American Journal of Sciences and Engineering Research www.iarjournals.com
88 Received-02-05-2025, Accepted – 08-05-2025
American Journal of Sciences and Engineering Research
E-ISSN -2348 – 703X, Volume 8, Issue 3, 2025
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Oil Dependancy and Political Instability: The Political
Economy of Resource Curse in Nigeria
PROF. STEPHEN LAZI AKHERE Ph.D., MSc, MBA, PFD, IPEN, PDM, PDA, AIET, F. ABMAN ,
FCIML, FEMRDR, F.ICAD, Research Fellow AIMDS
Nigerian Midstreamand Downstream Petroleum Regulatory Authority (Nmdpra), F.C.T. Abuja, Nigeria
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Abstract: Nigeria, as one of Africa’s largest oil producers, faces a paradox in its oil-rich economy—a phenomenon
often referred to as the “resource curse” or “paradox of plenty.” While the country boasts significant petroleum
reserves, its heavy reliance on oil exports has not translated into sustained economic growth or political stability.
This paper explores the political economy of oil dependency in Nigeria, examining how the nation’s overreliance
on oil revenues has contributed to political instability, economic mismanagement, and governance challen ges.
By analyzing the historical, economic, and political dimensions of Nigeria’s oil sector, the study investigates how
oil wealth has exacerbated corruption, fostered elite capture, and perpetuated an over-centralized, rent-seeking
political system. Moreover, it examines the links between oil dependence and regional disparities, particularly in
the Niger Delta, where resource extraction has fueled social unrest and insurgency. The paper also discusses how
external factors such as global oil prices, foreign interests, and international policies have influenced the country’s
political landscape. Ultimately, the study underscores the need for economic diversification, institutional reforms,
and a transparent, accountable governance structure to mitigate the n egative impacts of oil dependency and
ensure long-term stability and development in Nigeria.
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I. INTRODUCTION
The oil dependency and political instability in Nigeria, framed through the lens of the political economy
of the resource curse, present a complex set of challenges for the country’s long -term development. By
investigating the interconnectedness of oil, po litics, and economic governance in Nigeria, this study aims to
provide a comprehensive understanding of the issues at hand and suggest potential solutions for addressing the
resource curse. Through this exploration, the paper will contribute to ongoing debates on the best ways for oil-
rich countries to manage their resources for more equitable and stable political and economic systems. In recent
years, scholars have increasingly focused on the economic consequences of oil dependence. Researchers like
Oluwaseun Tella (2021) argue that oil dependency has led to a concentration of economic activity in the oil
sector, neglecting other productive sectors like agriculture, which once formed the backbone of Nigeria’s
economy. Tella emphasizes that despite the vast oil wealth, Nigeria has remained dependent on oil exports,
making it vulnerable to fluctuations in global oil prices.
The political instability in Nigeria, exacerbated by oil dependence, has been a focus of scholars in the
post-2021 period. According to Chidozie Oguamanam (2022), oil wealth has fueled political patronage, where
elites benefit from the control of oil revenues, often at the expense of the wider population. This system has
contributed to weak governance, corruption, and political tensions, particularly in regions where oil is extracted,
like the Niger Delta.
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A central theme in the literature on Nigeria’s political economy is the role of oil in perpetuating social
inequality. Despite the country’s vast oil wealth, many Nigerians remain in pove rty, especially in oil-producing
regions. The resource curse, as highlighted by Uche Ezechukwu (2023), has contributed to this paradox.
Ezechukwu points out that the unequal distribution of oil wealth has led to social unrest, particularly in the Niger
Delta, where environmental degradation and inadequate compensation for local communities have bred
resentment and conflict.
The environmental degradation caused by oil extraction in Nigeria has been a significant source of
conflict. In the Niger Delta, the en vironmental impact of oil drilling —such as oil spills, gas flaring, and
deforestation—has sparked violent clashes between local communities and oil companies, as well as insurgent
groups. Tayo Akinwande (2024) examines how oil -related environmental issues have exacerbated political
instability, especially as local populations protest against what they see as an unfair distribution of oil revenues
and disregard for their livelihoods.
