1

Olivia Archer
COR 416: Wealth & Poverty
Dr. Peters
Feb 3, 2020
Nigerian Reliance on Oil and Impact of a Universal Basic Income

Introduction and Thesis

The American Dream is an elusive enigma at best and a misleading delusion at its worst.

People are encouraged to work hard to be successful, but this ideology is troubling and

increasingly fleeting. Hard work does not equivocate wealth, especially in developing countries

where government corruption runs rampant and raw materials dominate the market. As the 11th

largest oil producer in the world, Nigeria’s economy is extremely dependent upon the oil sector.1

However, because of the abuse of governmental power, there has been little structural and social

progress. This lack of structure and total reliance on oil makes Nigeria dependent. Large

corporations, like Royal Dutch Shell, are incentivized to maximize their profits within the free

market and turn to expansion in resource-abundant third world countries. Shell uses cheap

resources from the land to lower the production costs but refuses to financially help the country,

especially Ogoniland in the Niger Delta region. Since 1958, Shell extracted $30 billion in oil

from the Niger Delta, yet most Ogoni communities have no pipe-borne water, electricity,

hospitals, roads, or even schools.2 Additionally, since Shell fails to incorporate environmental

responsibility into their operations, they threaten Nigerians’ livelihood through land

appropriation and pollution. Continued oil exploration has wreaked havoc by depriving

1
Damu, Jean, and David Bacon. "OIL RULES NIGERIA." The Black Scholar 26, no. 1 (1996): 51-54.
Accessed February 2, 2021. http://www.jstor.org/stable/41068629.
2
Steven Cayford. "The Ogoni Uprising: Oil, Human Rights, and a Democratic Alternative in Nigeria." Africa
Today 43, no. 2 (1996): 183-97. Accessed February 2, 2021.
http://www.jstor.org.ezproxy.elon.edu/stable/4187095.
 2

communities of their economic lifeline as spillages from oil pipelines destroyed farmlands and

marine life. This contributes to environmental degradation in developing countries as large

corporations exploit their land and resources. Nigerians are too dependent and impoverished to

strike a more equitable deal with Shell and too unstable to combat the corrupt government.

Therefore, Nigerians should be given a universal basic income to receive the necessary

money to stimulate their economy by buying goods within their own nation and establish

economic independence.

Problem

Nigeria is the most populated of African countries and is known for its raw materials,

especially oil and gas. Their upstream oil industry acts as the most important economic sector,

producing over 90% of its total exports.3 While some Nigerians were hopeful the discovery of oil

would lead to economic prosperity, the government had other plans. The Nigerian government

found ways to maintain control of their resources and find the most efficient and economically

sound ways to exploit them. Even though Nigeria is one of the largest oil producers in the world,

most of the Nigerian population doesn’t see the investment of the oil revenue. According to

Transparency International, Nigeria is ranked the 149th most corrupt nation in the world, out of

180 countries.4

Beyond corruption, oil companies also have a large amount of influence upon the

government. Shell is the largest joint venture in Nigeria, producing around 50% of the income.5

3
Manby, Bronwen. "The Role and Responsibility of Oil Multinationals in Nigeria." Journal of International
Affairs 53, no. 1 (1999): 281-301. Accessed February 2, 2021. http://www.jstor.org/stable/24357796.
4
“Corruption Perceptions Index 2020 for Nigeria.” Transparency.org. Accessed February 3, 2021.
https://www.transparency.org/en/cpi/2020/index/nga.
5
Damu, Jean, and David Bacon. "OIL RULES NIGERIA." The Black Scholar 26, no. 1 (1996): 51-54.
Accessed February 2, 2021. http://www.jstor.org/stable/41068629.
 3

It is questionable whether multinational oil companies or the militaristic government holds true

control of the nation. Since their economy is centralized around an overreliance on a single

commodity to generate foreign exchange and public revenues, oil’s power permeates into social

and cultural issues of the nation.

