Industrial Technology Research Institute in Nigeria Order Instructions: Assessment Field Report
Produce a brief report of 750 words in length, which
Identifies the problems which iTRi ( Industrial Technology Research Institute ) is attempting to
resolve, critically reflects on the appropriateness of the solutions it is implementing, and identifies
the potential shortcomings of its strategies. Couch your answers in the relevant academic debates
on the extractive industries. ( Tin Markets, Technology & Sustainability )
Write an essay of 3000 words, as well as deliver a 10-15 minute presentation, based on the question
below
To what extent are impoverished governance and a lack of transparency responsible for the resource
curse “epidemic” in developing countries? Select (Nigeria) a region of the developing world and
support your argument with examples.
The essay must be word processed, paged, properly and consistently referenced, and double spaced
with wide margins and in 12 point front size.
These are three separate assignment
Brief report of 750 separate
Produce a Power point presentation of 10-15 minute from the essay is separate
The 3000 essay itself is separate
The essay must be structured with introduction
Criteria
Ensure you analyse and critique rather than simply describing the topic. This involves
using an analytical framework; – Choose relevant examples to illustrate your argument.
Tie theoretical perspectives to real-world examples; – Demonstrate comprehension of the
subject and ensure factual accuracy; – Structure their argument clearly – ensuring that their
essay flows from one point to the next; – Ensure you use evidence to back up the points you
are making; – Use high quality, relevant primary and secondary source literature and
reference their sources using a standard referencing protocol; – Proof-read you work before
submission, write in short sentences, use proper punctuation and grammar.
Industrial Technology Research Institute in Nigeria Sample Answer
Resource Curse: Nigeria
Introduction
The purpose of this paper is to critically analyze the extent to which Nigeria is under a resource curse epidemic resulting from impoverished governance and lack of transparency. The paper will illustrate Nigerian resource curse using three evidences. First instance, the country has been experiencing civil wars especially in the resource endowed regions. It is because of the minerals that communities fight against each other with the assistance of the political leaders. The greedy leaders cause troubles in the resource-rich regions and distract the locals from demanding their rights in order to exploit the minerals for their personal gains. An example is the Boko Haram militants who are politically motivated to cause chaos and are even funded using the revenue generated from the minerals. Top leaders lack transparency on the way on the amounts generated from the minerals since they collude with the mining industries for political reasons (Gaard, 2015). When there is lack of transparency, accountability lacks for the minerals hence the common citizens’ end up living in poverty instead of the resources helping them to improve their living standards. Since most of the people are uneducated, lack the necessary skills needed to prompt demand for government accountability thus they are taken advantage of by those who are in power.
Resource Curse
Countries rich in minerals and gas should use the resources to provide an essential source of funding for development purposes. However, it seems exploitation of such natural resources is linked to inequality, poverty, poor public services, and slow economic growth. The paradox is what is referred to as the resource curse. In developing countries, however, the resource curse epidemic is mostly in existence due to impoverished governance that lacks transparency (Butler, 2014).
Dutch Disease
Resource curse originated from an economist three decades ago after the North Sea gas epidemic in Netherlands that was experiencing high inflows from export of natural resources leading to increase in value of the currency. Increase in local currency negatively affected the local industries by making their products more costly. Thus, availability of natural resources is not a guarantee of wealth in a country (Aguet, 2015).
In Africa, the top eight oil producers in 2011 were Nigeria, Algeria, Angola, Egypt, Libya, Sudan, the Republic of Congo and Equatorial Guinea. Many resource-rich African countries make poor use of their wealth. Instead of creating prosperity, resources have often fostered corruption, undermined economic growth, incited armed conflict and damaged the environment.
Corruption is widespread in many of Africa’s most resource-rich countries. Instead of investing resource revenue into infrastructure and education, crooked politicians, often in conspiracy with the companies mining the resources, siphon proceeds from the region’s mineral and petroleum wealth into their own pockets.
Rent as Percentage of GDP
As a share of GDP, sub-Saharan African resource rents are higher than those of any other region in the world, according to the World Bank. For example, the Republic of Congo has the highest total resource rents of 64% in Africa. Equatorial Guinea, with a government widely seen as autocratic, has the worst control of corruption score among African countries. It also has very high resource rents of 47%. Nigeria, where oil rents amount to almost 30% of GDP, has been plagued by conflict.