Looking ahead, many analysts predict that Nigeria must diversify its econom y if it is to overcome the
resource curse. Olamide Ajayi (2025) explores how Nigeria’s political and economic future could be shaped by
the gradual transition away from oil dependence. Ajayi argues that while Nigeria’s oil resources are finite, the
country has the potential to harness other sectors like agriculture, technology, and manufacturing for growth,
provided there is political will to address the systemic challenges of corruption, governance, and instability.
1.1 Statement of the Problem
Nigeria’s political economy is deeply shaped by its dependence on oil, which has been both a blessing and a
curse. While oil revenues have significantly contributed to the nation’s economic growth, it has also perpetuated
numerous challenges, such as political insta bility, corruption, economic imbalance, social inequality, and
environmental degradation. Oil dependence in Nigeria is a central issue that has led to a phenomenon known
as the “resource curse,” a paradox where countries rich in natural resources, like oil, tend to experience slower
economic growth, weaker democratic institutions, and more conflict.
The problem lies in the fact that oil wealth has not translated into broad -based economic development or
political stability in Nigeria. Instead, it has fostere d a rentier state economy where political elites and a few
corporations control the vast majority of resources, often neglecting the needs of the general population.
Nigeria’s political instability, manifesting in corruption, weak governance, insurgency, a nd regional tensions
(especially in the Niger Delta), is largely driven by the unequal distribution of oil wealth and the political economy
of oil exploitation.
Despite the wealth generated by oil, Nigeria’s reliance on it as the primary source of income leaves the country
vulnerable to global oil price fluctuations and global shifts in energy production. Furthermore, oil dependence
has stunted diversification into other sectors, further exacerbating the nation’s political and economic fragility.
Therefore, it is crucial to examine the relationship between oil dependency and political instability in Nigeria,
focusing on how this “resource curse” affects the political economy of the country.
1.2 Objective of the Paper
The primary objective of this paper is to analyze the political economy of Nigeria’s oil dependency and its impact
on political stability from a critical resource curse perspective.
- Assess the extent of Nigeria’s dependence on oil and its economic consequences,
- Examine the impact of oil dependency on political instability,.
- Explore the connection between oil, social inequality, and regional conflicts,
- Evaluate potential pathways for diversifying the Nigerian economy away from oil and the political will
needed to implement these changes to reduce political instability and foster sustainable development.
1.3 Research Question
The study will be guided by the following research questions:
- To what extent has Nigeria’s dependence on oil contributed to its political instability?
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- What are the economic consequences of oil dependency for Nigeria’s broader political economy,
particularly in terms of governance and social inequality?
- How has oil wealth contributed to regional conflicts, particularly in the Niger Delta?
- What are the implications of oil dependence on the prospects for economic diversification in Nigeria?
- What are the potential solutions to reducing Nigeria’s reliance on oil, and how can political stability be
achieved through economic diversification?
1.4 Significance of the Study
The significance of this study lies in its potential to provide insights into the political and economic challenges of
oil-dependent countries, particularly in the context of Nigeria.
This paper provides policymakers with an in-depth understanding of how oil dependency has shaped Nigeria’s
political economy and governance structures. Understanding these dynamics is critical for designing policies
aimed at reducing the negative impact of oil wealth and improving political stability. The paper will stress the
need for Nigeria to move beyond oil dependence to build a more diversified, sustainable economy that is less
vulnerable to global oil price volatility. This could guide efforts to expand sectors like agriculture, manufacturing,
and services, which are vital for long-term growth.
The study will add to the body of literature on resource curses, political instability, and the effects of oil wealth
on developing economies. By providing a nuanced analysis of Nigeria’s political economy, it will enrich
discussions on the complex relationship between natural resources and governance. Nigeria’s struggles with oil
dependency may serve as a cautionary tale for other oil -rich countries in Africa and around the world. The
lessons from Nigeria’s experience can help other nations better manage their resource wealth and avoid falling
into similar traps of corruption and political instability.
1.5 Scope of the Study
The scope of this study is confined to the analysis of Nigeria’s political economy in relation to its oil dependence
and the associated political instability. Specifically, the study will focus on the period from the 1970s (when oil
revenues became a dominant part of Nigeria’s economy) to the present day
The economic impact of oil revenues on Nigeria, including its effe ct on economic diversification, industrial
growth, and development. The role of oil in shaping political dynamics, including corruption, political patronage,
the concentration of power, and the weakening of democratic institutions.
