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The availability of natural resources presents both opportunities and challenges for development for
many countries in the Global South
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The discovery and exploitation of natural resources in countries of the Global South has
commonly had negative impacts on their path to development
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Auty introduces
the notion of the resource curse, which is defined by Shaffer as “the tendency of naturalresource-exporting countries to underperform economically, have nondemocratic
governments as well as poor governance, and a higher propensity for involvement in
conflicts » (2012, p
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This paper will explore wether or not Nigeria fits into this pattern
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Nigeria is the largest oil producing country of Africa and ranks sixth
in the world (NNPC, 2015)
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In order to understand the relationship between oil
exploitation and Nigeria’s development, one must first understand the complex concept of
development
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He acknowledges that GDP is still highly
relevant but it can certainly not be considered sole indicator of development
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I will focus on the
impact of oil from its discovery in 1956 until 2010
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This refers to the structural economic
imbalance and decline in other domestic sectors as a consequence of the increased cost of

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domestic production compared to imports (Bradshaw, 2005)
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Nigeria’s economy
has been greatly affected by the discovery and exploitation of oil
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Previously, agriculture accounted
for close to 50% of the country’s total GDP whereas oil amounted to solely 1
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During the oil boom of the 1970s and after becoming a member of the Organisation
of Petroleum Exporting Countries in 1971, Nigeria government’s focus shifted almost
entirely on the petroleum industry
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Indeed, in the 70s and early 80s, government spending increased
greatly leading to greater disposable income and in turn, a rise in consumer expenditure
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The net-importer status of Nigeria became a real issue as the international oil
prices dropped in 1986
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This decline in economic growth was accompanied by
the inability of local manufacturers to compete with imported goods, widespread migration
towards cities, expanding poverty in rural areas as well as a rise in informal sector activities
(Odularu, 2008)
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Many urge the government to diversify and turn oil revenue into
sustainable development and economic growth
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In fact, Sala-i-Martin and Subramanian (2003) argue that the latter is
responsible for the country’s mediocre economic growth and development
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Indeed, in 2009 the World Bank estimated 76% of people live below $3
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Most of the revenues generated from oil exports haven’t reached local people: no more than
1% of the population have shared 85% of oil related income and between 100 to 400 billion
dollars in revenue have gone ‘missing’ since 1970 as a result of corruption and rent-seeking
behaviours (Watts, 2007)
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This poor ranking has generated the creation
of multiple agencies in the hope to fight corruption practises such as the Economic and
Financial Crime Commission but efforts seem to be unproductive as most of them are ran by
government officials, themselves profiting from corruption
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He has also decided to take control of the country’s oil assets and to try to recover the
hundred and fifty billion dollars that are estimated to have been stolen in the oil sector
(Winsor, 2015)
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Initially, the
‘derivation principle’ allocated 50% of revenues from natural resources to the producing
states
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Tensions arose out of the fact that the 5
southern oil producing states who contributed to over 90% of oil production in 2001 were
receiving less revenue than the 5 non-producing northern states (Idemudia, 2012)
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Indeed, the UNDP
report of 2007 identifies between 120 and 150 violent conflicts in the three main oilproducing states (cited by Watts, 2007)
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In addition, the Niger Delta
has been recognized one of the most polluted areas in the world by the 2006 WWF report
(cited by Watts, 2007) and qualified as an ‘ecological wasteland’ (Kadafa, 2012, p
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Oil
leakage and spills (both sabotage and accidents) have led to an estimated 1
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In addition, gas flares have brought up the issue of acid rain in the Delta
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Looking back at our definition of development, the mitigation of unemployment and
inequalities also plays a key role in the understanding of Nigeria’s progress since the
discovery of oil resources
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Indeed, the oil business has a very low labour-capital ratio and the
employment of locals in this sector amounts to only 1
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In addition, unemployment has only been growing over the past few
decades, as illustrated by figure 3
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Besides, the income inequalities have sharpened as shown by figure x
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Figure 3 - Unemployment in %
30
25
Percentage




















20
15
10
5
0
1986

2006

2007

2008

2009

2010

2011

Year
Data from the World Bank, 2015

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Percentage



Figure 4 - % of people living


under $3
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NEEDS is one poverty reduction strategy put in place in 2004 by the
government
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However, NEEDS coupled with the numerous other
development plans and policies have had very little beneficial impacts to the livelihoods of
the poor, the main cause being abandonment of plans due to volatility of oil prices and
hence, a lack of funds (Odularu, 2008)
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The abundance of crude oil oil hasn’t led to the expected economic
growth and social development, rather, the Nigeria economy is now extremely dependent
on a single sector and the people have not seen the benefits from the oil windfall
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The
highly fractionalized status of Nigeria has allowed rent seeking behaviour and fighting over
oil windfall to take place (Hodler, 2005)
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The first step towards this is for the government to
manage the ever growing conflict between locals and transnational companies
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In

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addition, the government must implement stricter environmental regulations to protect
Nigeria’s ecosystems
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