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How to Reverse Nigeria’s Oil Curse

The inauguration of Nigeria’s new president, Muhammadu Buhari, sets the stage for an unprecedented alliance of public- and private-sector actors to perform something close to a miracle: reverse the ravages of the so-called oil curse.

The tough-minded ascetic, who was elected on an anticorruption platform, aims to clean up practices in his country’s notoriously opaque and criminal national oil company, the Nigerian National Petroleum Corporation (NNPC). If multinationals and Western governments join forces with Buhari, Nigeria could be transformed from an object lesson in how hydrocarbon wealth paradoxically cripples developing nations into a model for its resource-rich neighbors to emulate.

Of the world’s nearly 60 oil-producing countries, a mere half dozen have escaped the oil curse. As they discover oil—and their governments discover the temptations of an unaccountable revenue stream—other economic sectors wither. Unemployment rises. Corruption grows pervasive. Oil revenues are squandered on conspicuous consumption by members of ruling networks while populations become poorer. Alienated groups rebel.

And it’s not just the locals who suffer. Western oil companies pay a hefty price in the form of increased personnel costs and security measures, repudiated contracts, production stoppages, “corporate social responsibility” outlays, and, when all else fails, undesired divestiture. Meanwhile, international donors pour precious development funds down a seemingly bottomless hole. 

Nigeria is a textbook case of this syndrome. A once-vibrant economy that included manufacturing, long-distance trade, and agricultural production so abundant that it fed much of West Africa has given way to an oil monoculture. Attacks and kidnappings in the oil-producing south have declined, to be replaced by what officials call industrial “bunkering”—the theft of crude by the barge-load. Oil oozing from sabotaged pipes has poisoned precious marshland. On the other side of the country, the emergence of the Boko Haram insurgency can be partially ascribed to acute corruption and gross regional inequalities associated with Nigeria’s curse.

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