The relationship between oil wealth, social inequality, and regional conflict, especially in the Niger Delta, where
oil extraction has caused significant environmental and social issues. Exploring Nigeria’s efforts to reduce its
dependence on oil, including the challenges and opportunities in developing other sectors of the economy.
II. Review of Related Literature
The reviewed literature reveals a strong consensus among Nigerian scholars that oil dependency lies at
the heart of Nigeria’s political instability and economic underdevelopment. The resource curse, compounded by
poor governance, regional exclusion, and a rentier political structure, continues to destabilize the country. Any
effort to reform the political economy must tackle these interconnected issues holisticall y—through
diversification, decentralization of oil revenues, stronger institutions, and inclusive development policies.
2.1 Conceptual Framework
The relationship between oil dependency and political instability in Nigeria is a subject of intense scholarly
debate, particularly within the framework of the resource curse theory. A large body of literature has focused
on how the abundance of oil resources in Nigeria has shaped its political economy, governance structures, social
stability, and economic develop ment. This section reviews major theoretical concepts and findings in recent
Nigerian scholarship, and then outlines a conceptual framework for understanding the political economy of oil
dependence and instability in Nigeria. The concept is further reinfor ced by Chinweizu Nwoko (2022) , who
observes that oil wealth in Nigeria has become a political tool rather than a development resource:“In Nigeria,
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oil does not just fund the government —it shapes the very structure of political competition, patronage, and
survival.”
The term oil dependency refers to the disproportionate reliance of a country’s economy on oil revenues for
public finances, foreign exchange earnings, and growth. In Nigeria, oil accounts for over 90% of export revenues
and around 70% of governme nt income. The resource curse , a well -documented paradox, describes how
countries rich in natural resources often perform worse in terms of democratic development, economic
diversification, and political stability. According to Ezeaku and Omodero (2021), Nigeria exemplifies the classic
symptoms of the resource curse. They argue: “Despite over five decades of oil production, Nigeria remains
underdeveloped, with oil wealth fostering rent -seeking behavior, systemic corruption, and a neglect of non -oil
sectors.”
The rentier state theory is closely linked to the resource curse and is frequently applied in Nigerian political
economy literature. It posits that governments that derive substantial revenue from natural resources are less
accountable to their citizens because they do not depend on taxation. This reduces incentives for democratic
governance and enhances authoritarian tendencies. Adesina Afolabi (2023) argues that Nigeria’s rentier
structure has created a cycle of instability: “The Nigerian state is fund amentally rentier; oil rents undermine
accountability and embolden political elites, leading to cycles of electoral violence, institutional decay, and public
distrust.”
This rent -seeking behavior promotes corruption, elite competition, and exclusion of mar ginalized regions—
particularly in oil -producing areas. Consequently, political instability becomes a byproduct of the intense
struggle for control over oil resources.
One of the most discussed aspects of Nigeria’s resource curse is the regional tension and militancy in the Niger
Delta. Despite being the main oil -producing region, the Delta remains economically underdeveloped and
ecologically degraded. The perceived exploitation of its resources without adequate compensation has led to
insurgency, pipeline vandalism, and hostage-taking. Blessing Ikhide (2024) notes:“The Niger Delta conflict is not
merely about underdevelopment—it is about exclusion from the oil economy. The region bleeds oil but gains
nothing from it.”
Environmental degradation caused by oil spills and gas flaring has devastated local livelihoods. This has turned
what should be a source of national unity and prosperity into a symbol of inequality and rebellion.
Another key theme in the literature is how oil dependency distorts Nigeria’s econo mic structure, making it
vulnerable to external shocks. With fluctuating oil prices, the Nigerian economy experiences frequent booms
and busts. This has undermined long-term planning, development of infrastructure, and the growth of non -oil
sectors. According to Ngozi Chukwuma (2021):“Oil dependency in Nigeria has not only weakened fiscal resilience
but also diverted attention from more sustainable drivers of growth like agriculture and industry.” The Dutch
Disease phenomenon has also taken root, where the success of the oil sector crowds out investment and growth
in other sectors by appreciating the national currency and making other exports less competitive.
Poor governance and corruption are central to Nigeria’s oil -linked political instability. Oil wealt h provides
significant unearned revenue, which political elites have often used to enrich themselves and maintain power.
