Paper short abstract:

This paper explores the colonial origins of oil dependence in Nigeria through the lens of the revenue allocation system, situating contestation over the formal distribution of revenues to the states at the centre of the struggle to diversify and transform the economy.

Paper long abstract:

The development literature is replete with analyses of Nigeria’s engagement with extractives, often drawing on the resource curse literature to provide explanations for its struggles to diversify its economy and undergo structural transformation. Undoubtedly, the acceleration towards an oil-based rentier state under military rule represents a pivotal moment in the historical trajectory of the country, reducing the expansion and competitiveness of Nigeria’s agriculture and manufacturing industries. Yet, the indelible impression left by the spread of colonial interests and authority on Nigeria’s capitalist development and the present-day economy and state cannot be ignored. Taking a mixed-methods approach based on empirical fieldwork interviews with politicians and technocrats and statistical analysis, this paper will discuss commodity dependence in Nigeria not purely as a response to the influx of revenue during the 70s and 80s, but a phenomenon at the intersection of resource wealth and a political settlement established under colonial rule. The analysis will explore how the colonial era embedded a set of interests and ideas that favoured accumulation at the expense of productive activity and pan-Nigerian progress.

Alongside this, colonial engineering of ethno-regional tension and an imbalanced federation contributed towards centring the revenue allocation system as an arena of contestation within Nigeria’s political settlement. Fostering subnational reliance on federal transfers, the dampening effect of the system on innovation and broader productive potential is evident. Though progress has been made, efforts to transition the economy towards a more diversified economic base are resisted by those wishing to maintain a distributive status quo.