INFRASTRUCTURAL DEVELOPMENT
There
is now a large body of empirical literature on the appraisal of oil sector to
the Nigerian economy. However,
majority of the literature focus on the challenges faced by the Nigerian
economy as a result of the discovery of oil industry. Others have addressed
it’s impact to the development of the economy.
Eke (2007), empirically evaluate the relationship
between the oil industry and the improvement of the Nigerian economy. The data
suggest that discovery of oil sector has thrown many problems to Nigerians. The
data suggest that the benefits gained has made the Nigerian government loose
focus on administration as every individual and the government centre her hope
on the gains from the oil sector for survival. Moreover, instrumental variables
procedures indicate a strong connection between oil industry and development of
Nigerian state and economic growth in the long run if the government applies
more effort to development. Claude (2010), has highlighted the challenges of
oil sector in the nation’s economic growth. The result of the long run analysis
underscores the predominant role of the Nigerian government. The issue is that
industry is faced with poor funding for investment. Though the gains accrued
from the industry is overwhelming, the government never took it serious to
invest to the benefit of Nigerians.
Mbam (2010), carried out a comparative study of
several oil rich countries. The estimates in this study were based on data from
four oil producing countries in the world. The results showed that the main
determinant of investment and economic growth was cash flow. In Nigerian
situation, the government instead of using the cash flow for investment in
other sectors of the economy to enhance economic growth, they chose to hoard it
in their private account thereby retarding development in the long run. Zeufact
(2007), studied the investment behaviour of oil industry in Nigeria between
1986 and 1993.The findings revealed a negative influence on uncertainty on
investment. Corruption seems to also have played a decisive role in capital
accumulation. The government of military dictatorship chooses to acquire wealth
to their own personal account rather than the development of the Nigerian
economy. This led to the destruction of the Nigerian refineries and the
building of individual refinery to make more gains to their individual
benefits.
Adjasi O. and Ogumbe A.(2008), studied the effect of
oil industry on economic growth between 2000 and 2006 using a dynamic panel
data modeling setting. Results largely show a positive relationship between the
industry and the economic growth of the nation. Further analysis based on the
level of economic development and oil productions are conducted. The results
reveal that the positive influence on the nation’s economy is as a result of
the military dictatorship. The military as observed is not accountable to any
one and as a result, uses the countries oil wealth •the way they like. Equally,
when the democratic government took over, issues on development came in and
this adds to the high increase of per capita income and improved Gross National
Product (GNP).
Ochulor (2010), empirically assessed the relationship
between oil market improvement and long run economic growth in Nigeria for the
periods 1985 - 2005. The study used secondary data while four models of
multiple regressions were specified. The regression results which were obtained
using the ordinary least squares (OLS) show that sales from crude oil prices
statistically have no significant effect on economic growth in the country
during the periods 1985-2005.
The major implication of the findings is that if oil
industry is to significantly contribute to rapid economic growth, policies must
be fashioned out to eliminate those factors that blur the effectiveness of the
vehicle or transmission mechanism through which oil production prices influence
economic growth. Based on the, findings, there should be an improvement in the
utilization of the gains from oil sales. This will entail improvement in the physical
infrastructure, more efficient share of transfer and delivery and provision of
adequate policies on the sharing formula. Also, there should be improvement in
the institutional regulation, environment and legal frame work such that a
balance is maintained between the soundness and utilization of money accrued
from sales.
Ochiagha (2011), looked at the relationship between
oil industry and economic development using times series data for eight Arab
countries and the regression results showed a positive and significant
relationship between the growth rate of income and the growth rates of oil
production. Consequently, isolating the contribution of oil production to the
development of those countries has, proved difficult because the citizens of
those countries are considered benefiting from the gains of oil industry.
OIL SECTOR AND THE STANDARD OF LIVING OF NIGERIANS
Nigeria is blessed with abundant oil and other natural
resources, its own mismanagement and corruption has prevented it from fully
reaping the benefits of these resources. The country is one of the world’s
largest producers of oil, yet this has not had a significant impact on the
welfare and standard of living of its citizens, the majority of whom live below
the national poverty line (Nwaroh, 2012).
Oil is largely an enclave sector in Nigeria having a
few forward and backward linkages with the rest of the economy. It remains a
decisive force for economic performance. Its impact is transmitted through the
income effect mediated through public spending and imports. Oil GDP is clearly
more volatile than the non-oil GDP and often experiences rapid growth in value
added with the tread usually reflected in volatile growth for the economy as a
whole.
Dappa (2011), describes the impact of oil on the
standard of living of Nigerians as follows:
Employment Opportunities
Oil industry in Nigeria has improved the standard of
households through the employment of their young graduates whom through salary
yield improves the living standard of many households.
Infrastructural Development
Through the income yield from oil sector, the government-Federal,
state and local councils develop their areas of jurisdiction infrastructurally.
Abuja got developed infrastructurally as a result of the income yield from oil
sector.
Re-distribution of income
Oil
sector helps in the re-distribution of income among regions which improves the
standard of living of Nigerians especially those in rural areas.
Increase in Per Capita Income Per Head
The impact of oil transmitted through the income
effect. The living standard of individuals got improved. The per capita income
per head will increase and most households will meet up with their scale of
preferences.