Resources Comparison with Developed Countries
Resources do not automatically lead to poor outcomes. For instance, North America produces more oil than Africa, but it has the lowest resource rents as a share of GDP and has good governance ratings. Canada remains among the top ten world oil producers, according to the US Department of Energy, but has one of the least corrupt governments in the world, also according to the World Bank. On the other hand, Norway is one of the top ten exporters of crude oil in the world, while maintaining its stature as a permanent leader of the United Nations Human Development Index.
Overview of Nigeria
The country is endowed with minerals and natural oil. It is ranked as one of the leading oil exporters in the world. Its governing structure highly depends on revenue generated from oil and ignores other investments (Ushie, 2013). The country experiences civil and ethnic clashes. Additionally, Nigeria is ranked as a third world country.
Benefits of minerals in Nigeria
High rents – Sub-Saharan Africa resource rents are by a margin higher than other countries in the world according to the World Bank measure of GDP. Rent is defined as the difference between production value at global prices and the sum of the cost of oil production, minerals, natural gas, forests, and coal (Christy, 2015). Nigeria has one of the highest resource rents as a measure of GDP but has one of the lowest controls of corruption scores among developing nations (Ezekwesili, 2015).
Reduced unemployment due to numerous job offerings in the mines. Most of the casual laborers and data collection workers are hired from the local communities. Income earned assists in raising their income levels.
Improved livings standards from the income generated in mines. When the locals use their wages for investment, they raise their standards of living and that of the community in general. Mines serve as income generator for the local communities (Aguet, 2015).
Increase in government revenue from taxation and export of minerals. Companies operating in the mines are taxed from their gross income thus providing revenue to the government. The revenue is then used to upgrade infrastructures and provide public amenities for the citizens of Nigeria.
Causes of Resource Curse in Nigeria
Overdependence on natural resources. Nigeria could be prosperous if only it exercised good governance, transparent mining deals, had stronger disclosure and had control of corruption. Good governance means presence of national policies that encouraged diversified economies and discouraged over-dependence on natural resource rents.
Lack of transparency- Another resource curse emerges from transnational companies that coerce with politicians to meander the country’s natural resources for their personal gains. The country has made little progress in enhancing transparency. Though the country has joined EITI, its people still view their leaders as corrupt (Halidu, 2015).
Lack of expertise skills by locals. Skills required for effective monitoring of transparency require funding that the government of Nigeria is not able to provide. The private sector, multilateral banks, and bilateral donors offer the financial support needed for programs that educate citizens in accounting and tracking of revenue expenditure. The citizens of the country require the technical and analytical skills to be able to track government expenses. However, if the citizens do not have the necessary skills, they are not in a position to hold public officials accountable for the wrongful spending of public resources and revenue (Ezekwesili, 2015).
Economic gap between poor and the rich. It’s not surprising that the dominant factors leading to Nigeria’s civil war are economic. The factors that contribute mainly for the risk of war are levels of income, the rate of economic growth, and governing structure. Still, if a country is poor, is economically declining and hugely depends on natural resources for export, it surely faces a risk of experiencing civil war. In Nigeria, there is a big financial gap between the rich and the poor. The rich entice the poor to engage in war while they are using their status and finances to get profits from the country’s resources (Ezekwesili, 2015). Natural resources end up springing evil instead of creating prosperity for the citizens.
Detached government. The detachment of Nigeria’s government creates a route through which natural resources rent increase. Since the government is resource-rich, it does not need other revenue source, and, therefore, it becomes detached from its citizens. In the majority of the countries that pay high tax, they scrutinize their governments on how it spends its revenue. It can, therefore, be seen that if there is no tax, representation of the people does not take place but if the electorates pay taxes, they will be represented. The government ignores the needs of the people since it gets revenue from rents. The result is an underdeveloped economy with the majority being poor (Gaard, 2015).
Centralized resources. Natural resources are mostly found in one part of the country, in the peripheral region. Due to poor governance, the politicians know that the people in this region are a ready prey for secessionist political movements. Instead of the people focusing on development and using the resources to create diversity in other investments, they get corrupted in their minds and cease to do constructive businesses (Gaard, 2015). The negative energy and statements usually result in civil wars and the same politicians that were inciting the people to end up benefiting from their resources.