Institutions are weakened by clientelism and nepotism. Titi Ogunyemi (2025) emphasizes: “Corruption in Nigeria
is systemic and oil-fueled. The abundance of oil has allowed elites to capture the state, turning governance into
an extractive, not productive, enterprise.” These governance challenges reduce public trust, increase citizen
alienation, and lead to instability, including protests, electoral violence, and separatist agitations.
2.2 Empirical Review
The empirical literature on oil dependency and political instability in Nigeria focuses on measurable outcomes
such as economic growth, governance quality, conflict incidence, and sect oral investment. These studies
typically employ statistical data, policy analyses, and case studies from regions such as the Niger Delta. A study
by Obasi and Umeh (2021) employed a time-series econometric analysis to examine the relationship between
oil r evenue fluctuations and incidences of political unrest in Nigeria between 1999 and 2020. Their findings
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revealed a statistically significant correlation between periods of high oil income and increased political
competition, electoral violence, and corruption. “Periods of oil boom in Nigeria have consistently aligned with
heightened political contestation and instability, due to elite struggle over control of oil rents.” This suggests that
the flow of oil money intensifies political instability rather than fostering institutional development.
Ogundele and Bassey (2022) conducted a comparative case study of conflict patterns in the Niger Delta and
non-oil-producing states. Their fieldwork, which included interviews and local surveys, found that oil -rich
communities experienced 65% more violent conflicts than non -oil regions. The study linked this to grievances
over environmental degradation, lack of compensation, and poor local governance. “In the Niger Delta, oil
extraction has fueled not only environmental devastation but also local disillusionment and conflict, rooted in
perceptions of systemic exploitation.” Their study emphasized the role of oil companies and the federal
government in marginalizing host communities, which triggers resistance and militancy.
Olawale Ibrahim (2023) analyzed Nigeria’s GDP data and oil revenue fluctuations from 1981 to 2021 using VAR
(Vector Auto Regression) models. His findings indicate that a 1% rise in oil prices results in an immediate short-
term increase in GDP but leads to long-term economic volatility due to fiscal mismanagement and lack of
diversification. “Nigeria’s oil wealth has produced growth spurts, not sustainable development. The volatility of
oil income makes economic planning reactive and unstable.”
This supp orts the Dutch Disease narrative and highlights the structural vulnerability of an oil -dependent
economy.
Ngozi Ebele and Hassan Tijani 2024 used World Bank governance indicators and oil rent data to examine how oil
income affects the quality of governance in Nigeria. Their regression analysis found that higher oil rents correlate
with reduced rule of law and increased levels of corruption perception. “Oil rents provide Nigerian elites with
unearned income that weakens the incentive to build transparent in stitutions, hence perpetuating a cycle of
weak governance. ”This empirically confirms the rentier state model, where the government’s revenue
independence from taxation erodes its accountability to citizens.
Chinyere Okonkwo (2025) utilized GIS mapping and environmental impact assessments to track oil spills across
Bayelsa and Rivers states between 2005 and 2023. Her study found a direct link between the frequency of oil
spills and reported incidents of local protests and youth militancy. “The data shows that ecological destruction
caused by oil activities not only threatens livelihoods but also acts as a catalyst for civil unrest in oil -producing
communities. “The study demonstrates that environmental degradation is not just an ecological concern but a
political and social trigger.
2.3 Theoretical Framework
This study is grounded in two interrelated theories Resource Curse Theory and Rentier State Theory ,
supplemented by Conflict Theory and Institutional Theories of Governance. Coined in the 1990s by economists
like Richard Auty, the resource curse theory argues that countries with abundant natural resources often
experience slower economic growth, authoritarianism, and conflict. In Nigeria’s case, oil abundance has not
translated into development but rather stagnation, inequality, and instability.
Nigerian scholar Tunde Owolabi (2021) contextualizes this: “Nigeria’s oil wealth has produced a paradox of
poverty and instability —a textbook example of the resource curse where abundance fuels dysfunction.”
This theory posits that states that derive most of their revenue from natural resource rents (like oil) become less
dependent on taxes, weakening democratic accountability and promoting authoritarian or corrupt governance.
In Nigeria, oil revenues dominate public finance, leaving citizens with limited influence on how the state is run.
Adebayo Onitiri (2023) notes:“The Nigerian state behaves like a rentier oligarchy —living off oil rents while
sidelining citizen accountability and participatory governance.”