Government corruption reduces the quality of social infrastructures and leaves the people

incapable of development. Oil is sold out to big corporations, giving multinational contractors

around half of the Nigerian oil profits, while local Nigerian contractors receive much less

because of their low employment rates in the industry.6 Ogoniland is the perfect example of the

abuse of power and oil. In 2010, the International Monetary Fund (IMF) estimated that the oil

sector accounted for over 95% of Nigeria’s export earnings and about 65% of the government’s

revenue.7 Despite the profits for the government, the Ogoni people remained destitute while their

land was destroyed through spills of crude oil on farmland and gas flaring. An estimated 9

million- 13 million (1.5 million tons) of oil has been spilled into the Niger Delta ecosystem over

the past 50 years; 50 times the estimated volume spilled in Exxon Valdez oil spill in Alaska

1989.8 Little has been done to compensate the Ogoni despite the accumulated wealth the federal

government received from the region. The meager compensations provided did not contribute to

or improve the quality of life. The general consensus is states are contributing too little in return

for what they are getting. Government corruption diverts important spending away from the

people, impacting socially valuable goods.

6
Manby, Bronwen. "The Role and Responsibility of Oil Multinationals in Nigeria." Journal of International
Affairs 53, no. 1 (1999): 281-301. Accessed February 2, 2021. http://www.jstor.org/stable/24357796.
7
Osaghae, Eghosa E. "The Ogoni Uprising: Oil Politics, Minority Agitation and the Future of the Nigerian
State." African Affairs 94, no. 376 (1995): 325-44. Accessed February 2, 2021.
http://www.jstor.org/stable/723402.
8
Genova, Ann, and Toyin Falola. "Oil in Nigeria: A Bibliographical Reconnaissance." History in Africa 30
(2003): 133-56. Accessed February 3, 2021. http://www.jstor.org/stable/3172086.
 4

While there are demands for more equitable treatment, Nigerians do not have the means

of combating the government or corporations. This problem demonstrates how government

corruption keeps Nigerians impoverished, despite having the resources to develop their nation.

Nigerians are kept below the line of poverty and only relatively few states are capable of

developing significant internal revenue generation to complement the national oil reserves

allocation. Nigerians need a government willing to foster economic diversification by giving

them the money to internally stimulate their economy and move away from their tremendous

reliance on oil.

Solution/Response

In order to combat overreliance on oil and allow the Nigerian economy to properly

develop, the government should provide a Universal Basic Income. A Universal Basic Income

(UBI) is a financial payment made to all eligible adults. Receiving the constant payment is a

fundamental right of being a member of society. In a way, it is a mechanism to make sure

citizens have a safety net, ensuring they will not starve or lose their homes. The challenge with

properly implementing this program is the need for nationwide commitment to this economic

reform. However, once the money is distributed, Nigerians can use their money to diversify their

economy and move away from a sole focus on the oil sector. This allows the Nigerian

government to take back some power from multinational companies, like Shell, and redistribute

the money elsewhere.

While implementation of a UBI would be a huge shift in ideology in Nigeria’s economic

system, it is obvious the current system isn’t working. The government provision of a universal

income allows for economic diversification and a focus on improving the country’s weak
 5

infrastructure. Government corruption slows the integration of social and financial programs,

withholding money from oil mining and pocketing profits. The World Bank reports that Nigeria’s

total spending on social assistance programs is 0.28% of GDP and covers only 7% of the

population.9 Even though no country has a UBI in place, social assistance programs remain

ineffective as millions of people stay in poverty. Using a UBI sends the message that Nigeria

prioritizes its citizens health and safety above financial gain.

To observe the results of this economic proposal, a UBI pilot project was launched in

Namibia and yielded promising results. Among the many notable achievements include how

crime fell by 42%, healthcare became more accessible to residents, school drop out rates fell to

almost 0%, income generating activities jumped 15%, and child malnutrition decreased 32%.

These are some of the many observations made after the completion of the program.10 Overall,

poverty rates dropped from 97 percent to 43 percent.11 These statistics indicate that applying this

program to Nigeria would allow for strong infrastructural development.