Coercion of politicians with the rebels. Poor governance and lack of transparency create tension among political rivals and the citizens. When the ruling government has no control over the opposition and the corrupt government officials, it creates room for the existence of rebel groups and organizations. In Nigeria, Boko Haram is one of the rebel groups that is said to be politically involved. Politicians fight amongst themselves through the rebel groups. The natural resources increase the motivation for the rebel groups as they facilitate them financially especially when some politicians are involved.
The politicians use the natural resources to facilitate the rebels to gain power or fight the existing government (Patrick, 2012). When the rebels increase in power and the government structure is weak, the ordinary citizens end up suffering. Instead of the people enjoying the resources, they are mostly scared and end up running away to protect themselves. When the natural resources facilitate rebellion in a country, the resources become a curse instead of a solution.
Results of Resource Curse on the Country
Civil wars- Countries with poor governance that lacks transparency are prone to war especially if the country is endowed with abundant natural resources. Nigeria has continuously been fighting civil wars and is one of the most corrupt nations in the world as ranked by World Bank’s control of corruption Index. In Nigeria, oil rents an amount equivalent to 30% of the GDP and the country has been in conflicts (Ezekwesili, 2015). Dependence on natural resource insulates leaders from public accountability and pressure. Though Nigeria has abundant natural resources, it is short of paramount checks on government control including a democratic culture. In past years, violent war has plagued Nigeria making oil a curse instead of a blessing to the majority of citizens.
Low economic growth. A mixture of transparency issues and poor impoverished governance is lethal in Nigeria. Sub-Saharan Africa resource rents are by a margin higher than other countries in the world according to the World Bank measure of GDP. Rent is defined as the difference between production value at global prices and the sum of the cost of oil production, minerals, natural gas, forests, and coal (Collier, 2011). Nigeria has one of the highest resource rents as a measure of GDP but has one of the lowest controls of corruption scores among developing nations.
However, natural resources do not automatically cause poor economic outcomes or become a natural epidemic curse. For example, North America has a higher oil production capacity compared to Nigeria and Africa in general yet its GDP is lower (Halidu, 2015). Still, Canada, one of the top oil producing countries has the least corrupt government worldly. Norway is considered as a perennial global leader and it still has high export capacity. As witnessed in these three countries, North America, Canada and Norway, the resource curse can be avoided if the governance structure is transparent and is in control of corruption (Lawson & Greenstein, 2012).
Low income for the locals. Often, African nations coerce with Western organizations to reach deals that mutually benefit them at the expense of the nation. There is no transparency in tendering of contracts. Since Western organizations are more powerful and have the ability to pay more, African leaders allow to be influenced to give contracts to western companies without thinking of the local industries predicament (Paltseva & Roine, 2011). The locals become the casual laborers for the Western organizations in the mining of their country’s resources. The organizations are highly paid by the government since the leaders know they have extra benefits from the payments.
Demoralization of the local industries. The local industries are demoralized, and some end up closing since they are unable to compete with the Western organizations (Marie, 2010). Even though some of the domestic industries have the capability of giving the same services as the Western organizations, they are not given the same opportunity even if they submit their tenders. The locals end up being enslaved in their territories and doing manual jobs in their land while the Western organizations and the corrupt government officials reap high income.
Ethnic wars. Nigeria is an ethnically diverse society. Though people lobby the government, the lobbying is not necessarily for the welfare of the whole nation but individual and group interests. The government is ethnically divided leading to poor delivery of services to the public (Collier, 2011). On the other hand, electorates only elect someone because they belong to the same ethnic group. Instead integrating the nation, the ethnic tribes have divided the nation. People become self-centered even in the use of the natural resources. Those in power exploit the resources to fight other tribes. Since there are different resources in the different regions of the country, instead of the government ensuring there is an equitable distribution of the resources; it uses the resources to fight its ethnic rivals (Ushie, 2013).
