Resource Curse in Nigeria Essay Paper

Resource Curse in Nigeria
Resource Curse in Nigeria

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Resource Curse in Nigeria

     Majority of the African countries make poor use of their natural resources. Instead of the resources enhancing economic growth, they often lead to corruption, reduced economic growth, caused civil wars and degraded the physical environment. Like most of the African countries, corruption is endemic in Nigeria, an oil producing country in West Africa. Instead of investing resource revenues in education and infrastructure, crooked and corrupt politicians collude with mining companies, siphons the proceeds from the oil and other minerals into their own pockets (Sucheta 2013).

The purpose of this paper is to critically analyze the extent of the Resource Curse in Nigeria and ails from ‘dutch disease’ epidemic that has resulted from impoverished governance and lack of transparency, hence dragging its economic growth.

Resource Curse in Nigeria                                                                                    

                                         Countries rich in minerals and gas should use them to provide an essential source of funding for development purposes. However, it seems exploitation of such natural resources is linked to inequality, poverty, poor public services, and slow economic growth. The paradox is what is referred to as the resource curse. In developing countries, however, the resource curse epidemic is mostly in existence due to impoverished governance that lacks transparency (Rhett 2013).

                                         There exists strong evidence to show that countries rich in natural resources have lost profitable opportunities by agreeing to harmful contracts. There is also strong evidence to show that resource-rich governments lack the will and capacity to manage revenues collected from extraction industries in an efficient way that meets social objectives and enhances development in a sustainable way.

Moreover, adding to the difficulties faced by governments in developing countries in the management of volatile revenue, the countries are mostly vulnerable to problems such as corruption, lack of transparency, civil conflicts, and accountability problems (Sucheta 2013). These problems have hindered domestic development and instead of the resources being used for the benefit of the citizens, they have caused a ‘curse’.

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Resource curse in Nigeria

1.    Social and community impact

                                         Nigeria ails from a phenomenon sickness referred to as ‘Dutch disease’ by a popular economist. The economist used the term to describe the effect of the North Sea gas bonanza on Netherlands economy. Analysts that have been studying the trends in resource-rich countries have used the term dutch disease to represent the negative pattern in development. The local communities are unable to compete with other countries due to inflow of foreign currency making the local currency to bloat (John 2013).  

Rather than the natural resources lead to economic development in Netherlands, the minerals caused a foreign exchange inflow that resulted in the rising of the country’s currency value. If currency becomes overvalued, domestic industries in manufacturing, agriculture, and other exports end up becoming less competitive. Though the illness afflicts both the well governed and impoverished economies, the latter has few ways of dealing with the consequences (Paul 2011).

                                         Countries with poor governance that lacks transparency are prone to war especially if the country is endowed with abundant natural resources. Nigeria has continuously been fighting civil wars and is one of the most corrupt nations in the world as ranked by World Bank’s control of corruption Index. In Nigeria, oil rents an amount equivalent to 30% of the GDP and the country has been in conflicts (Oby 2015).

Dependence on natural resource insulates leaders from public accountability and pressure. Though Nigeria has abundant natural resources, it is short of paramount checks on government control including a democratic culture. In past years, violent war has plagued Nigeria making oil a curse instead of a blessing to the majority of citizens. 

                                         A mixture of transparency issues and poor impoverished governance is lethal in Nigeria. Sub-Saharan Africa resource rents are by a margin higher than other countries in the world according to the World Bank measure of GDP. Rent is defined as the difference between production value at global prices and the sum of the cost of oil production, minerals, natural gas, forests, and coal. Nigeria has one of the highest resource rents as a measure of GDP but has one of the lowest controls of corruption scores among developing nations (Oby 2015).

                                         However, natural resources do not automatically cause poor economic outcomes or become a natural epidemic curse. For example, North America has a higher oil production capacity compared to Nigeria and Africa in general, yet it has a low resource rate as a percentage of GDP and it has a good governance structure (Tasihu 2015).

