Natural resource fund governance and the institutionalization of rent seeking in Nigeria's oil sector

The concept of resource curse is widely accepted in the extant literature. However, the burden of proof remains high as some resource-rich countries experience rapid economic growth. This study examines how Nigeria's strategy for governance and management of revenue proceeds from petroleum resources has helped sustain rent-seeking behavior, the resource curse phenomenon, and under-development of the country. Using the theory of new institutionalism and a process-tracing method, the article argues that political and historical dynamics in establishing legislation for governance and management of oil and gas revenues engendered path-dependent rent-seeking practices sustained by selfish political elites. The resource curse is not universal or inevitable in resource-rich countries, but largely a product of institutionalization and sustenance of initial unhealthy practices. We recommend that recognizing the need for savings, stabilization, and investment, and setting clear fiscal rules to check excessive political discretion will reduce rent seeking and the resource curse in Nigeria and elsewhere.

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