Nigeria's economy is struggling to
leverage the country's vast wealth in fossil fuels in order to displace
the crushing poverty that affects about 57% of its population.
Economists refer to the coexistence of vast wealth in natural resources
and extreme personal poverty in developing countries like Nigeria as the
"resource curse". Although "resource curse" is more widely understood
to mean an abundance of natural resources which fuels official
corruption resulting in a violent competition for the resource by the
citizens of the nation. Nigeria's exports of oil and natural gas—at a
time of peak prices—have
enabled the country to post merchandise trade
and current account surpluses in recent years.
Reportedly, 80% of
Nigeria's energy revenues flow to the government, 16% cover operational
costs, and the remaining 4% go to investors. However, the World Bank has
estimated that as a result of corruption 80% of energy revenues benefit
only 1% of the population. In 2005, Nigeria achieved a milestone
agreement with the Paris Club of lending nations to eliminate all of its
bilateral external debt. Under the agreement, the lenders will forgive
most of the debt, and Nigeria will pay off the remainder with a portion
of its energy revenues. Outside of the energy sector, Nigeria's economy
is highly inefficient. Moreover, human capital is underdeveloped—Nigeria
ranked 151 out of countries in the United Nations Development Index in
2004—and non-energy-related infrastructure is inadequate.
From 2003 to 2007, Nigeria attempted to implement an economic reform program called the National Economic Empowerment Development Strategy (NEEDS). The purpose of the NEEDS was to raise the country's standard of living through a variety of reforms, including macroeconomic stability, deregulation, liberalization, privatization, transparency, and accountability. The NEEDS addressed basic deficiencies, such as the lack of freshwater for household use and irrigation, unreliable power supplies, decaying infrastructure, impediments to private enterprise, and corruption. The government hoped that the NEEDS would create 7 million new jobs, diversify the economy, boost non-energy exports, increase industrial capacity utilization, and improve agricultural productivity. A related initiative on the state level is the State Economic Empowerment Development Strategy (SEEDS).
A longer-term economic development program is the United Nations (UN)-sponsored National Millennium Goals for Nigeria. Under the program, which covers the years from 2000 to 2015, Nigeria is committed to achieve a wide range of ambitious objectives involving poverty reduction, education, gender equality, health, the environment, and international development cooperation. 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. President Olusegun Obasanjo's campaign
against corruption, which includes the arrest of officials accused of
misdeeds and recovering stolen funds, has won praise from the World
Bank. In September 2005, Nigeria, with the assistance of the World Bank,
began to recover US$458 million of illicit funds that had been
deposited in Swiss banks by the late military dictator Sani Abacha, who
ruled Nigeria from 1993 to 1998. However, while broad-based progress has
been slow, these efforts have begun to become evident in international
surveys of corruption. In fact, Nigeria's ranking has consistently
improved since 2001 ranking 147 out of 180 countries in Transparency
International's 2007 Corruption Perceptions Index.