Where do the oil rents go? An investigation into the national account of Nigeria (1980-2010)

By

ACKNOWLEDGEMENT

I would like to thank my supervisors, friends and family, without their support this research study would not have been possible.

DECLARATION

I adjudge that the entire content of this dissertation is entirely my own work; the content used in this dissertation has not been submitted before in any educational institution and represents my own opinion.

Signed __________________ Date _________________

TABLE OF CONTENTS

ACKNOWLEDGEMENTII

DECLARATIONIII

CHAPTER 1: INTRODUCTION1

Background Issue1

Aims and objectives of the Study3

Research Questions3

Scope of the Study4

Structure of Dissertation4

CHAPTER 3: METHODOLOGY6

Introduction6

Research Method6

Research design7

Qualitative Research: Secondary Data8

Data: Variables10

Dependent Variables10

Independent Variables11

Rationale for a Quantitative Research11

Data Analysis11

Regression analysis12

Limitation of Methodology13

Research validity14

Trustworthiness15

CHAPTER 4: ANALYSIS AND DISCUSSION16

Introduction16

Regression16

Correlation20

Research Questions Analysis22

Overall Validity of the Model26

Independent Factor Validity27

Discussion27

Statistical findings27

Oil Rents Nigeria In Past Decades28

Impact of Oil Rents On The Nigerian Economy30

Increase In Oil Revenue33

Impact of resource endowment on economic growth35

Key Challenges And And Policy Actions38

Resource curse and Nigeria41

Lack of Humanitarian Development44

Political Implications of Oil in Nigeria46

REFERENCES48

APPENDIX51



CHAPTER 1: INTRODUCTION

Background Issue

The violent conflict between the oil companies and the local communities in Nigeria is not new. The ramifications of the oil issue in Nigeria and key consequences for the society relations are renowned. What is unknown is the prevalence of the rentier space, the operational mechanism, the origin and the continuation of the conflict. The federal government also faces the conflict in the Niger Delta, where a guerrilla spent years attacking the interests of the oil industry because of environmental degradation in the region and the distribution of oil revenues. The high stakes rent seeking political and culture in Nigeria has been facilitated by two important factors according to the present literature, that is, the systematic decline into a regime of lawlessness and the political extremis throughout the military dictatorship. Therefore, it is important to determine the extent to which these and other factors have influenced the oil rent allocation in Nigeria.

A political problem is compounded by the widespread poverty (70 percent of the population lives on less than two dollars a day) and high income inequality, unjustifiable given the enormous wealth of natural resources enjoyed by Nigeria (Humphrey, Sachs, Stiglitz, 2007, 12-56). Rampant corruption in the management of public resources, including oil revenues, which represents 80 percent of them, and the lack of a culture planner and redistributive policies, explain the inadequate provision of funds for the financing of elementary services, including basic education, health and infrastructure. In these circumstances it is not surprising the proliferation of crime, including kidnapping are the scourge of econonomy, plaguing the country (Diprose, Ukiwo, 2008, 23-67). It is obvious that the corruption in the natural resources is evident in most of the courtiers. Since 2003, Nigeria has embarked on an ambitious agenda of reforms aimed at enhancing governance in public financial management (PFM), banking services, power and telecommunications infrastructures, and transparency and accountability in the oil sector (Humphrey,Sachs,Stiglitz,2007,12-56). The reforms have led to strong economic growth during 2003-07 (Ariweriokuma, Soala, 2009, 54-79). However, the corruption may result as the inefficient use of the oil resources ...