Jake Moser

E Format
2/5/2011
Nigeria and the Oil Curse

Exporting upwards of 2.3 million bbl per day, Nigeria is Africa’s largest exporter of oil,

and the fifth largest in the World. Yet despite the country’s massive oil revenues, more than 70

percent of its population is living below the poverty line.1 Nigeria is one of the nations that have

fallen into the curious poverty trap of natural resource abundance. Pollution, and civil conflict,

all fueled by Nigeria’s oil and gas industries, have stymied economic growth in Nigeria, yet the

country’s dependence on these very industries for maintaining current economic standing have

made it very difficult to break free from this trap.

The Niger delta is the home to the bulk of Nigeria’s vast crude oil and natural gas riches.

Despite the abundance of natural resource wealth in this region, the majority of the 31 million

residents of the Niger delta are living in poverty and lack adequate access to clean drinking water

and health care.2 In addition to being stricken by extreme poverty, the Niger delta has been

called by the 2006 World Wildlife Fund “one of the most polluted places on earth” averaging

roughly two oil spills per day for a period of up to two decades.3 The concentration of oil in this

region has also led it to becoming the most violent area in the country, as different gangs and

rebel groups fight for control of a portion of the oil industry. Because of the particularly

1
The World Factbook 2009 . Washington, DC: Central Intelligence Agency, 2009.
htt ps://www.cia.gov/library/publicati ons/ the- world- factbook/inde x.htm
2
Amnesty International, Nigeria: Petroleum, Pollution and Poverty in the  Niger Delta (London, UK: Amnesty
International Publications, 2009), 9
3
Liane Hansen, "Documenting the Paradox of Oil, Poverty in Nigeria," National Public Radio, accessed February 4,
2011, last modified June 6, 2008, 
http://www.npr.org/templates/story/story.php?storyId=92155119.
 Moser 2

intensified conditions in this region, the effects of the oil industry in the Niger delta will be the

primary focus of this paper.

With the Nigerian focus being on quick, efficient extraction of oil, pollution has become

a major problem for the people of the Niger delta region. Estimates by the Nigerian

Conservation Foundation have put the total cost of environmental damage caused by

mismanagement in Nigeria’s oil extraction industry at roughly $5 billion per year.4 About 95

percent of natural forestation in the delta has been lost as a direct result of the oil industry.5 This

deforestation has only exacerbated the problem of pollution as it has left this wetland landscape

even more susceptible to flooding. These floods increase the range of the adverse effects of oil

spills, giving them a means of transportation throughout the country side.6

The effects of pollution do not stop at the devastation of natural beauty. It has directly

impacted and worsened the standard of living of the poor in the delta region in four major ways.7

Firstly it has greatly reduced the ease of access to a supply of clean drinking water.8 Prior to oil

industry’s presence, the people of the delta relied on the river as a source of relatively clean

drinking water. The frequency of oil spills in this region has stripped them of their ability to do

so, forcing the people to rely on more expensive ways of finding clean water, or drinking

contaminated water.9 Secondly, the pollution has taken away many of the local peoples’ main

source of food. Fisheries and farms had provided the local people with an inexpensive way to

eat as farmland and fish were two things available in remarkable abundance in the delta.
4
Aderoju Oyefusi, "Oil Dependence and Civil Conflict in Nigeria," Center for the Study of African Economics (June
2007): 4.
5
Eno Anwana, "Taking Control of Africa's Resources," African Voices on Development and Social Justice, no. 167
(July 2004): 133, accessed February 4, 2011,
http://www.pambazuka.org/en/publications/ africanvoices_chap05.pdfAfrica Voices 133
6
Anwana, 134.
7
Amnesty International, 10.
8
Amnesty International, 25.
9
Amnesty International, 25.
 Moser 3

Widespread flooding which transports oil spills across the countryside taints farms and renders

the food inedible. In addition, direct pollution of the waterways has killed many species of fish

and taken away one of the most abundant and inexpensive sources of protein for the people of

the region.10

Thirdly, and perhaps most importantly, this waterborne pollution caused by the oil

companies has stripped tens of thousands of families from the delta of not only their food, but

their source of income.11 Many of the families of the region relied on farms and/or fisheries as

their only form of employment. Jonah Gbemre, a local of the delta region, was quoted as saying

to amnesty international, “Because of oil exploration there are no more fisheries … We

experience the hell of hunger and poverty. Plants and animals do not grow well, the fish have

died…”12 Many people just like Jonah are out of jobs because there are simply no fish to catch,

and because their crops won’t grow. Despite the fact that the nation’s largest industry, oil, is

almost entirely based in the delta region, unemployment is high and average income is actually

lower than the national average.13 This is in large part down to the fact that the oil companies’

negligence has put those who depend on the true natural beauty of the area out of business.