Still, Canada, one of the top oil producing countries has the least corrupt government worldly. Norway is considered as a perennial global leader yet it is one of the highest exporters of crude oil. As witnessed in the three countries, North America, Canada and Norway, the resource curse can be avoided if the governance structure is transparent and is in control of corruption.

Resource Curse in Nigeria

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                                         Nigeria could be prosperous if only it exercised good governance, transparent mining deals, had stronger disclosure and had control of corruption. Good governance means having economic policies that encouraged diversified economies and discouraged over-dependence on natural resource rents. Another resource curse emerges from transnational companies that coerce with politicians to meander the country’s natural resources for their personal gains.

The country has made little progress in enhancing transparency. Though the country has joined EITI, its people still view their leaders as corrupt (Tasihu 2015). The leaders have not taken a step from lack of transparency to actual accountability that requires a nation with the training and skills needed for overall effectiveness and monitoring.

                                         Skills required for effective monitoring of transparency require funding that the government of Nigeria is not able to provide. The private sector, multilateral banks, and bilateral donors offer the financial support needed for programs that educate citizens in accounting and tracking of revenue expenditure. The citizens of the country require the technical and analytical skills to be able to track government expenses.

However, if the citizens do not have the necessary skills, they are not in a position to hold public officials accountable for the wrongful spending of public resources and revenue. The reason the citizens do not have the skills is because the governance structure of Nigeria does not provide room and opportunity for the citizens to get educated. Instead of concentrating on average citizens, the public officials concentrate on how they can rip from the public natural resources before their term in office ends (Oby 2015).

Resource Curse in Nigeria

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                                         It’s not surprising that the dominant factors leading to Nigeria’s civil war are economic. The factors that contribute mainly for the risk of war are levels of income, the rate of economic growth, and governing structure. Still, if a country is poor, is economically declining and hugely depends on natural resources for export, it surely faces a risk of experiencing civil war. Although the world and media focus on political personalities and the events triggering the war, the fact is that civil war is mostly experienced in countries that have low levels of income, are declining economically and highly depend on natural resources.

In Nigeria, there is a big financial gap between the rich and the poor. The rich entice the poor to engage in war while they are using their status and finances to get profits from the country’s resources (Oby 2015). Natural resources end up springing evil instead of creating prosperity for the citizens.

                                         The detachment of Nigeria’s government creates a route through which natural resources rent increase. Since the government is resource-rich, it does not need other revenue source, and, therefore, it becomes detached from its citizens. In the majority of the countries that pay high tax, they scrutinize their governments on how it spends its revenue. In fact, the tax payment is the reason that most countries in the West became democratic. It can, therefore, be seen that if there is no tax, representation of the people does not take place but if the electorates pay taxes, they will be represented.

As a resource-rich nation, the rents are not considered to belong to the citizens the same way income is taken from them in the form of taxes hence creating the detachment. The government ignores the needs of the people since it gets revenue from rents. The result is an underdeveloped economy with the majority being poor (Kammers 2015).

Resource Curse in Nigeria

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                                         Natural resources are mostly found in one part of the country, in the peripheral region. Due to poor governance, the politicians know that the people in this region are a ready prey for secessionist political movements. The politicians those people with money and empty promises telling them that resources should not be used in other regions and that other politicians are squandering the rents instead of the region benefitting from the proceeds.

Instead of the people focusing on development and using the resources to create diversity in other investments, they get corrupted in their minds and cease to do constructive businesses (Kammers 2015). The negative energy and statements usually result in civil wars and the same politicians that were inciting the people to end up benefiting from their resources.

                                         Poor governance and lack of transparency create tension among political rivals and the citizens. When the ruling government has no control over the opposition and the corrupt government officials, it creates room for the existence of rebel groups and organizations. In Nigeria, Boko Haram is one of the rebel groups that is said to be politically involved.

