Poverty in the Oil Rich Country

In Nigeria, many people live in poverty, which seems strange considering that the country has a substantial amount of oil. Even so, sixty percent of Nigeria’s population lives in absolute poverty meaning that they have a difficult time affording shelter, food, and clothing. Nigeria’s economic situation is troubling because it is one of the more densely populated countries in Africa, and many live in poverty(Mbah, Fidelis). 

In the past, government corruption has been blamed for Nigeria's economic problems. This is why there have been several political leaders who have focused on reducing corruption. President Buhari fired 26 heads of federal agencies. He also split up the oil industry into two sections to better monitor it. Despite Bhauri’s efforts to reduce corruption a large portion of the population continues to live in poverty(Turkson, Nshira). This led experts to believe that another cause of poverty in Nigeria is the poor state of infrastructure and financial mismanagement.

The poor infrastructure of the oil industry is one of the major factors responsible for poverty. The economy relies too much on the oil industry, and there are not enough jobs. As a result, many people are unemployed and have to rely on the government for financial assistance. The government has a difficult time assisting their citizens(Goodman, Jack, and Mwai, Peter). One reason for this is because the oil industry is poorly organized, making crime prevalent in the industry, people siphon oil from pipes in and put it into drums. These drums are then transported to refineries, where they are sold on the black market. According to Kolawole Banwo, it is unknown how much oil exactly has been lost this way(Nshira,Turkson).

A different structural flaw in the government is the lack of revenue sharing, as well as unfair electoral procedures. Revenue sharing refers to the distribution of the revenue to the state and local governments. In Nigeria, the central government controls the majority of the country’s revenue and resources. They made a policy that says at least thirteen percent of the oil revenue must return to the state where this revenue has been produced. Some of the oil-producing areas demand a higher portion of the revenue. If the central government were to grant these requests, it would alter the distribution of revenue throughout the country. This means that areas that do not produce as much oil would receive an even smaller percentage of the revenue. The INEC is responsible for managing the electoral process. The leader is appointed by the president, and the Executive Branch pays the chairman. This makes it possible for people from the Executive Branch to bribe or blackmail the chairman. Therefore, the elections are unnecessary, because the outcome is already decided beforehand by the government(Hanson, Stephanie).

The mismanagement of funds is a different contributor to poverty in Nigeria. In the recession in 2017, the oil prices for Nigerian oil decreased from $112 per barrel to $50. This badly impacted the economy because the oil industry makes up 70% of the national income. This caused the Nigerian Naira to lose much of its value. The currency got pegged to 199 nairas per American dollar. This reduced the willingness of investors to participate in the Nigerian oil industry, depleting the foreign reserves, and making it difficult for businesses to obtain foreign currency which is used to pay for imports, the inability to receive imports created a drag on economic growth(Manning, John).

It will take Nigeria a long time for their infrastructure to improve and for the economy to fully recover. The government has thought of ways to improve Nigeria this includes: cutting governing costs, increasing oil production and investing in the infrastructure. When these changes are implemented it can make it possible for the economy to improve and then there will be less poverty(Manning, John).

Work Cited

Goodman, Peter Mwai & Jack. “Nigerian Elections: Is Poverty Getting Worse?” BBC News, BBC, 9 Feb. 2019, www.bbc.com/news/world-africa-47122411.

Hanson , Stephanie. “Nigeria's Creaky Political System.” Council on Foreign Relations, Council on Foreign Relations, 12 Apr. 2007.www.cfr.org/backgrounder/nigerias-creaky-political-system.

Manning, John. “Why Is Nigeria in Recession?” International Banker, 9 Apr. 2017, https://internationalbanker.com/finance/why-is-nigeria-in-recession/.

Mbah, Fidelis. “'Politicians Have Failed Us': The Despair of Nigeria's Poor.” Nigeria News | Al Jazeera, Al Jazeera, 25 Nov. 2018, www.aljazeera.com/news/2018/11/failed-despair-nigeria-poor-181123200501471.htm.

Turkson, Nshira. “The Nigerian Oil Company's Missing Billions.” The Atlantic, Atlantic Media Company, 18 Mar. 2016, www.theatlantic.com/international/archive/2016/03/nigeria-oil-corruption-buhari/473850/.