Academic journal article Indian Journal of Economics and Business

Nigeria: State, Oil and Malignant Underdevelopment

Academic journal article Indian Journal of Economics and Business

Nigeria: State, Oil and Malignant Underdevelopment

Article excerpt

Abstract

In spite of the phenomenal rise in price of oil and the attendant surge in revenue from the sector to the Nigerian state, oil wealth has not made the expected impact on the development landscape of Nigeria. This paper argues that the dominance of the oil majors in the sector with their monopoly of the process technology for production has not only engendered foreign domination of the sector it has equally reduced the actual wealth accruable to the state from the industry. The discourse is concluded on the note that the transition from rentierism to rentier capitalism through the instrumentality of the local techno-comprador constructed by the state has not only foisted a comprador state status since 1973 when the country joined the Organization of Petroleum Exporting Countries (OPEC), it has equally reduced the amount of wealth available for development.

Keywords: Techno-comprador; Rentier capitalism; Dutch Disease; Resource Curse; Resource blessing

INTRODUCTION

The outbreak of the Arab-Israeli War of 1967, which triggered Western search for alternative sources of crude oil, engendered the watershed in the restructuring experienced by the Nigerian political economy since after the Civil War, 1967-1970. Before the surge in price of oil in the world market following this development, Nigeria had activated and enjoyed her abundant blessings of human and natural resources to raise foreign exchange for execution of viable national projects and provision of social and economic infrastructure. Thus, in the context of an agrarian accumulation, 72 per cent of the GDP in 1950 came from agricultural activities as against 1.1 per cent contributed by mining activities. Similarly, more than 70 per cent of her exports came from agriculture while 95 per cent of the food needs were locally produced. By 1966 when GDP went up to N3.375 million, the share of crude oil rose to 4.8 per cent. In 1970, GDP stood at N3.486 million, out of which crude oil contributed 7.5 per cent. (Tell, 2008:18).

The improved profile of the oil sector that started in 1966 assumed a higher toll in 1971. During the first year of Nigeria's entry into the organisation of petroleum exporting Countries (OPEC) as the 11th member, a barrel of oil sold for between 45 and 65 cents. The price of a barrel rose to $3.22 one year later. In sustenance of this rising profile, the price rose from $11.87 per barrel in 1975 to $38.82 in 1980 (Tell, 2008: 24). While there has been occasional fall in price, recent statistics point to a general upward trend; Bonny Light which stood at $24.20 per barrel in 2001 rose to $29.20 per barrel in 2003 and $55.43 per barrel in 2005. Having hovered between $70.00 and $90.00 per barrel between 2006 and 2007, the price which later rose to $147 per barrel in July 2008 crashed to $44 per barrel in early December 2008. Current price for Bonny Light as at October 2010 moved between $79 and $81 per barrel. The improved performance of the oil sector has led to its displacement of the agricultural sector. Thus, from its low 2.7 per cent contribution to exports in 1960 the oil sector graduated to 73.7 per Cent by 1971. Similarly, while the value of oil export has been consistently rising that of non-oil export has been consistently declining. As the figure for oil exports increased from N4.506 trillion in 2004 to N6.217 trillion in 2005, that of non-oil exports declined from N113.735 billion in 2004 to N92.310 billion in 2005 (Tell, 2008).

This phenomena change in the structure of the Nigerian economy from 'point resource' agrarian economy to 'point resource' hydrocarbon state and the surge in revenue inflow from oil have not addressed the basic issues of underdevelopment and the crisis of poverty. If anything, increased poverty, rising corruption as well as deepening extraversion of the economy have been the hallmark of a wealthy state threatened by malignant undevelopment. The discussion in this paper is organized around issues that are at the base of the crisis of wealth without development. …

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