Finally, the pollution has caused numerous health complications. Families in economic

hardship are forced to take a chance on drinking contaminated drinking water, or eating oil

affected fish as they are in desperate need of nourishment. In many cases, health complications

arise from the lack of access to clean sources of food and water and this only makes the families

economic position more strained.14

10
Amnesty International, 26.
11
Amnesty International, 33.
12
Amnesty International, 24.
13
Oyefusi, 7.
14
Amnesty International, 35.
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Perhaps even a bigger issue than pollution in creating a society stuck in poverty is the

civil tension and conflict that the oil industry has brought in to Nigeria. Again, the Niger delta

region has been particularly hard hit by resource related violence as it is the hub of the oil

industry. Conflict can be devastating to an economy, potentially even sending it on a trail to

becoming a “failed” state. In their research, Collier and Hoeffler found that 23 percent of states

which depend primarily on oil exports have had a civil war within in a five year period.15 Also at

higher risk is any country that has already had a civil war during its history (Nigeria makes this

list) and any country with large co-dominant racial groups (again Nigeria fits the bill).16 Despite

all of the risk factors, Nigeria as a whole has managed to avoid slipping into another full blown

civil war since fighting its first some 40 years ago; however, do not think that there is not civil

conflict in Nigeria as the oil industry is creating tension and violence on many different levels in

Nigeria. There are conflicts between local communities and the oil companies, between larger

regions of the country on a national level, between rebel groups and the oil companies, and they

all trace their way back to the same cause…oil.

On the national scale there are conflicts between regions of the nation, as well as between

regions of the nation and the Nigerian government. The primary reasoning behind regional

disputes is the sharing of oil revenues.17 With the majority of Nigeria’s oil supply being located

in the delta in the Southwest of the country, most of the oil revenue tends to stay in that region of

the country. Disputes have arisen over how much of the delta’s oil revenues the rest of the state

is entitled to receiving.18 Furthermore this has created tension in the way that the government

15
Oyefusi, 2.
16
Paul Collier, The Bottom Billion: Why the Poorest Countries are Failing and What Can Be Done About It (New
York: Oxford University Press, 2007), 27,36.
17
Oyefusi 7.
18
Oyefusi, 7.
 Moser 5

distributes public goods among the regions. Also, all of the regions seem to have an argument

with the government over how much the government should be doing to help clean up, or

compensate for, the environmental impacts of the oil industry.19 The majority of this tension has

tended to remain violence free, but it has only furthered the Nigerian view of three very distinct

regions to the country, with each worried more about itself than the whole of the country. This is

a recipe for civil conflict.

Conflicts between the oil companies and the local communities have, for the most part,

been nonviolent conflicts. The main sources tend to be land ownership disputes and

compensation for the environmental damage that the oil companies have caused.20 It is in these

local communities where the most meaningful and violent conflict is taking rise. Rebel groups

have been forming, feeding off of the frustrations of the locals, and becoming increasingly more

violent in their ways of protest. In an email, Jomo Gbomo, one of the leaders of the Movement

for the Emancipation of the Niger Delta (MEND), wrote, “It is assumed that our motivation is

derived from a desire to steal little amounts of crude oil from pipelines. What we are fighting for

aside from what we term to be a liberation of the Niger delta peoples from 50 years of political

and economic slavery, is that the truth be heard everywhere about our fight for the freedom of

the peoples of the Niger delta who have cried out in vain for help.”21 Primarily by way of armed

attacks on oil facilities, or by the capturing of hostages, this group called MEND has “shut in”

up to 40 percent of Nigeria’s oil industry, meaning that they have managed to stop nearly half of

the country’s oil production for the time being.22 MEND is chasing the goal of the economic

liberation of the people of the Niger delta, but by reducing the countries oil production by up to

19
Oyefusi, 7.
20
Oyefusi, 7.
21
Liane Hansen.
22
Liane Hansen.
 Moser 6

900,000 bbl per day MEND have temporarily made life worse for the people of the region.23

While in good times the people do not see much of the oil revenues, when oil revenues begin to

dry up, the government is quick to turn to the people.

