Nigeria's fragile economic prospects are mostly due to its reliance on oil exports says World Bank

This was revealed in the World Bank's most recent study, "A Better Future for All Nigerians: Nigeria Poverty Assessment 2022."

According to the World Bank, Nigeria's economy is now increasingly vulnerable to global oil output and price fluctuations.

Oil has been more of a curse than a blessing in Nigeria. The country's failure to realize its full potential is a textbook example of what scholars call the "resource curse," which is caused by weak governmental institutions and bad governance in managing large revenues.

The resource curse, often known as the "paradox of plenty," is a well-studied inverse relationship in which wealth has a negative consequence. Nigeria, Africa's greatest oil producer, sixth-largest exporter, and holder of the world's tenth-largest proven oil resource, is probably such a "cursed" country.

The abundance of natural resources can have disastrous consequences. Oil-exporting countries such as Nigeria, Venezuela, Angola, and the Democratic Republic of the Congo have seen their economies and livelihoods destroyed, but many countries throughout history, such as Norway, Canada, and Botswana, have bucked the curse through strong state management and anti-corruption institutions.

The research states, "Nigeria's growth performance was deteriorating even before the COVID-19 problem."

"Between 2000 and 2014, Nigeria experienced a period of steady growth, with the economy growing at a rate of roughly 7% per year, outpacing the predicted annual population growth rate of 2.6 percent." However, real GDP growth fell to 2.7 percent in 2015, then -1.6 percent in 2016, as global oil prices fell, triggering Nigeria's first recession in nearly two decades. Following that, there has been no recovery in growth. It lags behind both population growth and comparable country growth over the same time span.

"Poverty reduction will be substantially more difficult when global growth slows. Nigeria's reliance on oil exports is one of the main reasons for the country's bleak growth prospects, and it could also hinder any growth from being broad-based."

According to the report, oil accounted for more than 80% of Nigeria's total exports in 2019, although accounting for only 10% of GDP.

"In fact, since the 1970s, this has been true every year." "As a result, Nigeria's economy is very vulnerable to changes in global oil supply and prices," the paper notes.

"Moreover, despite the importance of oil for exports, Nigeria's extractive sectors do not employ a great number of people."

"This means that any gains from oil production would not necessarily be shared across employees and households: mining and extractive industries employ less than 1% of working Nigerians, with the proportion significantly lower among those from low-income families."