Brodie's Public Policy and Global Governance Blog

 I was surprised to read that the booming oil industry in Nigeria has generated a "brain gain" for the impoverished country. This surprise came because of what many have termed the "resource curse." The resource curse is said to occur in countries that rely primarily on the export of a single commodity and especially those that only export oil. It turns out that many single commodity exporting countries experience poor governance and GDP growth rates far below those of similar countries that do not possess any resources. Some argue this results froma lack of competitiveness in a single commodity economy, political corruption that is inherent in these economies and volatility of revenue of commodities that can have wild fluctuations in their price. It is important to note that while many countries with an abundance of natural resources suffer from the resources curse, the very existence of these resources is not a causal reason for the onset of the curse.

Nigeria has been able to escape this curse. While most of the population of Nigeria are still incredibly poor, the oil boom has helped to strengthen other sectors of Nigeria's economy. The telecommunications, banking and energy sectors are growing at double and triple digit rates and the economy is forecast to grow at roughly 9% during 2008. This has spurred many ex-patriats to come back home. While many of these people have been able to find lucrative careers outside of Nigeria the lack of talent in the Nigerian economy means that these people can find even better jobs in their home country. Many Nigerian companies have CEOs that are as young as 30, which is unheard of in most of the West. The rise in energy prices has to have contributed to this situation with prices more than doubling in the last few years.

Government corruption will be a continuing challenge for this fledgling economy that may pose a roadblock towards future growth but government officials are already privatizing many key industries in Nigeria. It is not always easy to diversify the activities that take place within an economy but it appears that Nigeria, aided by soaring energy prices has been able to do so. The key challenge will be to remove the dependence of economic growth in the country on oil and smooth the volatile GDP growth that the country has experienced in the past. The benefits of growth in the country will also have to be much more equitably spread to lift some of the poorest Nigerians out of poverty. Rebel groups have been an enormous problem for the oil industry in Nigeria because the benefits of the oil industry have not helped many of the poorest Nigerians.