Displacements. Mining of oil in Nigeria has displaced thousands of people. The government gives license to extractive industries without first considering the welfare of the community. Irresponsible extraction of oil and other minerals has resulted in epidemics, displacement, and hunger for affected communities. In the case of Boko Haram, it is the dire urge to control the resources that provoked the existing conflicts between the communities in Northern Nigeria. The licensed corporations force the communities to leave their land without prior notice or consultation (Collier, 2011). The community inhabiting the region endowed with the natural resource should be the main beneficiaries of it. Poor governance resulting from corruption forces the community to seek other means of survival instead of using the resources to upgrade their well-being for large corporations and political gains.
Poor people in the rural areas are not essentially equipped with skills to stand up to such extractive projects or fight for their rights (Pradhan, 2013). Still, such communities highly depend on the natural resources for their survival and maintenance of their traditions and livelihood. Unfortunately, the communities live in remote regions and lack enough education. The communities also have a poor justice system that acts as an inhibitor to getting to decision makers, comprehend decision-making process, and come up with appropriate measures to claim their rights. If riots do not happen, the communities leave their land injured and poorer.
Underutilization of Local Skills Leading to Low Living Standards. Mining industries are not poor and usually employ few unskilled personnel. Most of the skilled labor is imported from abroad. The need for heavy technological machines and expertise skills require the companies to seek for Western labor since most of the locals have skill and expertise limitation. The government is not keen on education quality making most of its citizen’s lack the necessary skills needed for the resource industry (Akpabio, 2013). The public schools lack enough equipment to teach adequately the theoretical and practical skills needed for the market.
Why it is Hard to Fight Resource Curse
Nigerian government is not committed to end corruption and exercise transparency. Since most of the government officials are after wealth, they concentrate on how to enrich themselves instead of the welfare of ordinary citizens (Paltseva & Roine, 2011). They use their power to selfishly gain from the mines.
Collusion of political leaders with western industries. Western industries offer high-rank officials large sums of money for them to obtain license and extract minerals at the expense of the local industries. Instead of growing the local industries, they end up destroying them.
Civil and ethnic wars. There is a lot of ethnic and civil war in Nigeria and most of it is attributable to the mines. People get caught up in fighting and relocating to safer environments such that they do not get the opportunity to work and reap from the mines (Akpabio, 2013).
Extraction industry requires expertise skills which are imported from abroad. Local people do not have the required knowledge and skills to handle complex equipment required for accessing and extraction of minerals. They are only employed to do casual jobs, thus do not get high wages to improve their lives.
International Initiatives and Financial Institutions
There exists a program called Equator Principles responsible for advocating of maintenance of safe conditions by mines if they are to be financed.
Dodd Frank Wall is supposed to monitor the amount mines and extractive industries report to their governments. These industries are listed in US stock exchange.
Industrial Technology Research Institute in Nigeria Recommendations
The resource curse is avoidable. Nigeria could be prosperous if it practiced good governance: transparency in its dealings with mining, oil and gas companies; stronger disclosure and anti-corruption rules; and economic policies that promote diversified economies and discourage dependence on resource rents.
Consumer Protection Act, Dodd Frank and other bodies should come up with a body responsible for following up in the individual industries to ensure that they follow all the requirements and are accountable to their governments.
Civil societies should be empowered so that they can advocate for governments to become accountable and present correct information. The local industries should be given first priority for extraction to make sure that the income goes back to the local community and stays within the region for prosperity to be experienced in Nigeria.
Industrial Technology Research Institute in Nigeria Conclusion
If a government is co-opted by partisan interests, it increases opportunities for favoring specific groups in the community through a budget allocation in exchange for political power. Also, if citizens are used to the fact that wealth results from neither productive efforts nor work but from having contacts within the government, they will have less motivation to train themselves on their rights. The great focus of political and economic power means there are fewer incentives to invest in other industrial sectors. In the end, it leads to high levels of poverty, inequality, low democracy, political instability, civil wars, all of which undermine economic growth. Nigeria heavily depends on natural resources for revenue collection and does not put a lot of effort investing in other sectors. The poor citizens do not have adequate representation in the government since each region is treated differently. The natural resources that are supposedly meant to enrich and improve the living standards of the people as seen in North America and Canada have instead facilitated corruption resulting in poor economic growth and poverty in developing countries.
Industrial Technology Research Institute in Nigeria References
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