case of interest for the study of political and economic development. The case of nigeria routledge studies in international business and the world economy ariweriokuma, soala. Nov 11, 2008 upon taking power in august 1985, general ibrahim babangida promised a decisive course of economic and political change for nigeria. Between 1995 and 2001, oil accounted for an estimated 37% of gdp and 63% of government revenues eifert, gelb and tallroth, 2003.

Evidence of corruption and the influence of social norms. On the dynamics of the oil resource curse in nigeria. Adewale the political economy of a country is pivotal to its economic dynamics as well as its social system. The political economy of oil deregulation in nigeria s fourth republic. Nigeria, like many resourcerich nations, has had a relatively poor history in terms of oil revenue management.

In this post, well take a look at the structure of the nigerian economy and how it has evolved from the precolonial times to the present day nigeria. Pdf it is widely acknowledged that many oilrich countries face the challenge of macroeconomic instability due to the highly volatile nature of. Nigeria is the most populated nation on the african continent and contains a vast wealth of natural resources. Nigeria has overtaken south africa as africas largest economy, and it is one of the worlds major sources of highquality crude oil. Nigerias creaky political system council on foreign relations.

An examination of nigeria s growth history with the nominal figures for gdp from 19902017, as against the price of crude oil figure 1, a major contributor to the countrys income showed a. Apr 02, 2015 luqman, s and lawal, f m 2011 the political economy of oil and the reform process in nigerias fourth republic. Nigeria and the political economy of underdevelopment. This paper explores the political economy of resource curse with the view of appreciating the development challenges caused by crude oil dependency in nigeria. The nigerian economy is one of the largest in africa. From 1680 to 1800, the economy of nigeria was dominated by the atlantic slave trade because of. It is the largest petroleum producer in africa, and a key exporter of oil to both western europe and the us, and yet the political economy of nigeria remains one of gross indebtedness, inefficiency and mismanagement. It shows the nexus between the political and the economic aspects of the countrys federalism.

Nigeria is engulfed with socioeconomic problems which have caused poverty and. The nation has never earned so much from the sale of oil as it does currently. Natural resources boko haram nigeria political violence political economy a predatory capitalism has bred misery turned politics into warfare all but arrested the development of productive forces. The political economy of oil and gas in africa the case of. Since the late 1960s it has been based primarily on the petroleum industry. The political economy of nigeria has had a checkered history. Between 2000 and 2014, nigeria s gross domestic product gdp grew at an average rate of 7% per year. It is ranked as the 27thlargest economy in the world in terms of nominal gdp, and the 24ndlargest in terms of purchasing power parity. Nigeria is sub saharan africas largest economy and relies heavily on oil as its main source of foreign exchange earnings and government revenues. Available records on the history of the political development of nigeria since independence have shown that the reins of government has always fallen into the hands of a political leadership class that showed more interest in private, group or ethnic gains than in the general wellbeing of the nigerian state. Unlike most parts of europe, united states of america, australia that are advanced in development, and even asia where remarkable economic growth is rapidly paving the way for development. The economy of nigeria is a middleincome, mixed economy and emerging market, with expanding manufacturing, financial, service, communications, technology and entertainment sectors.

According to the updated imf forecasts from 14th april 2020, due to the outbreak of the covid19, gdp growth is expected to fall to 3. Political economy in nigeria 233 new found wealth from oil revenues did not result in a sustainable strategy for long term development in nigeria. This paper uses a political economy perspective to analyze the governance weaknesses along the petroleum sector value chain and attempts to establish the links between challenges in sector regulation and the following major political and economic attributes. The nigerian political economy in transition sani musa february 2006 the military handed over power to a civilian administration on may 29th 1999 with the inauguration of president olusegun obasanjo and 36 civilian state governors. By 1974, oil revenue had risen to 55 percent while in 1980, it stood at 80 percent. Abstract the nigerian petroleum industry has been having major transformations since the discovery of crude oil in nigeria in 1956. The positive and negative contribution of petroleum to nigerian economy can be quite obvious.