Nigeria’s reliance on oil has ultimately left it stuck in poverty. Pollution and conflict

have severely hampered the country’s growth rate. Some other oil related factors that have

slowed growth in Nigeria are “Dutch Disease,” dependence on the world price of oil, and

political corruption. The so called “Dutch Disease” has nearly mad the former agrarian nature of

the Nigerian society extinct. A country that was once self sufficient now has to rely on

expensive food imports to supplement what is no longer grown within its own borders.24 A

country that relies so heavily on oil exports is very susceptible to the world price of oil. As Paul

Collier explains in his book the Bottom Billion, “The swing from big oil and borrowing, to little

oil and repayment, approximately halved Nigerian living standards.”25 In 1986 Nigeria’s living

standard was nearly halved, because of the lack of a diversified economy and the over-reliance

on oil exports. Political corruption has certainly played its part as well. After all, Nigeria has

brought in over $600 billion in oil wealth over the past 50 years, which would tend to suggest

that they experienced prosperity throughout that time. But they didn’t. As Ed Kashi, co-author

of the book Curse of the Black Gold points out, "If we spend more money here in America or

Europe on oil, it has no impact on the people in the Niger Delta, no positive impact," Kashi says.

"What it does is just further enriches the power structure, from the government people to the

chieftain and tribal leaders who all benefit from the rise of the oil prices."26 While political

corruption is hard to measure, there must be some involved considering how little of the massive

23
Liane Hansen.
24
Anwana, 132.
25
Collier, 41.
26
Liane Hansen.
 Moser 7

oil revenues the country brings in ever makes it to the everyday citizen. Oil revenues make

political corruption especially bad because lack of checks and balances allows governments to

under invest, invest badly, and worst of all, spend the money for their own personal gain.27

Nigeria’s dependence on oil exports markets has contributed greatly to its poverty. It

does so by fostering conflicts, creating pollution (which in turn raises unemployment, sickness,

and the cost of food and water), and encouraging government corruption, “Dutch disease,” and

susceptibility to market price fluctuations. Unfortunately, shaking this dependence on oil is a

very difficult task for a couple of reasons. One, high-ranking officials and politicians become

accustom to the extravagant life styles funded by oil revenues, and as such they are less likely to

make any change that will reduce this revenue. Two, the weaning off of oil revenues needs to be

a slow process or else the effect on the economy could be just as devastating as a major drop in

the world price of oil. Nigeria needs to start taking steps to diversify their economy and thus

start reducing its dependence on oil. Nigerians have recently started a period of political reform,

the outcome of which is still unclear, but hopefully, for the sake of its people, it is a first step in

the direction of real economic growth.

27
Collier, 44.
 Moser 8

Bibliography

Amnesty International. Nigeria: Petroleum, Pollution and Poverty in the Niger Delta. London, UK:
Amnesty International Publications, 2009.

Anwana, Eno. “Taking Control of Africa’s Resources.” African Voices on Development and Social Justice,
no. 167 (July 2004): 132 - 135. Accessed February 4, 2011.
http://www.pambazuka.org/‌en/‌publications/‌africanvoices_chap05.pdf.

Collier, Paul. The Bottom Billion: Why the Poorest Countries Are Failing and What Can Be Done About It.
New York: Oxford University Press, 2007.

Hansen, Liane. “Documenting the Paradox of Oil, Poverty in Nigeria.” National Public Radio. Accessed
February 4, 2011. Last modified June 6, 2008. http://www.npr.org/‌templates/‌story/‌story.php?
storyId=92155119.

Oyefusi, Aderoju. “Oil Dependence and Civil Conflict in Nigeria.” Center for the Study of African
Economics (June 2007).

The World Factbook 2009. Washington, DC: Central Intelligence Agency, 2009.
htt ps://www.cia.gov/library/publicati ons/the-world-factbook/index.htm