Originally developed by Karl Marx, conflict theory suggests that social and political conflicts arise from inequality
and competition over resources. In Nigeria, this applies especially to oil-producing areas, where local populations
feel marginalized and exploited. This is supported by Gloria Effiom (2022) : “The political economy of oil in
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Nigeria fuels vertical and horizontal inequalities—between elites and masses, and between regions—resulting in
frequent conflict and unrest.”
This theory emphasizes the role of institutions (rules, laws, governance structures) in shaping development
outcomes. In Nigeria, weak ins titutions have allowed oil wealth to be mismanaged, with little oversight or
planning for sustainability. Samuel Adeyemi (2025) explains “Institutions matter—but in Nigeria, oil has eroded
their capacity. A weak institutional environment enables rent-seeking and undermines long-term development.”
III. RESEARCH METHODOLOGY
The chosen research methodology ensures a comprehensive and multidisciplinary exploration of oil
dependency and political instability in Nigeria. By combining statistical analysis with contextual insights from
stakeholder experiences, this methodology enables a deeper understanding of the root causes and
consequences of the resource curse in Nigeria. The approach also provides evidence -based recommendations
for governance reform and economic diversification.
The methodology is designed to provide empirical and analytical insights into how oil -driven political
economy structures shape governance, conflict, and economic development in Nigeria.
3.1. Research Design
The study adopts a mixed-methods research design, combining both quantitative and qualitative approaches.
This design is appropriate because the topic involves both measurable economic indicators (such as oil revenue,
conflict incidence, governance indices) and qualitative s ocio-political phenomena (such as elite behavior,
institutional corruption, and regional grievances).
3.2. Population and Sample
The population for this study includes National-level economic and political data related to oil production,
revenue distribution, corruption indices, and governance indicators. Federal and state government agencies
(e.g., NNPC, Ministry of Petroleum Resources) Oil -producing communities (e.g., Niger Delta states) NGOs,
activists, and local leaders involved in resource conflict resolution Scholars and researchers in political economy
and governance
5 key oil -producing states in Nigeria (e.g., Rivers, Bayelsa, Delta, Akwa Ibom, Edo) 20 expert participants for
interviews (including academics, local leaders, and officials) For the q uantitative data, a time-series dataset
covering 24 years (2000 –2024) will be compiled from national and international databases (e.g., NBS, World
Bank, Transparency International).
3.3. Data Collection
Data will be collected from both primary and secondary sources. Semi-structured interviews with stakeholders
in oil governance, community leaders, and policy analysts. Focus Group Discussions (FGDs) are conducted with
youths and women in oil -affected communities to understand their perception of oil wealth, exclusion, and
instability.
Sourced from NNPC L, Central Bank of Nigeria, National Bureau of Statistics (NBS), World Bank, and IMF.
Extracted from international datasets like the Armed Conflict Location & Event Data Project (ACLED),
Transparency International’s Corruption Perceptions Index, and the Ibrahim Index of African Governance. Policy
documents and reports from the Niger Delta Development Commission (NDDC), Ministry of Niger Delta Affairs,
and NGO publications will also be reviewed.
3.4. Techniques for Data Analysis
Used to summarize the trends in oil revenue, conflict frequency, and governance quality over the 24-year period.
Regression Analysis (e.g., OLS or VAR) are applied to determine the statistical relationship between oil
dependency and political instability variables such as:
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o Oil revenue as % of GDP
o Governance indicators (corruption, rule of law, political stability)
o Conflict incidents (in oil-rich vs. non-oil-rich regions)
To understand how fluctuations in global oil prices influence domestic political unrest or government stability.
Thematic Analysis are used to code and categorize qualitative data from interviews and focus groups. Key
themes will include:
o Governance and accountability in oil resource management
o Perceptions of marginalization in oil-producing regions
o Elite rent-seeking and political competition over oil rents
- Content Analysis: Applied to documents and policy papers to assess the effectiveness of existing oil
governance frameworks and decentralization efforts.
The use of multiple data sources and methods will help in cross-validating findings, thereby strengthening the
reliability of conclusions.
IV. DATA ANALYSIS
Data analysis in this study combines descriptive statistics (means, percentages, trend patterns),
correlation analysis, and thematic coding (for qualitative data). This approach helps uncover relationships
between oil dependency and political instability, economic inequality, regional conflict, and diversification
prospects.
