Nigeria's Economy
Oil and Nigeria's Economy
How oil discovered in 1956 came to dominate Nigeria's exports and government revenue, and why oil wealth hasn't translated into broad prosperity.
Oil was discovered in the Niger Delta in 1956.
Dominance
- Oil and gas make up around 90 percent of Nigeria’s exports.
- Oil has provided a large share of government revenue, though its share has fallen as production declined.
Production
Nigeria is Africa’s largest or second-largest oil producer (alongside Angola and Libya in some years) and a member of OPEC since 1971.
The problem
- Despite oil wealth, a large share of Nigerians live in poverty.
- Theft of oil and pipeline sabotage cut output.
- Corruption diverted revenues.
- Volatile oil prices cause boom-bust cycles.
Refining paradox
For decades, Nigeria exported crude but imported most of its petrol because its state refineries barely worked.
Resource curse
Nigeria is often cited as an example of the resource curse: natural wealth coinciding with poor development.
When oil prices fell in 2014-16, Nigeria's government revenue collapsed and the economy entered recession in 2016.
Nigeria shows oil can coexist with widespread poverty.
- Oil was discovered in 1956 in the Niger Delta.
- It makes up around 90 percent of exports.
- Theft, corruption and volatility limit benefits.
- Nigeria imported petrol despite exporting crude.
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