Nigeria’s economic recession and oil resource curse
Nigeria had high expectations from crude oil resources as revenue base for the nation when it was first discovered in 1956 at Oloibiri in the Niger Delta.
This optimism that crude oil will be able to assist the country’s developmental agenda, however, was the reason for assessed negligence over other sources of revenue generating opportunities, like agriculture and manufacturing.
Nigeria joined the ranks of oil producers in 1958 when its first oil field came on stream, producing 5,100 bpd. After 1960, exploration rights in onshore and offshore areas adjoining the Niger Delta were extended to other foreign companies.
More than 50 years after the first oil was produced in the Niger Delta, the country, which depended on crude oil to help finance over 80 per cent of national budget, is now facing economic recession.
Nigeria and other oil producing countries, which depended so much on crude oil resources, are facing the worst time in managing their economies, as crude oil prices remained stagnant at around $50 per barrel since 2014.
Saudi Arabia, which is not so much affected by the low oil prices, perhaps learnt its lessons when its then minister of petroleum, Ahmed Zaki Yamani, declared the natural resource as a curse than a blessing, saying: ‘All in all, I wish we had discovered water’.
At the height of the 1973 oil embargo, which saw the Arab world virtually re-defining the nature of international economic relations, Yamani cautioned at the peak of the euphoria that if the oil resource and the oil weapon were not used properly, it would be like the foolish soldier, who fires a bullet in the air, only for the same bullet to be inflicted on the source.
In broad terms, the immediate foregoing constitutes the tragedy of the Nigerian condition or non-condition, according to Prof. Kayode Shoremekun, Vice Chancellor, Federal University Oye Ekiti.
Shoremekun, in his paper titled: “Nigeria, Oil and the Yamani Syndrome”, made available to The Guardian on , believed that crude oil power status had seen the country going around with bloated ambition and aspirations, and misguided priorities. “Indeed, a number of oil rich countries have become victims to the “resource curse”, a term reserved for those countries, which have a wealth in minerals, fuels and resources but “tend to have less economic growth and worse development outcomes than countries with fewer natural resources,” he said.
Shoremekun stated that owing to the prophetic insights of Zaki Yamani, oil has turned into a feature, which has helped to orchestrate the worst aspects of the existence of Nigeria.
According to him, the indices of such existence included a magniloquent profile that was in a sharp and sad contrast to the country’s productive base.
He said: “As if to completely fulfill the apocalyptic prophesies of Yamani, oil which if properly handled should have been the basis of our prosperity, has become one of the main sources of our instability. Unfortunately, this instability has potentially mortal consequences for the nation. Indeed, the grim reflection in some scholarly circles is that, a book is waiting to be written and this book will probably be title: Oil and the Mortality of Nigerian State.”
Shoremekun said that Nigeria cannot be regarded as oil producing nation. “Nigeria’s authentic status is really that of the recipient of relatively vast and providential oil revenues. The operative words here are “relatively” and “providential”. And this may well explain why Nigeria continues to be caught in the throes of underdevelopment. In simple terms, providential revenues cannot be the basis of development. Development is a conscious choice and process. The illusion of an oil producing status is also accompanied by other illusions, which form an integral part of our national life,” he added.
Former Governor, Central Bank of Nigeria (CBN), Prof. Charles Soludo, said the country’s current economic recession was self-inflicted due to over dependency on oil.
According to Soludo, “for too long, we have lived with borrowed robes, and I think for the next generation, for the 400 million Nigerians expected in this country by the year 2050, oil cannot be the way forward for the future.
“To revive the economy, former governor of Central Bank of Nigeria (CBN), Muhammad Sanusi II, said Nigeria also needs to take measures to protect its infant industries.