Nigeria is Africa's biggest oil producer. The state of Lagos alone has a bigger economic output than Kenya. Moreover, Nigeria generates a larger gross domestic product (GDP) than all other West African states combined. But despite the natural wealth, experts warn of rising poverty and social unrest.
According to Nigerian economist Afolabi Olowookere, whom The Guardian Nigeria cited, the oil sector's share of government revenue dropped from nearly 47% in 2017 to a meager 7.4% in the first half of 2022.
Nigeria has failed to benefit from the global oil price boom. As a result, the oil sector's share of Nigeria's GDP has also virtually halved since 2010, from more than 13% to just under 6%.
Nigeria's problem is that it relies almost entirely on expensive imports to meet its gasoline needs. Nigeria has four state-owned refineries, but they have become dilapidated and idle due to mismanagement.
The government pours billions of dollars into fuel subsidies yearly to cushion the social consequences. However, consumers then feel the costs at the pump. This has even led to the smuggling of cheaper gasoline from neighbouring countries. Much of the oil and fuel shortage is due to theft.
The country's foreign exchange reserves are also in dangerous waters. They continue to shrink with each passing year.
"Nigeria is in a difficult economic situation that continues to deteriorate," World Bank experts wrote. Experts have long called for Nigeria to move away from oil dependence.
Transparency International's ranking shows how corruption continues to cripple Nigeria's economic activity. It is ranked 154 out of 180 countries surveyed in 2021, significantly deteriorating from position 144 in 2018.
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