Dutch Disease and Nigeria Oil Economy

Abstract

The paper examines why the enormous promises held out by the inflow of revenues from oil export has not made any significant improvement in the lives of Nigerians and the economy as a whole. The paper traces the problem to the inherent contradictions, anomalies, and problems associated with countries that depend on oil as their primary export commodity. The revenue it generates when prices are high tends to cause “Dutch-Diseases”, high oil revenue raises exchange rates, promotes an adverse balance of payments when prices fall, reduce the incentive to risk investment in non-oil sectors like agriculture and manufacturing. Just one example is Nigeria, which, since initiating the export of oil has seen its agricultural sector collapsing and now it is entirely dependent on imported food. The paper draws attention to the political imperative strengthening governance to address these anomalies.