A Review of the Nigerian Energy Industry

UN scores Nigeria’s oil industry linkage to economy low

Africa-needs-jobs01 May 2013, Addis Ababa – The UN Economic Commission for Africa, ECA says Nigeria’s effort to improve linkage between its oil and gas industry with other sectors of the economy achieved only a modest success. It said the modest success was due to limited production capacity of state owned-oil company and monitoring functions.

The Commission in a statement by its Information and Communication Service, made available to the News Agency of Nigeria in Addis Ababa, also blamed the little progress on the restiveness in the oil-rich Niger Delta region and other multi-faceted crises in other parts of the country.

Another factor responsible for the little progress was the restiveness in the oil rich Niger-Delta region, according to this year’s Economic Report on Africa (ERA2013). The report was co-authored by Economic Commission for Africa, ECA, and the African Union, AU, the statement said.

It said that oil and gas sector contributed an average of 76 per cent of the Federal Government’s revenue between 1980 and 2000, accounting for 97 per cent of the export over the same period. “But the business is dominated by foreign multinationals among which Shell is the biggest operator, accounting for 43 per cent of the country’s crude oil.”

According to the statement, the outcome of government’s efforts to increase local content has not met its target due to the absence of legislation, weak monitoring and supervision capacity by the NNPC, as well as its limited capacity to carry out independent exploration and production activities.

The statement also blamed the country’s slow economic growth on the neglect of the non-oil sector, especially agriculture, which was the mainstay of the Nigerian economy in the 1970s. “Agricultural commodities such as Cocoa, Cotton, Palm Kernel, Groundnut and Rubber, which were in the commanding height of the economy before the 1970s were neglected as crude oil took pre-eminence. Nigeria is the World’s fourth-largest Cocoa producer.

The beans are responsible for 36 per cent of the non-oil export receipts. Yet, not much has been done to encourage the value addition in this sector.”

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