Nigeria Joins OPEC

In 1971, Nigeria became a member of the Organization of the Petroleum Exporting Countries (OPEC), tying Africa's most populous nation to the main body coordinating oil policy among major producers. The move came as petroleum was rapidly becoming the foundation of the Nigerian economy and state finances, a shift that brought great wealth and lasting structural problems.

Oil had been found in commercial quantities in the Niger Delta in the 1950s, with Shell-BP making the first major discovery at Oloibiri in 1956. Production began shortly before independence in 1960 and grew steadily through the decade. The Nigerian Civil War of 1967 to 1970, sparked by the secession of the southeastern region calling itself Biafra, was fought in part over control of the oil-bearing areas, and the fighting disrupted output. When the war ended in January 1970, the federal government under General Yakubu Gowon turned to petroleum as a means of rebuilding and consolidating national unity.

OPEC itself had been founded in 1960 by Iran, Iraq, Kuwait, Saudi Arabia and Venezuela, aiming to give producing countries greater say over prices and over the foreign companies that then dominated extraction. Nigeria's entry, in the early 1970s, made it the organization's first member from sub-Saharan Africa, though Libya and Algeria, both North African states, had joined slightly earlier. Membership gave Nigeria access to shared information, bargaining strength and a seat in discussions about production and pricing. In the same period, the government began increasing its stake in the industry, and in 1971 it established the Nigerian National Oil Corporation, later reorganized as the Nigerian National Petroleum Corporation.

The timing proved fortunate. The oil price rises of 1973 and 1979 sharply increased government revenue, funding roads, universities, public buildings and a large expansion of the civil service. Oil came to account for the great majority of export earnings and of federal income, far outweighing agriculture, which had previously been central to the economy and to export trade in goods such as cocoa, groundnuts and palm oil.

The long-term consequences were mixed. Heavy dependence on a single commodity left Nigeria exposed to price collapses, as in the 1980s, which brought debt and austerity. Many economists describe a "resource curse" in which oil wealth encouraged corruption, neglect of other sectors and disputes over how revenue should be shared among regions. In the Niger Delta, oil spills and gas flaring damaged local livelihoods and fueled grievances and unrest that continued for decades. Nigeria remains an OPEC member today, and its experience is often cited as a case study in both the promise and the risks of building a national economy on petroleum.