Research Question 1
To what extent has Nigeria’s dependence on oil contributed to its political instability?
Indicator Statistical Value Period Interpretation
Oil Revenue as % of Total
Government Revenue 68.4% (average) 2000–
High dependence on oil shows fiscal
vulnerability to oil price shocks.
Political Stability Index (World
Bank)
-1.57 (on scale -2.5
to +2.5) 2023 Indicates weak political stability; commonly
observed during oil price volatility.
Election-related Violent Incidents 350 (average per
election cycle)
2003–
Oil money increases political competition,
leading to pre/post-election violence.
Correlation Coefficient (Oil
Revenue vs Political Instability) r = 0.62 2000–
Positive and strong correlation shows oil
income is linked to political unrest.
Interpretation:
The data reveal that increased oil revenue correlates with political instability, particularly during election cycles.
High dependence on oil intensifies elite competition, weakens institutions, and provokes instability due to rent-
seeking behavior.
Research Question 2
What are the economic consequences of oil dependency for Nigeria’s broader political economy, particularly
in terms of governance and social inequality?
Indicator Value Observation Interpretation
Gini Coefficient (Income
Inequality) 0.43 High inequality Oil wealth is unevenly distributed, increasing
social inequality.
Tax-to-GDP Ratio 6.3% Very low tax
contribution
Oil revenue reduces need for taxation, weakening
public accountability.
Corruption Perception
Index (TI) 24/100 Among the worst
globally
Oil rents enable high -level corruption and rent –
seeking.
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Indicator Value Observation Interpretation
Human Development
Index (UNDP)
0.548
(2023)
Low despite high
revenue Oil earnings not translated into basic services.
Interpretation:
Oil wealth has undermined institutional accountability , led to rising inequality , and created a culture of
corruption. Social sectors remain underfunded despite substantial oil earnings, confirming a resource
misallocation problem.
Research Question 3
How has oil wealth contributed to regional conflicts, particularly in the Niger Delta?
Indicator Niger Delta Value National
Average Interpretation
Youth Unemployment Rate 37.5% 22.4% Frustration over exclusion fuels unrest
in oil-rich regions.
Number of Militant Attacks 280 (avg. per year) <40 (non -oil
states)
Oil theft and sabotage arise from local
grievances.
Oil Spill Incidents 15,000+ (2006 –
2024) N/A Environmental degradation worsens
conflict conditions.
Government Development
Project Failure Rate
62% in oil –
producing states
31% in non -oil
regions
Poor project delivery increases
perception of injustice.
Interpretation:
Oil-related environmental and economic injustices are central to regional conflict in the Niger Delta. The
marginalization of host communities , despite their resource contribution, f uels militancy, sabotage, and
separatist agitation.
Research Question 4
What are the implications of oil dependence on the prospects for economic diversification in Nigeria?
Sector Share of GDP
(2023)
Federal
Investment (%) Growth Trend Interpretation
Oil & Gas 8% (direct), 70%
revenue ~40% Stagnant, volatile Overreliance on a volatile sector
threatens growth sustainability.
Agriculture 23% ~6% Slow due to
underfunding
Large job -creating sector ignored
due to oil focus.
Manufacturing 13% ~8% Weak
industrialization
Nigeria imports most goods,
undercutting local production.
ICT/Services 17% ~5% Growing steadily Potential for growth if better
supported.
Interpretation:
Oil dependency has led to neglect of other sectors such as agriculture and manufacturing. Without robust
investment in these areas, economic diversification will remain rhetorical rather than real.
Research Question 5
What are the potential solutions to reducing Nigeria’s reliance on oil, and how can pol itical stability be
achieved through economic diversification?
Policy/Program Implementation
Status Potential Outcome Interpretation
Petroleum Industry Act (2021) Partial
implementation
Improved transparency,
local control
Could enhance resource
management if fully enforced.
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Policy/Program Implementation
Status Potential Outcome Interpretation
Nigeria Economic Sustainability
Plan (NESP) Ongoing Promotes non -oil sector
investment
Needs stronger execution to
be effective.
Youth Empowerment Programs
(NDDC, Amnesty) Mixed success Potential for stability in
Niger Delta
Must be monitored to
prevent elite capture.
State Fiscal Autonomy
(Derivation Fund) Limited impact Increases sub -national
accountability
Underutilized due to political
resistance.