A UBI is a preferred method of economic help because of the versatility of the money. A

UBI is not tax deductible, and proves to be more helpful than benefits in kind because it can be

used for anything.12 UBI offers a recipient the support, independence and autonomy that will

9
Peter Elias Development Geographer. “Why Nigeria's Efforts to Support Poor People Fail, and What Can Be
Done about It.” The Conversation, October 13, 2020.
https://theconversation.com/why-nigerias-efforts-to-support-poor-people-fail-and-what-can-be-done-about-it-1
37122.
10
“Can UBI End Poverty in Developing Countries?” BORGEN, April 22, 2018.
https://www.borgenmagazine.com/can-universal-basic-income-end-poverty-in-developing-countries/.
11
Anyanwu, K. C. "The Bases of Political Instability in Nigeria." Journal of Black Studies 13, no. 1 (1982):
101-17. Accessed February 3, 2021. http://www.jstor.org/stable/2783978.
12
“Pros and Cons of Universal Basic Income: UBI.” Pros and Cons of Universal Basic Income | UBI, May 18,
2020.
https://www.penguin.co.uk/articles/2018/universal-basic-income-pros-cons.html#:~:text=UBI%20would%20al
low%20care%2Dworkers,to%20the%20sick%20and%20elderly.&text=The%20economic%20growth%20of%
20high,effect%20on%20the%20working%20classes.
 6

help them rise out of poverty. The statistics above mentioned an increase in income generating

activities. Again, the move away from oil would benefit the entirety of the country and reduce

some of the power of the oil companies. A UBI acts as a clear and morally correct means of

redistributing wealth generated from Nigeria’s natural resources. Not only would this be the most

logical use of money, but it is the most ethically sound decision.

Opponents of the UBI claim it is impossible to find the money to justify the program.

Nigeria’s abundance of resources and oil sector would be the perfect funds for the problem.

Using the funds from the oil sector would decrease Shell’s profits and deter increased

engagement with Nigeria’s oil industry. This slows the environmental deterioration caused by

their unsustainable practices, and revitalizes the agriculture industry. Nigerian’s living off of the

land would not be subject to the whims of these relentless oil companies. Nigeria’s agriculture

sector employs 36% of the workforce and contributes for about 21.2% of GDP.13 When oil

companies accelerate the deterioration of the environment, crops yields suffer and people starve

as their source of income and livelihood is destroyed.

A UBI would also contribute to better living standards of all Nigerians, which in turn,

would help the diversification of the economy. Nigeria has a huge untapped market in tourism.

Due to Nigeria’s poor power supply, polluted water, and insufficient transportation

infrastructures, tourism has not met its full potential. Currently only 16% of Nigeria’s roads are

paved, compared on average to half the roads in the world’s lower middle-income countries.

Similarly, in 2016, only about 30% of Nigeria’s population had access to improved sanitation

13
Nigerian Market : Main sectors. Accessed February 3, 2021.
https://import-export.societegenerale.fr/en/country/nigeria/market-sectors.
 7

facilities compared to, on average, more than half of the population in the country’s global

income peers.14 Resources and access to clean water and electricity follow a similar pattern.

Tourism is such a wildly untapped market, despite it being one of the world’s largest

economic sectors, supporting one in 10 jobs (319 million) worldwide and generating 10.4% of

world GDP.15 In 2018, Dubai, a country that previously used oil as their main source of revenue,

derives 20% of their GDP of $102.67 billion from tourism. The industry creates jobs and

redirects the flow of foreign investment into the country. Development of tourism in Nigeria

would provide another source of income and decrease the power of large oil corporations.

Lastly, a UBI has the potential to strengthen the telecommunications in Nigeria.

Throughout my studies in the Strategic Communication field, I learned the importance of staying

connected in a growing globalized economy. One necessary tool for this is internet access.

Without a solid infrastructure, Nigerians don’t have the necessary resources to easily access the

internet. Today, 65% of the Nigerian population does not have access to reliable electricity.

