Appraisal On The Impact Of Oil Industry On The Economic Development Of Nigeria
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Appraisal On The Impact Of Oil Industry On The Economic Development Of Nigeria
ABSTRACT
This study focusses on the oil industry’s impact on Nigeria’s economic development. The statistics presented above were gathered through the delivery of questionnaires. The mean analysis method was used to analyse the responses and draw meaningful conclusions from them.
It was discovered that factors such as the oil industry serve as government revenue by paying taxes, granting loans to farmers to improve agriculture, creating employment opportunities, and providing social amenities are some of the impact of the oil industry in order to improve Nigeria’s economic development.
Chapter one
INTRODUCTION
In this chapter, we will explore the study’s history, issue statement, purpose, significance, and some research questions, as well as the study’s scope and limitations.
1.1 Background of the Study
Oil is thought to be a mixture of organic chemicals obtained primarily from the remains of microscopic plants and animals that lived in the sea millions of years ago.
Special conditions and long periods of time were required for these remains to undergo intricate chemical transformations to become oil. These are occasionally accumulated in accumulations that humans can recognise and exploit.
Oil exploitation began more than a century ago, when drilling was conducted near oil seeps, indicating that oil existed beneath the surface. Today, geologists use considerably more sophisticated techniques such as seismic surveying and satellite imaging, and powerful computers help them interpret their findings. At the end of the day, only the drill can decide whether or not oil is there in the ground.
Nigeria, which has been one of the world’s leading producers of palm oil for almost two centuries, has suddenly become one of the world’s most productive countries, producing an average of 2.3 million barrels per day.
Nigeria’s oil business has an interesting parallel with the country’s once-thriving palm oil industry. The palm oil trade was a critical reason in the British decision to preserve and later Amex the area (the oil Rivers protectorates) in the late nineteenth century, at the height of Europe’s ambition for Africa.
This is the same location where the majority of Nigeria’s oil exploration takes place now. The oil business in Nigeria is one of the most important sectors of the economy.
It has risen to prominence and been the focal point of the Nigerian economy since its beginnings in the 1950s. However, even after two decades of the oil boom, economic industrialisation remains a fantasy.
Nigeria was previously an agriculture-producing economy, with exports primarily consisting of agricultural products such as cocoa, rubber, and groundnut, among others. However, the picture has changed dramatically, with the oil industry taking precedence over other sectors of the economy, including agriculture.
It’s no surprise that the country has significantly reduced its reliance on imported food, which is paradoxical given that agriculture remains the backbone of the economy, employing over 70% of the workforce.
By the early 1990s, petroleum production contributed for more than 90 percent of foreign exchange receipts (97 percent of local export receipts) and ten percent of GDP. More importantly, the rising oil revenue and declining GDP in the late 1980s indicate that the impact of the oil boom in the preceding decades was so detrimental to non-oil economic activities that even increasing oil revenue after the low rate of 1986 was insufficient to initiate or sustain a GDP recovery.
Some structural aspects of the economy reveal Nigerian oil revenues’ failure to provide the impetus for growth in other sectors, as well as the basis for what has been essentially an uneasy balance between energy and economic growth in the country, with per capita income declining from about $1,000 (in current dollars) in 1980 to about $240 in 1991.
The evolution of production structure reveals that agriculture’s share of GDP fell to 37 percent in 1997 and 41 percent in 1986, despite the advent of the structural adjustment program (SAP), which emphasised the need to re-establish agriculture as a growth sector.
The share of industry (manufacturing plus mining) increased from 29 percent in 1986 to 28 percent in 1991, but more importantly, there has been almost no change in the share of manufacturing (around 7-8 percent) over the last ten years, and oil revenues show that it has failed to strengthen either the manufacturing or agricultural base of the economy.
Furthermore, the oil boom year and enormous government spending, particularly on infrastructure and other non-tradables, did not prepare the economy for the early 1980s oil production cutback and price shock in 1986.
