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Analysis: Nigeria's resource curse

by Carmen Gentile
Abuja, Nigeria (UPI) Feb 18, 2008
Nigerian Vice President Jonathan Goodluck shocked his colleagues and countrymen this week when he referred to his country's oil wealth as an economic curse to his country over the last 50 years.

Speaking from the capital, Abuja, Goodluck told local media that the discovery of, and dependence on, oil in the volatile West African country has cause Nigeria's economy and development to remain stagnant over the last several decades.

"The overdependence on oil has put an unpleasant bracket in our national economic freedom," said Goodluck.

About 95 percent of Nigeria's revenue is generated by oil and gas, resulting in billions of dollars in state funds every year, though much of the country remains impoverished and underdeveloped.

The persistent poverty in Nigeria he attributed to a cultural of corruption within the petroleum sector, giving rise to the country's militant groups in the oil-rich Niger Delta.

"The interpretation given by some observers is that present agitations were only but a reaction to the many decades of neglect," the vice president added.

Hoping to draw a positive conclusion to his grim assessment of the country, Goodluck said that it was the administration's goal to "bring the much needed peace and justice to the communities so that development can thrive."

While the intentions of the vice president for the future of Nigeria may be good, it's the present situation that has wrought continuous unrest in the delta over the last several years.

Since the 1970s, Nigeria, Africa's No. 1 oil producer, has pumped more than $300 billion worth of crude from the southern delta states, according to estimates. But high unemployment in the delta, environmental degradation due to oil and gas extraction, and a lack of basic resources such as fresh water and electricity have angered some of the region's youth and incited them to take up arms.

Since coming to office last year, President Umaru Yar'Adua has made numerous pledges to tackle militancy in the delta and promote real development in the region.

In his budget proposal for this year, Yar'Adua said the government would allot one-third of the country's $20 billion budget for the military and development projects in the region in hopes of stemming the violence.

Money commitments aside, the effort could prove to be too little, note some experts, especially if government ambitions in the delta do not include policing state institutions and tackling a corrupt leadership that has siphoned off billions of dollars in oil revenue earmarked for development.

A culture of discontentment with the Nigerian government and the foreign oil companies doing business there pervades the delta, as the region's oil and gas wealth rarely trickles down to the region's inhabitants, said Frank Verrastro, senior fellow and director of the Center for Strategic & International Studies' Energy and National Security Program.

"Delta residents see this wealth being exported and it infuriates them," Verrastro told United Press International.

Like Goodluck, the CSIS expert noted the drawbacks of Nigeria's petroleum sector though said the country could break its current "resource curse."

"There is a way of dealing with the local population but it takes a concerted effort by investors, the militants and government in power to be committed to the same objective," he said, referring to the development of the delta, the stamping out of corruption in both the private and public sectors, as well as bringing an end to the militant attacks that have caused oil production to drop 20 percent in the last few years.

Nigeria's current oil production stands at an estimated 2 million barrels per day.

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