Oil revenue dependency: economic and legal challenges

Abstract

This article examines the oil revenue dependency and existing economic recession in Nigeria state. Drawing on the literature of the Nigerian state and specifically on the oil rich region of Rivers state, as well as on primary research, this article seeks to examine the nature of development in Nigeria. Broader literature indicates that there is over dependence on oil revenue by the Nigerian state and she relaxes with oil rent rather than diversifying and industrializing the Nation’s economy, thereby existing in a paradox of poverty in the midst of plenty. In an ideal situation, as a giant of Africa, Nigeria’s oil wealth is supposed to have launched her into real economic heights but it has not. In reality, however (the economy being solely dependent on oil), is affected by constant volatility of oil prices and oil discoveries in other parts of the world, Ordinary Least Square Regression method was used to carry out an in-depth research on the role of oil revenue on Nigerian economy. The study found out that sole dependence on oil revenue cannot lead to sustained economic growth, while increasing manufacturing, value added and openness of the economy will lead to sustainable Nigerian economy. The work concludes that economic diversification is a panacea to a sustainable Nigerian economy.