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 challenges.
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 study underscores the need for economic diversification, institutional reforms, and a transparent, accountable governance structure to ensure long-term stability and development in Nigeria.
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, politics, 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.
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 contributed to weak governance, corruption, and political tensions, particularly in regions where oil is extracted, like the Niger Delta.
A central theme in the literature is the role of oil in perpetuating social inequality. Despite the country’s vast oil wealth, many Nigerians remain in poverty. Uche Ezechukwu (2023) points out that the unequal distribution of oil wealth has led to social unrest, specifically where environmental degradation and inadequate compensation for local communities have bred resentment.
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. The problem lies in the fact that oil wealth has not translated into broad-based economic development. Instead, it has fostered 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 reliance on oil leaves the country vulnerable to global price fluctuations and shifts in energy production, while stunting diversification into other sectors.
1.2 Objective of the Paper
- 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.
II. Review of Related Literature
The reviewed literature reveals a strong consensus that oil dependency lies at the heart of Nigeria’s political instability. The resource curse, compounded by poor governance and regional exclusion, continues to destabilize the country.
2.1 Conceptual Framework
The relationship between oil dependency and political instability is a subject of intense scholarly debate. Chinweizu Nwoko (2022) observes that oil wealth in Nigeria has become a political tool rather than a development resource: “In Nigeria, oil does not just fund the government—it shapes the very structure of political competition, patronage, and survival.”
Nigeria accounts for over 90% of export revenues and around 70% of government income from oil. Ezeaku and Omodero (2021) argue that Nigeria exemplifies classic symptoms of the resource curse, fostering rent-seeking behavior and systemic corruption. The rentier state theory posits that governments deriving substantial revenue from natural resources are less accountable to their citizens because they do not depend on taxation, which reduces incentives for democratic governance.
2.2 Empirical Review
Obasi and Umeh (2021) employed time-series econometric analysis to examine oil revenue fluctuations and political unrest between 1999 and 2020. They found a statistically significant correlation between oil booms and heightened political contestation. Ogundele and Bassey (2022) found that oil-rich communities experienced 65% more violent conflicts than non-oil regions due to grievances over environmental devastation and systemic exploitation.
III. Research Methodology
The chosen research methodology ensures a comprehensive exploration of oil dependency using a mixed-methods research design. It combines quantitative data (measurable economic indicators) with qualitative insights (stakeholder experiences and socio-political phenomena).
3.1 Population and Sample
The study includes national-level economic data and 20 expert participants for interviews. For quantitative data, a time-series dataset covering 24 years (2000–2024) was compiled from national and international databases, including the National Bureau of Statistics (NBS) and the World Bank.
IV. Data Analysis
Research Question 1: To what extent has Nigeria’s dependence on oil contributed to its political instability?
| Indicator | Statistical Value | Interpretation |
|---|---|---|
| Oil Revenue as % of Total Govt Revenue | 68.4% (average) | High fiscal vulnerability to oil price shocks. |
| Political Stability Index (World Bank) | -1.57 (scale -2.5 to +2.5) | Indicates weak political stability. |
| Correlation Coefficient (Revenue vs Instability) | r = 0.62 | Strong correlation shows oil income linked to unrest. |
Research Question 2: What are the economic consequences of oil dependency for Nigeria’s broader political economy?
| Indicator | Value | Interpretation |
|---|---|---|
| Gini Coefficient (Income Inequality) | 0.43 | Oil wealth is unevenly distributed. |
| Tax-to-GDP Ratio | 6.3% | Very low contribution; weakens public accountability. |
| Corruption Perception Index (TI) | 24/100 | Oil rents enable high-level corruption. |
Research Question 3: How has oil wealth contributed to regional conflicts in the Niger Delta?
| Indicator | Niger Delta Value | National Average |
|---|---|---|
| Youth Unemployment Rate | 37.5% | 22.4% |
| Number of Militant Attacks | 280 (avg. per year) | <40 (non-oil states) |
| Oil Spill Incidents (2006–2024) | 15,000+ | N/A |
4.1 Research Findings
- Revenue Vulnerability: Over 68% of government revenue is derived from oil, making the state extremely vulnerable to global price fluctuations.
- Political Violence: A strong relationship exists between oil windfalls and political violence, particularly during election cycles.
- Fiscal Imbalance: A low tax-to-GDP ratio (6.3%) reflects a lack of fiscal accountability.
- Niger Delta Hotspot: Regional conflict is fueled by poor revenue sharing, extreme environmental degradation, and high youth unemployment.
- Underdeveloped Non-Oil Sectors: Agriculture and manufacturing have been neglected due to oil dominance in public investment.
V. Conclusions
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. The resource curse is deeply political; oil wealth exacerbates elite competition and contributes to institutional fragility. Despite its potential, oil wealth has not translated into broad-based development due to a failure to invest in human capital and infrastructure.
5.1 Recommendations
- High-Employment Investment: Prioritize agriculture, manufacturing, and ICT with targeted support for SMEs to stimulate production.
- Enforce the Petroleum Industry Act (PIA): Ensure full implementation with revenue transparency mechanisms and NEITI audits.
- NDDC Redesign: Reform the Niger Delta Development Commission for greater accountability and community participation in revenue management.
- Fiscal Autonomy: Enhance subnational fiscal autonomy to reduce over-centralization and equitable governance.
- Renewable Energy Roadmap: Provide incentives for private sector investment in solar, hydro, and wind energy as long-term oil alternatives.
VI. References
- Adeyemi, S. (2025). Institutional decay and rent-seeking in Nigeria’s oil sector. Nigerian Journal of Governance Studies.
- Afolabi, A. (2023). Rentierism and democratic regression in Nigeria. Journal of Democracy and Development Studies.
- Ezechukwu, U. (2023). Resource curse and social inequality in Nigeria. African Development Review.
- Ikhide, B. (2024). Oil extraction and insurgency: Environmental justice in the Niger Delta. Nigerian Conflict and Peace Studies Journal.
- Oguamanam, C. (2022). Oil wealth and political instability: The Nigerian experience. Journal of African Politics and Governance.
