Petroleum Economy Management in Nigeria: A Critical Analysis of Policy and Performance

1.0. Introduction

Nigeria is the largest economy within the continent of Africa, with a population of about 175 million situated within the West Africa subregion and a landmass of about 950,830 square kilometres. From the Post-Oil Boom Era in 1970, macroeconomic indices have played a vital role in the determination of economic development through components such as inflation levels, agricultural output, money supply, interest rates, and currency exchange rates. After the demise of the oil boom of the 1970s, the revenue allocation system remained one of the critical destabilizing factors in the Nigerian Federal experiment.

The choice of oil remains tied to its status as the physical basis of the Nigerian state, accounting for over 80 percent of federal revenue and 90 percent of foreign exchange earnings. Beyond this, it feeds into struggles over the control of assets and distribution by various factions of the ruling class. The politics of oil determines the political economy of fiscal federalism and confronts the power relations that underline the authoritative allocation of resources among the various tiers of the Nigerian Federation.

Over the years, Nigerian participation in the international polity was a result of her sudden strength in economic wealth derived from crude oil gains. The boost of her economic might gave her foreign policy nationalist and international recognition. In order to sustain these responsibilities, the administration initiated various reforms in 1999, including the privatization of government enterprises, liberalization of the economy for full private participation, unbundling of the petroleum upstream and downstream subsectors, and the recapitalization of financial institutions.

1.1. Statement of the Problem

Nigeria faces the paradox of possessing tremendous economic resources while being subordinated to external economic forces. Petroleum economy management is a determinant between human capital management and political strength. Over decades, petroleum products pricing in Nigeria has been bedevilled with complex scenarios emanating from weak socioeconomic policy directions and corruption, creating heavy dependency on foreign consumable goods when the nation has the potential to chart its own development path.

This research work examines the criticalities and salient economic challenges that have moderated the Nigerian oil and gas economy. These challenges focus on how Nigeria can attain sustainable political and socioeconomic independence, promote professional industrial integration, and develop a strong management portfolio to trigger international trade competency. A grave concern is the “attitudinal problem” of leadership—the yawning gap between what leaders say and what they execute regarding the external and internal environments.

1.2. Study Objectives

The study objectives of this research include:

• To examine the macroeconomic indices that will fast-track Nigerian petroleum economic development globally.
• To promote a strong, effective, and mutually beneficial industry integration and interaction.
• To analyze existing challenges associated with Nigerian petroleum economy management with a view to giving it a nationalist approach.
• To holistically review existing petroleum products pricing and legal framework policies over the years.
• To examine investment opportunities in the oil and gas economy and how crude oil influences behavior on international issues.

1.3. Hypothesis

The hypothesis of this study is as follows:

• There is a strong indication of a relationship between changes in economic factors, policies, political structures, and the managerial capabilities of the oil and gas sector.
• The Nigerian political economy management adoption policy is a radical position that will strengthen industrialization if implementation recognizes the necessary systemic changes regarding structural deficiencies in the socioeconomic values of Nigerians.

2.0. Overview of Petroleum Economy Management in Nigeria

Economic policy implementation is welfaric in nature, aimed at improving standard of living. This study views economic policy from three broad perspectives: fiscal, monetary, and commercial policies. The Nigerian petroleum economy is characterized by long protracted political instability, colossal sectoral corruption, and the malfunctioning of the four state-owned refineries. Dependence on petroleum revenues remains high, providing about 20 percent of GDP and 95 percent of foreign exchange earnings.

As economic recession continues to impact the economy, inconsistent international crude oil prices and declines in OPEC supply benchmarks have crushed the economy further downward. This has created circles of economic deprivation affecting about 70 percent of the population. While 80 percent of Nigeria’s energy revenues flow to the government, the World Bank estimated that these revenues benefit only 1 percent of the population due to systemic corruption.

2.1. Macroeconomic Trend of Oil and Gas Economy

Nigeria has experienced laudable economic growth from post-amalgamation in 1914 to date. The economic prospect of Nigeria as the largest black nation on the continent earned her the title “Giant of Africa.” However, per capita GDP growth has been unsustainable. In the 1960s, it reached a peak growth of about 283 percent in 1970 but declined by 66 percent by 1980.