Oil Production and Its Impact On The Political and Economic Development of Nigeria

The mismanagement of natural resources is not unique to Nigeria. Recent studies prove that states that depend solely on mineral exports tend to have slow economic growth rates, high levels of corruption, and in some cases, conflict. Nigeria is endowed with numerous natural resources and is Africa’s largest oil producer. The resource curse will explain how economies with plenty resources are under developed because they depend on that single source of production and fail to develop other sectors. The underutilization of other sectors has caused hardship in the economy. Prior to the discovery of oil, Nigeria exported palm products: maize, cotton, cocoa, among others. The agriculture sector was fully utilized and provided employment and generated taxes and revenue for the country. Furthermore, the rentier state ideology, which explains that states which derive substantial portions of its natural revenue from the rent of indigenous resources to external clients, means that all or most state revenue is derived from its resources. While this appears profitable, it leads to a weak state. Oil production in Nigeria has not helped much in the country as remains marred by poverty and most of the rural population do not even enjoy the benefits of the country being the biggest oil producer in Africa and also one of the biggest oil producers in the world. This thesis analyses the impact of oil production since its discovery and how it affects the growth of the Nigerian economy. It explains how government institutions cause slow growth in the economy through bribery and corrupt leaders and the petroleum industry is plagued with corruption, militancy and oil theft. Regardless, oil still remains the major export and largest source of income for Nigeria. Keywords: Corruption, Oil Production, Unemployment, Resource Curse, Natural Resources, Rentier States.