EFFECT
OF OIL DROP ON THE ECONOMY OF NIGERIA
CHAPTER
ONE
1.0
INTRODUCTION
1.1
BACKGROUND OF STUDY
One
of the greatest threats to economic and political development of any nation is
corruption (Mohammed, 2013). Corruption has been identified as one major obstacle
militating against rapid growth and development of the Nigerian economy
(Nagari, Umar & Abdul, 2013). It undermines good government, fundamentally
distorts public policy, leads to the misappropatriation of resources, harms the
private sector and private sector development, and particularly it hurts the
poor (Ajao, Dada & Olaoye, 2013). They also state that as a result of the
negative effects of corruption on development, Nigerian government and
international organizations seek for solution on how to combat the menace.
Researchers has that corrupt practices have been perpetrated in governance,
public and private places since the pre- colonial era to the colonial period
and through independence to present Nagari et al., 2013). Corruption is an
ancient practice that has been traced back to pre-biblical time and made itself
known in the ancient civilizations of developed and developing countries
(Nwankwo, 2014). Corruption is a disease, which eats into political, cultural
and economic growth of any country and destroys the functioning of various
organs of the government.
The
rise of public administration and discovery of petroleum and natural gas are
two major events seen to have led to a litany of ignoble corrupt practices in
the country (Wikipedia, 2014). Corruption steals money social programmes and
services through bribery, kickbacks and inflated pricing of contracts and
public projects (Obioma, 2012). He also notes that corruption breeds crises in
the country turn out to constitute some of the greatest dangers to the security
of the nation.
The
level of corruption and poor governance prevailing in the Nigerian system still
remain high, albeit there are so many efforts by economic and financial crime
commission (EFCC), independent corrupt practices and related offences
commission (ICPC), Transparent international, World Bank and many other
organizations to reduce it (Akinwale, 2012).
Baghebo
and Atima (2013) stress that since the Royal Dutch shell discovered oil in the
Niger Delta in 1956, precisely in Oloibiri, in Bayelsa state, the oil industry
has been marred by political and economic strife largely due to a long history
of corrupt military regimes, civil rule and complicity of multinational
corporations, notably Royal Dutch Shell.
Ribadu
(2006) as cited in Ajao, Dada and Olaoye (2013) say that the history of
corruption in Nigeria is strongly rooted in the over twenty nine (29) years of
military rule, out of forty six
(46)
years of her statehood since 1960.
According to him, successive military regimes subdued the rule of law,
facilitated the wanton, looting of the public treasury, decapitated public
institutions and free speech and instituted a secret and Opaque culture in the
running of government business. The result was total insecurity, poor economic
management, abuse of human rights, ethnic conflicts and capital flight. Prior
Studies have looked at corruption in Nigeria
(Bakare, 2011. Lawal & Victor, 2012; Ogundiya, 2009; and Mohammed, 2013).
However, no prior study has
focused on corruption in the oil
and
gas industry in Nigeria. Hence there is need for this study.
The
focus of the exercise is on corruption in the oil and gas industry in Nigeria,
keeping constant the existence of corruption in the other aspects of the Nigerian
society economic, social, political, religious, academic institution and
corruption in the services, etc. the nature, types, consequences, efforts made
to reduce corruption in the oil and gas sector in Nigeria
1.2
statement of problem
over
the years the oil sector has really being the major source of Nigeria source of
income. Nigeria participated fully in forex because of the oil export, but
today there has being a huge drop in the price of oil in Nigeria. it is believe
that usa patronizes the Nigeria oil sector are no longer buying from Nigeria;
reason is because more oil sectors has being discovered, and these oil sector
sell at a subsidized rate compare to Nigeria. so for the country to remain in
business the price of oil must drop. voices were heard that this will have a
huge effect on the real gross domestic product.
1.3 research
questions
1.
Does crises and corruption have any effect on the oil drop in Nigeria?
2.
Since there is drop in the price of oil, meaning that export rate is reduced,
why can’t the government release the oil more to individuals?
3.
is there any way the government can reduce the effect of crises and corruption
on the oil production and exportation from Nigeria?
4.
Is there any way the government can settle crises and reduce corruption
especially in the oil sector?
5.
Can the real gross domestic product of the country grow with high rate of
export?
1.4 METHODOLOGY
This
paper, which is part of a larger research project with a comparative research
design, aims to respond to this research gap. To this end, it uses a newly
elaborated comprehensive matrix of central contextual factors concerning the
potential relationship between resources and violence. Taking into
consideration the above‐mentioned
assumptions of the recent and more differentiated branches of the resource
curse theory as well as the general theoretical approaches of peace and
conflict research (Imbusch 2005; Senghaas 2004) and the debate re‐ garding the “political
economy of war” (Ruf 2003), this matrix consists of the set of contex‐ tual factors presented
in Table 1 below.
1.5 AIM AND
OBJECTIVES OF STUDY
1.
To determine the effect of export rate on the real gross domestic products
2.
To investigate the effect of oil drop on the availability of petroleum in
Nigeria.
3.
To determine how to balance the export rate and the real gross domestic product
of Nigeria.
1.6 SIGNIFICANCE
OF STUDY
By
the end of this research work, we shall be able to determine if there is a
significant relationship between the real gross domestic products, exchange
rate, interest rate, oil price and gross domestic capital. the research work
will also determine the effect of export rate on the real gross domestic
product of Nigeria.
1.7 SCOPE OF
STUDY
the
primary source of data for this research work was gotten from the cbn
statistical bulletin 2011 and the secondary date was gotten from books,
journals etc, the research work also made use of regression analysis and other
econometric priori test.
1.8 DEFINITION
OF TERMS
real
gross domestic product: is a macroeconomic measure of the value of economic
output adjusted for price changes (i.e., inflation or deflation). this
adjustment transforms the money-value measure, nominal gdp, into an index for
quantity of total output.
gross capital formulation: is the total value
of the gross fixed capital formation (gfcf), plus net changes in inventories,
plus net acquisitions less disposals of valuables for a unit or sector.
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