http://crowncapitalmngt.wordpress.com/ Nigerian sauntered into big resource wealth in the 1960s when oil was discovered in exploitable quantity. With huge revenues pouring in she looked poised to become an economic giant. Before the advent of oil, the country was not doing badly, with our growing solid mineral extractive sector and huge agriculture. Nigeria is a nation so vast and diverse. A walk through varying climatic conditions from South to the North offers diverse potential for any kind of agricultural endeavour. So are the natural resources so prevalent and diverse.

1. Nigeria: Our Resource
Curse - Dutch or Nigerian
Disease?

2. OPINION
Nigerian sauntered into big resource wealth in the 1960s
when oil was discovered in exploitable quantity. With
huge revenues pouring in she looked poised to become
an economic giant. Before the advent of oil, the country
was not doing badly, with our growing solid mineral
extractive sector and huge agriculture. Nigeria is a
nation so vast and diverse. A walk through varying
climatic conditions from South to the North offers
diverse potential for any kind of agricultural
endeavour. So are the natural resources so prevalent
and diverse. Our endowments, in people, culture,
climate and resources placed us on a pedestal to top all
economic charts.

3. Despite the hundreds of billions of dollars the country
had grossed in oil revenues, our developmental
experience has been disastrous. Our present economic
statistics paints a graphic picture of the sorry state we
found ourselves. While our average oil revenue per
capita in the mid 1960s was US$33, our GDP per
capita was US$245. In the 2000s, our oil revenue per
capita had risen to US$325 but the GDP per capita had
remained at the 60s level of US$245. What this mean is
that the huge oil revenue since the 60s has not
translated to any real economic development and
improved standard of living. If you remember that
245dollars cannot do for you now what it could in
1965, standard of living had actually nose-dived.

4. Economic scholars/analysts studying the trend in many
resource rich countries have noticed a negative
developmental pattern in most of them, what they
have come to call the Resource Curse or the Dutch
Disease. So infamously named after the Dutch
experience, the Dutch disease is a syndrome where
exploitation of abundant natural resource exerts a
negative drag on long term economic growth. Call it
the curse of oil in our case. While some nations are
shinning exceptions and others showing growing
resistance/immunity to the disease, we are witnessing
a growth of deadly strain I can only call the Nigerian
disease.

5. The trend was first observed in the Netherlands in the
50s when abundant natural gas production brought
rapid foreign revenue but declining local productive
sector. There are exceptions as demonstrated by
Norway, Australia, Chile, Canada and Botswana.
Even though the phenomenon is prevalent in most
resource rich countries the fact that countries like
Norway and others successfully mitigated the curse
reinforced the belief that the syndrome is only a result
of poor institutions of government.

6. The Dutch Disease manifests many symptoms, chief
among which is the inability of local productive
economy to compete as a result of bloated value of
local currency helped by inflow of foreign currency.
The high exchange rate means local goods and
services are expensive, making them uncompetitive in
international market and even encouraging import of
cheaper alternatives. Other symptoms of the resource
curse, some of which cannot be directly related to the
Dutch experience, include weak institutions, official
corruption, assertive resource nationalism,

7. internal unrest and even external aggression from
envious neighbours. Many of these factors are
common in our system but the main effect of the
syndrome- the high exchange rate that makes local
products uncompetitive is not the case in Nigeria.
Even countries that found themselves caught in this
economic web are wriggling free, developing
resistance to the resource curse. What then makes the
Nigerian case so unique? This article is only x-raying
those absurdities that make our case legendary.