Nigeria economic outlook top 10 themes for 2019 source. Nigeria has a population of 3 million, a landmass of 923,768km2, a bountiful endowment in arable land, solid minerals and petroleumgas resources. Following the oil price collapse in 20142016, combined with negative production shocks, the gross domestic product gdp growth rate dropped to 2. Oil currently represents 65% of government revenue and 95% of the countrys export earnings, with the us one of the main purchasers eia 2010. It is widely acknowledged that many oil rich countries face the challenge of macroeconomic instability due to the highly volatile nature of oil prices. Positive and negative contribution of petroleum to nigerian. The nigerian economy before the discovery of crude oil. The dominant unifying question for the authorswhether or not a politics of class is emerging in nigeria is answered from a variety of. Oct 22, 2008 the evolution of the nigerian oil and gas industry spanned about a century during which several challenges were encountered and surmounted by major international oil companies iocs. Because nigeria operates a federalism system of government with three tiers of government namely. However, nigeria s economy is highly dependent on oil and is therefore very vulnerable to fluctuations in crude oil prices and production. Phil vienna department of political science delta state university, abraka, nigeria abstract the discovery of crude oil in nigeria led to the neglect of agriculture that was the mainstay of the economy. From 1680 to 1800, the economy of nigeria was dominated by the atlantic slave trade because of the growth of the atlantic plantation system.

We then provide a political economy framework for understanding the evolution of the nigerian oil industry. Socio economic drivers of conflict, instability and resilience. Nigeria is the largest oil producer in africa and the tenth largest in the world onyeukwu, 2007. The central feature of nigeria s political economy is the relationship between oil resources and the state. In this context, the policy step taken by the central bank of. Nigeria has one of the largest populations in africa with over 200 million citizens. The political, economic and social dynamics of nigeria. Political leadership and corruption in nigeria since 1960.

Jun 10, 2010 oil corporations in the niger delta seriously threaten the livelihood of neighboring local communities. Due to the many forms of oil generated environmental pollution evident throughout the region, farming and fishing have become impossible or extremely difficult in oil affected areas, and even drinking water has become scarce. Alongside a phased transition to democratic rule, the new president outlined farreaching reforms intended to alleviate major distortions in the economy, to resolve a lingering impasse with external creditors, and to reduce a mounting burden of debt. School of management sciences national open university of nigeria 1416 ahmadu bello way victoria island lagos nigeria. The political economy of oil and rebellion in nigeria s niger delta. Given that problems of petroleum sector governance are extremely entrenched in nigeria, the key question is whether and how it is possible to get out of a poor equilibrium after fifty years of oil production. This pattern changed when oil suddenly became of strategic importance to the world economy through its supplyprice nexus, as shown in table 1.

Download the political economy of oil and gas in africa. Nigeria economic outlook top 10 themes for 2019 top 10 economies in africa in 2018 egypt 8. Nigeria is the worlds 8th oil exporter, and its oil reserves are estimated at about 35 billion barrels. At the same time, nigeria pays a high price for the oil. The government was highly ineffective in insulating the economy from the volatility. Oil can be both a blessing and a curse to economic growth and development. The political economy of oil deregulation in nigerias fourth. Economic development in nigeria, although has been rocked back and forth by various political, sociocultural, financial and infrastructural setbacks, the economic development of a country like nigeria cant be said to have totally been where it used to be, or to have back tracked as some people insinuate. This paper uses a political economy perspective to analyze the governance weaknesses along the petroleum sector value chain and attempts. The relatively slow pace of nigerias development has often been attributed to the phenomenon of the resource curse whereby the. The case of nigeria routledge studies in international business and the world economy pdf,, download. Oil price volatility continues to influence nigeria s growth performance. Political economy of resource curse and dialectics of.

The political economy of oil and gas in africa the case. Representatives of political and military elites are believed to have accumulated hundreds of billions of nigerias oil dollars in foreign bank accounts. Search for library items search for lists search for contacts search for a library. The igbo entrepreneur in the political economy of nigeria. Blows to global oil prices or domestic oil production could derail it while, in contrast, the implementation of the. The nigerian economy is dominated by crude oil, which accounts for about 10% of the countrys gdp, 70% of government revenue and more than 83% of the countrys total export earnings, according to opec. Oil exports have improved, driving up foreign exchange reserves and creating an impetus for the central bank to intervene in the foreign exchange market. Pdf the political economy of oil stabilisation funds in nigeria. Pdf impact of fallen oil prices on the nigeria economy. With an abundance of natural resources, it is africas biggest oil exporter, and has the largest natural gas reserves on the continent. The political economy of oil stabilisation funds in nigeria. Transparency and accountability for sustainable development in the niger delta esekumemu victor clark, d.