Economics of oil discovery in west Africa: the Nigerian experience
Africa is a resource rich continent than many other continents in the world. Presently Africa is the fastest growing source of energy, accounting for 117.481 billion barrels of crude oil or 9.49 % of the world's reserves at the end of 2007. Also in 2007 Africa produced an average of 10317.6 thousand barrels of crude oil per day or 12.5% of the world total production. On the continent, West Africa remains the beehive of exploration activities due to the Gulf of Guinea being endowed with billions of barrels of oil reserves. Since 2000 more than 275 new oil wells had been discovered in West Africa. Despite the endowment of West Africa with oil reserves, socio-economic development, especially in oil producing countries, is unsatisfactory in delivering its citizenry from extreme poverty and improve social services and infrastructures. The discovery of oil in West Africa has therefore become a resource curse rather than a blessing. Many have come to realize that the lack of effective and prudent management of oil revenue for sustained socio-economic development and improved quality of living is the prime factor for the resource curse. In this regard, this paper attempts to address policy issues using a political economy methodology. The paper analyzes the Nigerian experience from the discovery of oil in 1956 and pinpoints the adverse socio-economic impact of oil discovery on the Nigerian economy. The paper also examines the discovery of oil in Ghana, Sierra Leone and ongoing exploration for oil discovery in Liberia. However, the author wonders whether these three West African countries will avoid or repeat the Nigerian experience, if and when they become oil producing nations. This is in consideration of the situation in Nigeria where the discovery of oil more than 50 years ago turned to be not a blessing but a curse. In conclusion, the paper suggests the need for the formulation of an oil revenue management policy. In respect of this suggestion, the paper proposes a management strategy for sustained socio-economic development in the countries here under discussion.