Especially in rural areas, only 36% of people have access to a centralized power source due to

undeveloped transmission and distribution networks.16 Unsurprisingly, problems in the power

industry have hampered Nigeria’s growth. However, upon the introduction of a UBI, which

allows for a more extensive development of electricity supply, telecommunications offer the

opportunity of economic expansion.

14
Eweje, Gabriel. "Environmental Costs and Responsibilities Resulting from Oil Exploitation in Developing
Countries: The Case of the Niger Delta of Nigeria." Journal of Business Ethics 69, no. 1 (2006): 27-56.
Accessed February 3, 2021. http://www.jstor.org/stable/25123935.
15
Ukonne, Urenna. “Unlocking Nigeria's Tourism Potentials - Strategy - Nigeria.” Welcome to Mondaq.
Taxaide Professional Services Ltd, December 6, 2019.
https://www.mondaq.com/nigeria/economic-analysis/872308/unlocking-nigeria39s-tourism-potentials.
16
“Reliable and Affordable Electricity for Nigeria: Growing the Minigrid Market.” Rocky Mountain Institute,
July 22, 2020. https://rmi.org/reliable-and-affordable-electricity-for-nigeria-growing-the-minigrid-market/.
 8

Conclusion

Nigeria’s history of exploitation of resources and unjust government corruption will

worsen without intervention. Their infrastructure will continuously crumble, causing more

environmental, social, and economic issues. However, with the introduction of a UBI, stability is

within sight. Through a redistribution of funds from oil companies to the citizens, Nigerians

would rise above levels of crippling poverty and end the overreliance on the oil sector. Oil

companies would lose substantial power as Nigeria diversified their economy. Nigeria could

develop other important sectors like agriculture, tourism, and telecommunications. Their nation

would see obvious environmental improvements upon the withdrawal of multinational oil

companies like Shell, who disregarded and polluted the land. The government could finally give

back to the nation through the resources that originally belonged to the people. The general

quality of life would substantially increase through the development of roads, reliance on

electricity, and improved water quality. Most importantly, it would make people feel secure as

everyone would climb above the line of poverty. Economic security should be a basic human

right, regardless of ethnicity, race, or socioeconomic status. It is our civic duty to be aware of the

vast injustices commonly occurring in developing world countries because of unequal

distributions of power and overreliance on raw materials. Our imposing economic systems

perpetuate severe cycles of wealth and poverty despite our best intentions. Nigerians deserve a

baseline income to show they are cared for and cared about. Even though reimagining a society

with an equal distribution of wealth seems challenging, I believe it is my responsibility to work

towards a world where there is equal concern for each person. Developing countries should not

be disregarded because of their poor infrastructure and often corrupt government. Instead, an
 9

ideological change is necessary to envision structural changes that give the power back to the

rightful owners-- the people.

Capstone reflection and synthesis

The Elon Core curriculum helped me with the project because of the critical thinking

skills and wide variety of knowledge I obtained from previous classes. As a Strategic

Communication major and Philosophy minor, a large chunk of my studies revolve around both

reading, writing, and thinking critically and concisely. Most notably, COR 100 The Global

Experience and How Should We Live best prepared me for this research project. COR 100

provided a broad structure and glimpse into life beyond the Elon bubble. Throughout the global

class, we wrote a research paper on a problem of our choice. I chose the growing accumulation

of ocean pollution since I consider myself to be an environmental advocate and wanted to learn

more about potential causes and solutions of the problem. This long research paper taught me the

basic elements of attention to detail and in depth analyses of environmental problems. While fine

tuning my research skills, the How Should We Live class showed me the unfortunate realities of

cycles of wealth and poverty in our nation. How Should We Live acted as the perfect prerequisite

to my Nigerian oil capstone project because it helped me tackle hard ideological issues. I always

struggled with imagining a society different than the one we have now, including differences in

social, economic, and political institutions. We tackled several social justice issues, like

disability, environmentalism, and racism. We were encouraged to reconstruct a new society, in

which systemic racism and poverty wasn’t present. I realized the only reason it is hard to imagine

a new society, is because this is the only one I have experienced. These classes gave me insight

and a newfound hope that a shift in ideology has the potential to eradicate pressing world issues.

