A wealth of sorrow: why Nigeria’s abundant oil reserves are really a curse – The Guardian

In Nigeria, oil has been more of a curse than a blessing. Weak institutions of state and poor governance in managing the vast revenues have led the country to fail to realise its full potential in a textbook example of what academics know as the “resource curse”.

First coined by Prof Richard Auty in 1994, the term refers to the inability of nations to use their windfall wealth to improve their population’s lot and bolster their economies. The rich natural resources bring corruption and poverty to a nation, rather than positive economic development and, counterintuitively, these countries end up with lower growth and development than those without natural resources.

The subject of extensive research, the resource curse, or “paradox of plenty”, points to an inverse relationshipwhere wealth brings a detrimental impact. Nigeria – the largest oil producer in Africa, the sixth-largest global exporter, holds the tenth-largest proven oil reserve in the world – is arguably such a “cursed” nation.

Dependent on their natural resource exports, these countries have on average, lower growth rates, lower levels of human development, and more inequality and poverty. They also have been found to have worse institutions and more conflict than resource-poor economies.

It arises predominantly due to poor political governance and weak institutions, coming from the distinct phenomena around oil exploitation rather than possession – and is shaped by the multinationals, national and foreign governments, the foreign financiers and investors, alongside the structures of states and private actors in oil exporting countries.

Resource wealth can have a devastating impact. Oil-exporting nations such as Nigeria, Venezuela, Angola and DRC have seen livelihoods and economies devastated, but there have been many countries throughout history, such as Norway, Canada and Botswana who have bucked the curse through strong state management and institutions that can stand against corruption.

This is crucial, because the key thing the resource curse is indicative of is corruption: a global phenomenon that is the single greatest obstacle to economic and social development, significantly so in less-developed countries. Worldwide, an estimated $2tn is siphoned away annually by corruption. This amount could eradicate poverty, educate all the world’s children, cure malaria and bridge the global infrastructure gap.

A protest against a fuel subsidy removal in Lagos, January 2012. Nigeria is the largest oil producer in Africa but suffers from the ‘resource curse’. Photograph: Akintunde Akinleye/Reuters

As defined by Transparency International, corruption is an “abuse of entrusted power for personal or private gain.” In 1996, the World Bank’…….

Source: https://www.theguardian.com/global-development/2021/nov/09/a-wealth-of-sorrow-why-nigerias-abundant-oil-reserves-are-really-a-curse