This is known as the resource curse: assets that bring wealth and stability, but instead lead to corruption and poverty. And for Nigeria, oil is to blame.
In Nigeria, oil has been more of a curse than a blessing. Weak state establishments and poor governance in managing large revenues have led the country to fail to achieve its full potential in an ancient example of what is called the “resource curse. “
First coined by Professor Richard Auty in 1994, the term refers to the inability of nations to use their exceptional wealth to improve the lot of their other peoples and their economies. Rich natural resources bring corruption and poverty to a nation, rather than positive economic progression. And, against all odds, these countries end up with less expansion and progression than without natural resources.
The resource curse, or “abundance paradox,” relates to a reverse dating in which wealth has a negative impact. Nigeria, Africa’s largest oil producer, the world’s sixth-largest exporter, has the world’s tenth largest oil reserves, arguably a “cursed” nation.
Depending on their exports of herbal resources, these countries have, on average, lower rates of expansion, lower levels of human development, and more inequality and poverty. They were also found to have more poverty and more conflict than resource-poor economies.
It basically affects poor political governance and weak institutions, stemming from separate phenomena around oil exploitation than ownership, and is formed through multinationals, domestic and foreign governments, financiers and foreign investors, along with state structures and personal actors in oil-exporting countries.
Resource wealth can have a devastating impact. Oil exporting countries such as Nigeria, Venezuela, Angola and the Democratic Republic of Congo have noted that their livelihoods and economies have been devastated, yet the history of many countries, such as Norway, Canada and Botswana, have resisted the curse through a strong state. control and resilient institutions. against corruption.
This is crucial because the key detail of the resource curse is corruption: a global phenomenon that is the greatest impediment to economic and social development, especially in the least developed countries. Eliminate poverty, educate every child in the world, cure malaria, and close the global infrastructure gap.
According to Transparency International’s definition, corruption is “abuse of force for self-gain or non-public gain. “In 1996, then-World Bank President James D Wolfensohn called it a cancer and challenged all countries to strive for transparency and the pernicious have a corrupt effect on society, defining the consequences as a redirection of resources from the deficient to the rich. inflate trade costs, discourage foreign direct investment (FDI), drain public spending, divert aid, and undermine equitable national development.
Corruption undermines the integrity of Americans and establishments. A synthesis of social, political and economic forces takes power away from sovereign states, undermines democratic establishments and contributes to instability fuelled by citizens’ mistrust and resentment. It attacks democracy by distorting electoral processes, perverting the rule. of law and construction of new bureaucratic stumbles whose only raison d’être is to request bribes.
There are many reasons for corruption: self-interest, fear, greed and a preference for force; However, its consequences are the same, lasting and harmful.
Absorbing an influx of petrodollars is a complex factor for any nation. Countries that take advantage of these windfalls find it difficult to responsibly manage excess liquidity. Investments. Priority is given to spending on lower-priority projects. They boost existing projects with generous expenses. Then, in the face of emerging inflation resulting from unprecedented productivity, they rush to absorb liquidity and thus relax with monetary and field convenience. The combined effect of these points leads to the appreciation of the currency, which accentuates the deterioration of the functionality of the economy and causes the non-oil sectors to lose competitiveness in the face of increases in exchange rates. This specific phenomenon, known as ‘Dutch disease’, has led to the virtual disappearance of the oil sectors in the Netherlands.
Studies have shown that after an oil boom, an imbalance occurs as non-oil sectors remain underdeveloped. As demand for capital and hard work increases, the booming oil sector is diverting those same points from even less lucrative sectors, such as agriculture, weakening them. The windfall, which has created a concomitant abundance and resulted in giant revenues, higher salaries and higher returns on investment, is taking administrations into new territory. Incompetence and inexperience in public monetary control create stronger incentives to attract corruption.
The new wealth creates expectations among citizens and increases the demand for resources, not only from state agencies but also from civil society. the unemployed are calling for task creation. Bureaucracies form and are temporarily inefficient or incompetent, contributing to the accumulation of foreign debt and running industrial deficits.
An economic trap or “rentier state” develops. The government derives all or all of its overall profits from rents paid through foreign individuals, firms, or governments. This leads to a reduction in non-oil sectors, spiraling inflation, an accumulation in the quantity and prices of imports, more spending on immodest political projects, subsidies, and social systems to counter the emerging burden of living and currency depletion.
Through cunning control and determination, other countries have triumphed over the resource curse and led their economies to success. So far, Nigeria has failed in the eyes of a giant component of its population. If you are doomed to a failed state, only time will tell.
Kenneth Mohammed, MA Corruption and Governance, The Center for the Study of Corruption at the University of Sussex, is a Senior Advisor at Intelligent Sanctuary