Economics Essay范文节选

The struggling economy of Nigeria recently Economics Essay
 

The economy of Nigeria has continuously struggled to leverage the country’s vast wealth in fossil fuels in order to displace the crushing poverty that affects a little over half of its fast increasing population. The coexistence of vast natural resources wealth and extreme poverty has been referred to as the “Dutch disease” or “resource curse” by many economists and Nigeria clearly suffers from this disease. Despite the country being blessed with vast quantities of oil and is the sixth largest oil exporter in the Organization of Petroleum Exporting Countries (OPEC), which has generated billions of dollars in revenues over the last forty years since oil was found in Nigeria, this has not translated into an improved economy for the country. Instead through inefficiencies (infrastructural and institutional), corruption, abuse of natural monopoly powers, mismanagement, smuggling, bureaucratic bottlenecks and excessive subsidizing, the supply of refined crude oil in the country has virtually collapsed.

 

In recent years, the exports of oil and natural gas at a time of peak prices have enabled the country to post merchandise trade and current account surpluses. By the estimation of the World Bank, 80 percent of energy revenues in Nigeria benefit only a fraction of the population as a result of corruption. Within the current decade, Nigeria achieved a milestone agreement with the Paris Club of lending nations to eliminate all of its bilateral external debt. Under the agreement, the Paris Club will forgive most of the debt, and Nigeria will pay off the remainder with a portion of its energy revenues. Before this, about 75 % of Nigeria’s foreign debt was owed to Paris Club countries. A large chunk of this debt was due to interests and payment arrears. Nigeria's external medium and long-term debt was known to be tentatively estimated at US$3 1.9 billion (equivalent to 78 percent of GDP) at the end of 2000, and consisted of obligations to Paris Club creditors (US$24.4 billion), multilateral creditors (USS3.8 billion), and commercial creditors (US$3.6 billion). A small amount of debt (US$140 million) was also estimated to be owed to non-Paris Club bilateral creditors. The largest bilateral creditor is the UK (with about 27 percent of total Paris Club debt), followed by France, Japan and Germany (at about 15-17 percent), and Italy, the Netherlands, and the US (at less than 10 percent). Among the multilateral institutions, the World Bank (IBRD and 1DA) and the African Development Bank (ADB and ADF) were the largest creditors, with debt stocks of US$2.6 billion and US$1.1 billion, respectively. Nigeria has no outstanding credit or loans to the Fund. Outside of the energy sector, the country’s economy has been highly inefficient with human capital also being underdeveloped.

 

2003 to 2007 saw Nigeria implementing an economic reform program called National Economic Empowerment Development Strategy (NEEDS) with a related initiative at the state level called the State Economic Empowerment Development Strategy (SEEDS). NEEDS, with the purpose of raising the country’s standard of living- through a variety of reforms including deregulation, liberalization, privatization, macroeconomic stability, transparency, and accountability- addresses basic deficiencies such as the lack of freshwater for household use and irrigation, unreliable power supply, decaying infrastructure, impediments to private enterprise, and corruption. The government hopes that NEEDS will create 7 million new jobs, diversify the economy, boost non-energy exports, increase industrial capacity utilization, and improve agricultural productivity.

 

A long-term economic development program is the United Nations (UN) sponsored National Millennium Goals for Nigeria. Under the program covering the first fifteen years of the 21st century, Nigeria is committed to achieve a wide range of ambitious aims involving poverty reduction, education, gender equality, health, the environment, and international development cooperation. These are referred to as the Millennium Development Goals (MDGs). In an update released in 2004, the UN found that Nigeria was making progress toward achieving several goals but was falling short on others. Specifically, Nigeria had advanced efforts to provide universal primary education, protect the environment, and develop a global development partnership. However, the country lagged behind on the goals of eliminating extreme poverty and hunger, reducing child and maternal mortality, and combating diseases such as human immunodeficiency virus/acquired immune deficiency syndrome (HIV/AIDS) and malaria. A prerequisite for achieving many of these worthwhile objectives is curtailing endemic corruption, which stymies development and taints Nigeria’s business environment. Corruption mostly harms Nigerians themselves, but the country is widely known around the world for various fraudulent activities.

 

The oil boom of the ‘70s led Nigeria to neglect its strong agricultural and light manufacturing bases in favour of an unhealthy dependence on crude oil and by the beginning of the 2000, exports of oil products accounted for more than 98 % of export earnings and about 83 % of federal government revenue. New oil wealth, the concurrent decline of other economic sectors, and a lurch toward a statist economic model geared up massive migration to the cities leading to increasingly widespread poverty, especially in rural areas. Accompanying this trend, by 2000 Nigeria's per capita income had plunged to about one-quarter of its mid-1970s high, below the level at independence. Along with the endemic malaise of Nigeria's non-oil sectors, the economy continues to witness massive growth of "informal sector" economic activities, estimated by some to be as high as 75 % of the total economy.

 

Nigeria's proven oil reserves are estimated to be 37.2 billion barrels as of January 2010. The majority of reserves are found along the country’s Niger River Delta and offshore in the Bight of Benin, the Gulf of Guinea and the Bight of Bonny. Current exploration activities are mostly focused in the deep and ultra-deep offshore with some activities in the Chad basin, located in the northeast of the country. Nigeria has an estimated 100 trillion cubic feet of proven natural gas reserves as well. Nigeria is a member of the Organization of Petroleum Exporting Countries (OPEC), and in mid-2001 its crude oil production was averaging around 2.2 million barrels per day. A collapse of basic infrastructure and social services since the early 1980s was accompanied by poor corporate relations with indigenous communities, vandalism of oil infrastructure, severe ecological damage, and personal security problems throughout the oil–producing Niger Delta region which has continued to plague Nigeria's oil sector. Efforts are underway to reverse these troubles with amnesty recently granted to the region militancy groups who have over the years been involved in the region’s insecurity through vandalism of oil infrastructure, kidnapping and hostage taking of oil workers especially the expatriates. The major multinational oil companies have launched their own community development programs. The immediate past president included developmental programs for the oil-producing Niger Delta region in the ‘7-point Agenda’. The Niger Delta Development Commission (NDDC) has been created to help facilitate economic and social development in the region. With all these programs and many yet to be launched, there are high hopes that the NDDC can reverse the impoverishment of local communities. Meanwhile, the United State remains Nigeria's largest customer for crude oil, accounting for 40% of the country's total oil exports with Nigeria providing about 10% of overall U.S. oil imports and ranking as the fifth-largest source for U.S. imported oil. Apart from the United Kingdom, Nigeria is the largest trading partner of the United States with the trade balance overwhelmingly favouring Nigeria, due to oil exports.