Politicians fight amongst themselves through the rebel groups. The natural resources increase the motivation for the rebel groups as they facilitate them financially especially when some politicians are involved. The politicians use the natural resources to facilitate the rebels to gain power or fight the existing government. When the rebels increase in power and the government structure is weak, the ordinary citizens end up suffering. Instead of the people enjoying the resources, they are mostly scared and end up running away to protect themselves. When the natural resources facilitate rebellion in a country, the resources become a curse instead of a solution.

                                         Revenue collected from natural resources should be used for harnessing economic growth as in the case of Botswana. Though a landlocked country, Botswana used the income generated from the diamond to expand its economic capacity. In the case of Nigeria, the revenue collected from the sale of oil causes conflicts and social strife. It still doesn’t have to be the case especially since the country is democratic.

If the leading government were more organized and keen to develop the country uniformly, the revenue would be useful. However, the greedy politicians do not disclose all the revenue collected to avoid being scrutinized by its citizens and the world. There is no free of information between the government and the public, and it has become survival of the fittest.

Resource Curse in Nigeria

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                                         Often, African nations coerce with Western organizations to reach deals that mutually benefit them at the expense of the nation. There is no transparency in tendering of contracts. Since Western organizations are more powerful and have the ability to pay more, African leaders allow to be influenced and give them contracts without thinking of the local industries predicament (Elena and Jesper 2011).

The locals become the casual laborers for the Western organizations in the mining of their country’s resources. The organizations are highly paid by the government since the leaders know they have extra benefits from the payments. The local industries are demoralized, and some end up closing since they are unable to compete with the Western organizations.

Even though some of the domestic industries have the capability of giving the same services as the Western organizations, they are not given the same opportunity even if they submit their tenders. The locals end up being enslaved in their territories and doing manual jobs in their land while the Western organizations and the corrupt government officials reap high income.

                                         Nigeria is an ethnically diverse society. Though people lobby the government, the lobbying is not necessarily for the welfare of the whole nation but individual and group interests. The government is ethnically divided leading to poor delivery of services to the public. On the other hand, electorates only elect someone because they belong to the same ethnic group. Instead integrating the nation, the ethnic tribes have divided the nation (Oby 2015).

People become self-centered even in the use of the natural resources. Those in power exploit the resources to fight other tribes. Since there are different resources in the different regions of the country, instead of the government ensuring there is an equitable distribution of the resources; it uses the resources to fight its ethnic rivals.

Resource Curse in Nigeria

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                                         Just because a certain region supported a certain politician who is not a part of the leading government should not make a difference in how different regions are served by the government. The government should serve all people equally irrespective of their ethnic backgrounds. Instead, African governments choose to favor the regions that are richly endowed with natural resources to create room for embezzlement (Vanessa 2013). If the government were strong, ethnic differences and regional difference in term of natural resources should be used to create opportunities but not enmity among the people.

                                         There is no transparency throughout the extractive supply chain. The government has put no measure in place to promote transparency from the negotiation of contracts to the allocation of budgets through the public budget. Civil society movements are not in place due to fear of intimidation by the government while some activists get lured with huge sums of money and stop the activism.

Active involvement of civil societies is important in the tracking of the origin and use of revenue generated from the extractive process (Vanessa 2013). Having public institutions that civil society participation is paramount for they assist in efficient control, monitoring and implementation of the policies. However, the government does not support the movements, and if they are formed, it is quick to label them as political assassins and demoralize them.

                                         Mining of oil in Nigeria has displaced thousands of people. The government gives license to extractive industries without first considering the welfare of the community. Irresponsible extraction of oil and other minerals has resulted in epidemics, displacement, and hunger for affected communities. In the case of Boko Haram, it is the dire urge to control the resources that provoked the existing conflicts between the communities in Northern Nigeria. The licensed corporations force the communities to leave their land without prior notice or consultation (Paul 2014).

The community inhabiting the region endowed with the natural resource should be the main beneficiaries of it. Poor governance resulting from corruption forces the community to seek other means of survival instead of using the resources to upgrade their well-being for large corporations and political gains.