Armed with thorough research tactics and an understanding that societal changes are largely
 10

reliant on perspective and mindset, I felt equipped for this project. I was able to pinpoint

problems of corruption and overreliance on oil in Nigeria and suggest transformative yet feasible

solutions. Overall, my classes taught me that regardless of where we live, we have a

responsibility to advocate for justice around the world, through education and a genuine belief

that a better and brighter future is possible.

 11

Bibliography

Anyanwu, K. C. "The Bases of Political Instability in Nigeria." Journal of Black

Studies 13, no. 1 (1982): 101-17. Accessed February 3, 2021.
http://www.jstor.org/stable/2783978.

“Can Universal Basic Income End Poverty in Developing Countries?” BORGEN, April
22, 2018.
https://www.borgenmagazine.com/can-universal-basic-income-end-poverty-in-developing-countr
ies/.

“Corruption Perceptions Index 2020 for Nigeria.” Transparency.org. Accessed February

3, 2021. https://www.transparency.org/en/cpi/2020/index/nga.

Damu, Jean, and David Bacon. "OIL RULES NIGERIA." The Black Scholar 26,
no. 1 (1996): 51-54. Accessed February 2, 2021. http://www.jstor.org/stable/41068629.

Eweje, Gabriel. "Environmental Costs and Responsibilities Resulting from Oil

Exploitation in Developing Countries: The Case of the Niger Delta of Nigeria." Journal of
Business Ethics 69, no. 1 (2006): 27-56. Accessed February 3, 2021.
http://www.jstor.org/stable/25123935.

Genova, Ann, and Toyin Falola. "Oil in Nigeria: A Bibliographical

Reconnaissance." History in Africa 30 (2003): 133-56. Accessed February 3, 2021.
http://www.jstor.org/stable/3172086.

Manby, Bronwen. "The Role and Responsibility of Oil Multinationals in Nigeria."

Journal of International Affairs 53, no. 1 (1999): 281-301. Accessed February 2, 2021.
http://www.jstor.org/stable/24357796.

Nigerian Market : Main sectors. Accessed February 3, 2021.

https://import-export.societegenerale.fr/en/country/nigeria/market-sectors.

Osaghae, Eghosa E. "The Ogoni Uprising: Oil Politics, Minority Agitation and the Future
of the Nigerian State." African Affairs 94, no. 376 (1995): 325-44. Accessed February 2,
2021. http://www.jstor.org/stable/723402.

Peter Elias Development Geographer. “Why Nigeria's Efforts to Support Poor People
Fail, and What Can Be Done about It.” The Conversation, October 13, 2020.
https://theconversation.com/why-nigerias-efforts-to-support-poor-people-fail-and-what-can-be-d
one-about-it-137122.

“Pros and Cons of Universal Basic Income: UBI.” Pros and Cons of Universal Basic
Income | UBI, May 18, 2020.
https://www.penguin.co.uk/articles/2018/universal-basic-income-pros-cons.html#:~:text=UBI%2
 12

0would%20allow%20care%2Dworkers,to%20the%20sick%20and%20elderly.&text=The%20ec
onomic%20growth%20of%20high,effect%20on%20the%20working%20classes.

Steven Cayford. "The Ogoni Uprising: Oil, Human Rights, and a Democratic
Alternative in Nigeria." Africa Today 43, no. 2 (1996): 183-97. Accessed February 2, 2021.
http://www.jstor.org.ezproxy.elon.edu/stable/4187095.

“Reliable and Affordable Electricity for Nigeria: Growing the Minigrid Market.” Rocky
Mountain Institute, July 22, 2020.
https://rmi.org/reliable-and-affordable-electricity-for-nigeria-growing-the-minigrid-market/.

Ukonne, Urenna. “Unlocking Nigeria's Tourism Potentials - Strategy - Nigeria.”

Welcome to Mondaq. Taxaide Professional Services Ltd, December 6, 2019.
https://www.mondaq.com/nigeria/economic-analysis/872308/unlocking-nigeria39s-tourism-pote
ntials.