ECONOMIC DEVELOPMENT IN NIGERIA

BASIS OF NIGERIA’S ECONOMY Nigeria is one of the most resource rich countries on the African continent. It is a major producer of coal, zinc, natural gas, and iron ore. It is the 12 th largest producer of petroleum and it is a major player in OPEC (Organization of Petroleum Exporting Countries). Oil makes up about 80% of government revenues and 40% of the Gross Domestic Product (GDP). Oil has been both a blessing and a curse to Nigeria’s economic development.

Nigeria is a classic rentier state. In a rentier state, the bulk of the economy depends on the production and sale of one or two commodities, oil and natural gas particularly. The blessing of a rentier state is that the export of the product increases national wealth quickly and substantially. Revenues generated from oil exports could potentially build critical infrastructure, education, and health care systems to propel the country into more advanced stages of economic development. A country like Norway has used oil rents to do just that. In most rentier states, including Nigeria, oil revenues have been historically siphoned off by political elites, depriving poorer regions of much needed funds to develop critical infrastructureoil revenues have been historically siphoned off by political elites, depriving poorer regions of much needed funds to develop critical infrastructure

Rentier states often have a history of political corruption. Successive military governments have produced millionaire officers and family businesses tied to oil wealth and political connections. After the democratic transition of 1999, efforts have been made to allow the federal government to collect oil rents and then distribute them to federal states (revenue sharing). However, historic mistrust of the federal government by ethnic and religious regions have cast doubts on the effort. Moreover, ethnic groups in the Niger Delta (ex. Ijaw) have complained that although Nigerian officials and multinational oil companies benefit from oil production, local communities bear the social, economic, and environmental costs.local communities bear the social, economic, and environmental costs These developments have contributed to the rise of groups, like The Movement for the Emancipation of the Niger Delta (MEND), to challenge the status quo using diverse methods.

Although Nigeria is considered a middle income country, its development indicators reveal contradictions between the flow of oil wealth amid massive poverty. According to the Human Development Index, Nigeria ranks 142 nd out of 174 countries. Life expectancy is less than 50 years old. The majority of Nigeria’s population live below the poverty line (see BBC article)see BBC article

NIGERIA AND THE GLOBAL ECONOMY Nigeria is a major oil producer and exporter. Nigerian oil imports account for 8% of all U.S. oil imports. Increased oil revenues at the turn of the century, coupled with sincere efforts by the Obasanjo administration, has significantly reduced Nigeria’s national debt. Yet, Nigeria remains highly dependent on foreign imports to satisfy increasing consumer demand for consumer products, financial services, and information technology. Lower oil prices since the 2008 global recession, along with sustained domestic demand, has increased national borrowing and contributes to a growing national debt.

NIGERIA AND AFRICA Nigeria is a major actor in West African and pan-African political and economic affairs. Nigeria played a critical role in the creation of the Economic Community of West African States (ECOWAS). This supranational organization seeks to integrate the economies of west Africa closely, similar to the European Union. Under President Obasanjo’s leadership, ECOWAS voted to create a European-style parliament and pledged its commitment to create a single currency (like the Euro) in the future.

GENDER AND THE ECONOMY Historically, Nigeria’s patriarchal society has limited women economically to become landowners. Ironically, women tend to be major players in the agricultural sector, especially in the middle and southern parts of the country. Recently, women have created grassroots groups to become empowered economically. The advent of micro-credit has contributed to the growing economic clout of women, particularly in rural areas.