ALBANY, Georgia — Countries with large oil reserves are typically wealthy, with most oil-producing countries in the world having an economy that is in good standing. To the majority, Nigeria does not appear to have any clear issues. With the oil industry as it is, poverty seems to be a far-out description of Nigeria and its people.
In Nigeria, 75% of the youth population under the age of 25 is unemployed. Subsistence is a major issue in the country’s interior regions. Despite being the world’s 26th largest economy, Nigeria’s economy ranks 121st per capita income. Due to a lack of basic facilities, 20% of Nigerian children do not live until their fifth birthday. Most Nigerians lack access to water, electricity and other basic infrastructure.
Background on Oil in Nigeria
The country discovered oil in 1956. Oil exploration in Nigeria opened to international businesses in the next decade. Today, the country is the world’s 11th largest oil producer, with an average daily production of 1.8 million barrels in 2020. The petroleum sector represents around 9% of the country’s GDP and over 90% of total export value.
The Borgen Project spoke with local professor Dr. Tonyesima Furro who published a journal on oil revenues, corruption and lack of development in Nigeria. Dr. Furro said that even though the revenue is billions of dollars, only a minuscule portion of the budget goes toward addressing the social welfare, education and public health of the communities.
Understanding the Root Cause
Dr. Furro has also done extensive research on democracy and poverty in Nigeria. The conclusion is that there is more to Nigeria’s wealth than what meets the eye. It feels as if the country cannot continue blaming the west for the present challenges it faces. From the interview, it is evident Nigeria loses billions annually due to little accountability.
A political leader can steal as much as a quarter of a billion and fail to go to jail. With all the revenue that has been realized over the years, there is nothing to show for it. In fact, Dr. Furro stated that “there is little evidence to suggest the oil windfall is reflected in improving the social and economic well-being of the people of Nigeria.” Thus, corruption is the primary factor behind the high poverty rates in Nigeria despite the country having the second-largest oil reservoir in Africa.
Besides knowledge of the Nigerian government sharing its revenue amongst the states every year, Dr. Furro has no knowledge of any initiatives established to help the Nigerian communities.
Aid to Fight Poverty in Nigeria
On the contrary, Nigeria has received foreign help for a variety of initiatives over the years. Foreign aid increased dramatically in 2005 and 2006, from $6.4 billion to $11.4 billion, the greatest level in Nigeria’s history.
According to research, foreign assistance might combat poverty in underdeveloped nations by funding development initiatives that have a trickle-down impact on the people. However, for Nigeria, there are differing views on the influence of foreign aid on poverty reduction.
Many have stated that Nigeria does not require foreign help to combat poverty since profits received from crude oil and foreign remittances are enough for poverty eradication.
In recent years, an attempt to scientifically analyze the influence of foreign aid on poverty reduction in Nigeria has resulted in a slew of debates and contradictory findings. JideIbietan et al. (2014), for example, claimed that foreign aid does not alleviate poverty in Nigeria. In contrast, Akpan and Udoma (2010) showed that foreign aid had a negligible beneficial influence on the country’s economic progress.
Aside from foreign aid, an approved partnership with the World Bank recently established projects such as the Community and Social Development (CSD). The CSD project made social services accessible to 4,662 new communities and 1.8 million households. It provided natural resource management services to 800 communities. The project also developed more than 256 health centers all while rebuilding 1,510. It also increased educational attainment in primary school boys and girls.
Oil in Nigeria continues to affect Nigeria in both positive and negative ways. Despite the huge revenue generated by the oil industry, the majority of the people in the country live in poverty, with wealth concentrated among a few individuals. What seems to be the problem, as Dr. Furro said, is the dependency on foreign aid amongst the Nigerian people and corruption.
The potential of poverty eradication is within reach with the continuous efforts of partnerships and projects. As Dr. Furro’s study determined, Nigeria needs a system where there are checks and balances and structures that prohibit any person not on payroll to have direct access to funds. The country needs good governance practices and policies to leverage the oil industry and foreign aid as tools for poverty eradication.
– Destiny Jackson