Resource Curse in Nigeria

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                                         Poor people in the rural areas are not essentially equipped with skills to stand up to such extractive projects or fight for their rights (Sucheta 2013). Still, such communities highly depend on the natural resources for their survival and maintenance of their traditions and livelihood. Unfortunately, the communities live in remote regions and lack enough education.

The communities also have a poor justice system that acts as an inhibitor to getting to decision makers, comprehend decision-making process, and come up with appropriate measures to claim their rights. If riots do not happen, the communities leave their land injured and poorer.

                                         Mining industries are not poor and usually employ few unskilled personnel. Most of the skilled labor is imported from abroad. The need for heavy technological machines and expertise skills require the companies to seek for Western labor since most of the locals have skill and expertise limitation. The government is not keen on education quality making most of its citizen’s lack the necessary skills needed for the resource industry (Godswill 2013).

The public schools lack enough equipment to teach adequately the theoretical and practical skills needed for the market. Thought the government is aware of the predicament, it hasn’t put any measure to reduce the problem. As a result, most of Nigeria’s graduates are under-employed or unemployed whereas in developed countries the natural resources tend to help the citizens as seen in North America.

2.    Environmental impact

                                         Adverse consequences of extractive industries are many and different. Excessive use of oil as fuel is one of the major reason for the climate change and environmental pollution. From a micro perspective, natural oil pollutes water resources and rivers. Offshore activities also affect the biodiversity of the ocean floor. Clearing of land for oil and mineral extraction triggers land erosion.

Acidic residues from mines are hard to drain hence affecting the quality of land. The government should have measures in place to control oil extraction in Nigeria. However, dependence on oil for revenue limits the government control over extractive industries resulting in pollution-related problems to the community (Terra and Joshua 2012).

Resource Curse in Nigeria

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Natural Resource Governing Institute has been in the forefront trying to make sure that there is stability in the resource’s market. The institute set up measures to control global prices and revenues generated from developing nations such as Nigeria. It has been strategic in integrating the different stakeholders involved in extraction of natural resources.

With PYWP being in the mix too, the two bodies unite countries to make extraction of natural resources transparent and help people in the resource-rich nations. The fight for accountability amongst sub-Saharan nations hasn’t been easy but the give hope to the enslaved communities.

                                         If a government is co-opted by partisan interests, it increases opportunities for favoring specific groups in the community through a budget allocation in exchange for political power. Also, if citizens are used to the fact that wealth results from neither productive efforts nor work but from having contacts within the government, they will have less motivation to train themselves on their rights.

The great focus of political and economic power means there are fewer incentives to invest in other industrial sectors. In the end, it leads to high levels of poverty, inequality, low democracy, political instability, civil wars, all of which undermine economic growth (Bryan 2015). Nigeria heavily depends on natural resources for revenue collection and does not put a lot of effort investing in other sectors.

Resource Curse in Nigeria

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                                         Poor governance results from the structures put in place by the ruling regime. As a developing country that is richly endowed with resources, Nigeria has experienced a resource curse instead of a growth opportunity. The government lack of transparency has promoted corruption in the extractive industries (Bryan 2015).

Ordinary citizens have instead been forced to leave their ancestral homes to give room for resource extraction since they do not have the right will and skills required to fight for their rights. High dependence on extractive industries has resulted in civil wars and conflicts that are promoted by the politicians. The minerals provide high rent that is supposedly left for the rich and politicians.

                                         It can be noted that existing government regime concentrates on empowering their political careers through the use of the natural resources rather than serving the electorates. Ethnic differences and difference in political aspirations are used to create civil wars so that the government can get room to lure Western organization to exploit the minerals in return for high revenue (Daniel 2015).

The poor citizens do not have adequate representation in the government since each region is treated differently. The natural resources that are supposedly meant to enrich and improve the living standards of the people as seen in North America and Canada have instead facilitated corruption resulting in poor economic growth and poverty in developing countries.

Resource Curse in Nigeria

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