As a result, external debt grew from a reasonable $20 billion in 1980 to almost $30 billion in 1992. The debt servicing is like the economy as a whole, extremely dependent on oil income, although the oil industry usually received much from successive Nigerian governments, and foreign oil firms received the necessary inventories.
5o secure their continuous presence, the tale of oil in Nigeria is one of squandered opportunities, administrative disorganisation, increased public spending, and an increasing reliance on oil money for economic growth.
1.2 Statement of Problem
As the economy’s major sector, the oil industry should have some beneficial spillover effects on other sectors, such as technological transfer and forward and backward linkage.
The rapidly rising population developed a preference for a good quality of life, and social well-being was prioritised in the rest of the economy. This oil business is essentially an enclave that is more interwoven into the economies of Europe, America, and France than Nigeria.
Over the last few decades, Nigeria’s economy has been increasingly dependent on oil earnings. During the 1986-92 period, oil export revenues increased at an average rate of 13 percent per year, while GDP measured in current US dollars decreased by an average of oil export revenues increased at an average of oil export revenues, implying greater dependence.
Over time, the oil industry has made significant contributions to the expansion of Nigeria’s economy. Based on this premise, the researchers intend to assess the impact of the oil industry on Nigeria’s economic progress. Using SPDC as a case study.
1.3 PURPOSES OF THE STUDY
The study’s primary goal is to analyse the impact of the oil industry on Nigeria’s development. The aims include identifying the precise role of shell in Nigeria’s economic development.
2. Determine the impact of oil revenue on each area of the economy.
3. To highlight the bad aspects of Shell and the oil sector.
1.4 Significance of the Study
Nigeria’s oil business shares an unusual feature with the country’s once-celebrated palm oil industry. In light of this, the importance of the first place demonstrates that Nigeria has traditionally been an agriculture producing economy.
Nigeria’s oil industry is now one of the country’s most important economic sectors. Since its foundation in 1859, it has risen to prominence and become the focal point of Nigeria’s economy.
1.5 RESEARCH QUESTIONS.
The researchers consider the following question while doing their investigation.
i. How effective are the oil industry’s operations in driving Nigeria’s economic development?
ii. What are the primary challenges to the oil industry’s efficiency and productivity in terms of economic development in Nigeria?
iii. What actions and strategies could be used to improve the efficiency and productivity of Nigeria’s oil industry in order to boost economic development?
1.6 SCOPE/LIMITATIONS OF THE STUDY
The research project will be limited to shell companies in order to investigate the impact of the oil industry on Nigeria’s economic progress.
The sectors of the economy that are influenced by oil revenues will form an integral part of the scope.
1.7 Limitations of the Study
The researcher encountered a variety of limitations when doing this investigation. The most obvious limits were time, budget or expense, and literature supplies.
Time Factors: The researcher’s main constraint was time; he had additional courses to complete in addition to the seminar and term papers.
Finance: The difficulty of finance cannot be overstated. In this effort, the expense of procuring materials, transportation to SHELL PETROLEUM DEVELOPMENT COMPANY (SPDC) in Port Harcourt, photostatting the materials, purchasing stationery, typing, and binding exacerbated the study’s budgetary constraints.
Literature Materials: The relative scarcity of material, as well as the oil firms’ reluctance to provide information about the oil business, contributed to the researchers’ limits.
Despite this limitation, efforts have been made to provide decent work.
1.8 Definition of Terms
The researcher defines the following words to facilitate understanding of the study. Thus:
Revenue: The money obtained by the government through taxes or by an organisation, etc., from commerce.
Economy: The relationship between production, trade, and the supply of goods in a specific country or region.
Expenditure: The amount of money spent on the substance of something.
A mainstay is a person or object that is essential to something’s existence or success.
Industry is the gathering of individual firms that manufacture similar commodities or the creation of items from raw materials, particularly in factories.
Oil: A thick liquid found in rock beneath the ground.
Barrels are huge spherical containers often made of wood or metal with flat ends and covered sides.
Per capita: For each individual.
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