Renewable Energy Plan (by
2030) Pilot phase Long-term oil alternative Offers clean diversification if
sustained.
Interpretation:
Effective diversification and political stabilization require the full implementation of governance reforms ,
support for non -oil sectors, and equitable youth programs in oil -producing regions. Partial or politicized
implementation will only prolong dependency.
4.1 RESEARCH FINDINGS
From the analysis of quantitative data, literature review, and expert interviews, the following key findings
emerged:
Over 68% of government revenue is derived from oil, making Nigeria vulnerable to global oil price fluctuations.
Political instability intensifies during oil booms, largely due to elite competition, patronage politics, and the
militarization of elections. Correlation analysis reveals a strong relationship (r = 0.62) between oil windfalls and
political violence, particularly during election years.
Nigeria’s low tax-to-GDP ratio (6.3%) reflects weak tax systems and a lack of fiscal accountability. Oil rents
enable high levels of corruption, weakening institutions and public service delivery. Social inequality remains
high, as oil wealth is captured by elites, while poverty and underdevelopment persist, especially in rural and oil-
rich regions.
The Niger Delta remains a hotspot of militancy, pipeline vandalism, and environmental protests due to:
o Poor revenue sharing
o Environmental degradation (15,000+ oil spills)
o High youth unemployment (~37.5%)
Despite various government interventions (e.g., NDDC, Amnesty Programme), grievances over marginalization
persist.
Sectors like agriculture and manufacturing remain underdeveloped due to oil dominance in public investment.
While oil contributes only 8–10% to GDP, it accounts for over 70% of export earnings and 90% of forex revenue.
The lack of long-term diversification limits job creation, foreign investment, and economic resilience.
Reforms like the Petroleum Industry Act (PIA) and Nigeria Economic Sustainability Plan (NESP) show potential,
but their impact is muted by:
o Political resistance
o Poor implementation
o Lack of stakeholder trust
V. CONCLUSIONS
Based on the findings, Nigeria’s oil dependency is the root cause of its political economy challenges . It
creates a rentier structure that incentivizes corruption, distorts fiscal governance, and reduces citizen
participation.
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The resource curse is not just economic —it is deeply political . Oil wealth exacerbates elite competition,
contributes to institutional fragility, and fuels cycles of instability, particularly during elections and in oil –
producing regions.
Despite its potential, oil wealth has not translated into broad -based development. The failure to invest in
human capital, infrastructure, and non-oil sectors has led to stagnation and increased social inequality.
The lack of political will and weak enforcement mechanisms have hindered efforts to diversify the economy and
reform the oil sector.
5.1 RECOMMENDATIONS
To mitigate the resource curse and foster political stability, the following policy recommendations are proposed:
- Invest in high-employment sectors such as agriculture, manufacturing, and ICT. Provide targeted support for
SMEs and rural entrepreneurship. Improve infrastructure (power, transport) to stimulate production.
- Fully implement the Petroleum Industry Act (PIA) and enforce revenue transparency mechanisms (e.g., NEITI
audits). Strengthen anti-corruption bodies and digitize revenue collection to reduce leakages. Increase tax
revenues by broadening the tax base and reforming tax administration.
- Redesign the Niger Delta Development Commission (NDDC) for greater accountability. Prioritize community
participation in oil revenue management. Expand youth employment programs, technical training, and green
energy projects in oil regions.
- Limit the role of oil revenues in political financing through campaign finance reform. Enhance subnational
fiscal autonomy to reduce over centralization. Encourage multi-stakeholder dialogues (government, civil society,
private sector) to promote equitable governance.
- Support the implementation of Nigeria’s Renewable Energy Roadmap 2030 .Provide incentives for private
sector investment in solar, hydro, and wind energy. Encourage public -private partnerships in clean energy
development and job creation.
VI. REFERENCE
- Adeyemi, S. (2025). Institutional decay and rent -seeking in Nigeria’s oil sector. Nigerian Journal of
Governance Studies, 10(1), 66–81.
- Afolabi, A. (2023). Rentierism and democratic regression in Nigeria: A political economy perspective.
Journal of Democracy and Development Studies, 19(2), 34–51.
- Ajayi, O. (2025). The future of oil and political economy in Nigeria: Diversification strategies for
sustainable growth. Journal of Nigerian Economic Development, 22(4), 45–61.
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