The discovery of crude oil in commercial quantities at Oloibiri in present-day Bayelsa State in 1956 marked a defining moment in Nigeria’s modern history. Prior to this, agriculture was the backbone of the economy, employing the majority of the population and accounting for over 60 per cent of national income. Cocoa, groundnuts, palm produce, and rubber were the key export commodities.
By the late 1960s, oil had emerged as Nigeria’s leading export product. This transformation accelerated in the early 1970s following global developments that raised oil prices. The Arab-Israeli War of 1973 and the subsequent oil embargo led to a fourfold increase in crude oil prices. Nigeria, as a new member of the Organisation of Petroleum Exporting Countries (OPEC) since 1971, benefitted immensely from this price surge.
The 1970s oil boom dramatically changed Nigeria’s revenue profile. Petroleum exports rose sharply, and government income multiplied several times over. The country became the world’s seventh-largest oil producer by the mid-1970s, ushering in unprecedented optimism for national development. However, this rapid prosperity created structural weaknesses that undermined long-term stability, including overdependence on oil, fiscal mismanagement, and pervasive corruption.
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Key Events and Major Figures
The Rise of the Oil Sector
Nigeria’s membership in OPEC in 1971 signified its growing importance in global energy politics. The same year, the government established the Nigerian National Oil Corporation (NNOC) to manage its interests in the oil industry. In 1977, the NNOC merged with the Ministry of Petroleum Resources to form the Nigerian National Petroleum Corporation (NNPC), centralising control over exploration, production, and revenue management.
Under General Yakubu Gowon’s military government (1966–1975), oil production expanded rapidly, from about 400,000 barrels per day in 1966 to over two million barrels per day by 1974. Oil soon accounted for over 80 per cent of government revenues and 90 per cent of foreign exchange earnings.
Government Spending and Economic Expansion
The Gowon administration channelled oil revenues into ambitious development initiatives. The Third National Development Plan (1975–1980) was designed with an investment of over ₦30 billion, then the largest ever in sub-Saharan Africa. Funds were directed toward infrastructure, housing, education, and industrial projects. New universities were established, and highways, refineries, and steel complexes were built.
Oil wealth also funded the expansion of public administration. Civil service salaries rose, new states were created, and the federal government became the country’s largest employer. However, weak institutional capacity and a lack of fiscal discipline led to waste and corruption. Many projects were abandoned or poorly executed due to inflated contracts and political interference.
Reform Attempts under Murtala Mohammed and Olusegun Obasanjo
When General Murtala Mohammed overthrew Gowon in 1975, he introduced reforms to curb corruption and restore accountability. His administration reviewed major government contracts and dismissed thousands of civil servants deemed unproductive. After his assassination in 1976, General Olusegun Obasanjo continued his policies, notably through the Universal Primary Education (UPE) programme and the expansion of housing and rural development schemes.
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Although these initiatives improved access to education and infrastructure, much of the spending remained concentrated in urban areas, leaving rural communities marginalised. Oil wealth had begun to distort the economy, reducing incentives for agricultural production and local manufacturing.
Economic and Social Transformations
Economic Shifts
The oil boom fundamentally altered Nigeria’s economic structure. Agriculture’s share of GDP fell from roughly 60 per cent in 1960 to under 25 per cent by 1980. While manufacturing experienced brief growth, it remained dependent on imported raw materials and capital goods.
The influx of petrodollars strengthened the naira, making imports cheaper but weakening domestic production. Government reserves swelled, allowing massive imports of vehicles, consumer goods, and construction materials. However, this dependence on foreign products fostered trade imbalances and discouraged local enterprise.
By the late 1970s, Nigeria had become a mono-product economy, heavily reliant on oil exports. The neglect of non-oil sectors made the economy vulnerable to fluctuations in global oil prices, laying the foundation for later crises.
Social Changes and Urbanisation
Oil-driven prosperity reshaped Nigerian society. Cities like Lagos, Port Harcourt, and Kaduna expanded rapidly as rural dwellers migrated in search of new opportunities. A new urban middle class emerged, marked by increased consumption and Western-influenced lifestyles. Imported luxury goods, cars, and electronics became symbols of success.
Despite visible progress, inequality widened. The benefits of the oil boom were unevenly distributed, with the rural majority excluded from development gains. Corruption became systemic, and public service positions were often exploited for personal enrichment. The government’s focus on public sector employment also discouraged entrepreneurship, as citizens increasingly sought salaried work over private enterprise.
This period reinforced what economists call the “resource curse”, a condition where natural resource wealth leads to economic mismanagement, institutional decay, and slower long-term growth.
Colonial Legacy and Structural Patterns
Nigeria’s post-independence dependence on a single export commodity reflected colonial-era economic structures. British colonial policy had encouraged the export of raw materials while discouraging domestic industrialisation. After independence, oil replaced agricultural produce as the dominant export, but the extractive framework remained unchanged.
Centralised control over oil revenues strengthened federal authority but weakened state-level autonomy. Revenue allocation became politically contentious, giving rise to debates over resource control and fiscal federalism. The concentration of wealth in the federal government encouraged rent-seeking and corruption, patterns that persist in modern Nigeria.
Legacy and Contemporary Relevance
The End of the Boom
By the early 1980s, global oil prices fell sharply, ending the decade-long prosperity. Nigeria’s revenues dropped dramatically, exposing the fragility of an oil-dependent economy. Massive public spending during the boom years had created unsustainable debt levels.
In response, subsequent governments introduced austerity measures, culminating in the Structural Adjustment Programme (SAP) under General Ibrahim Babangida in 1986. SAP aimed to liberalise the economy, devalue the naira, and encourage diversification. However, these policies also led to inflation, unemployment, and widespread poverty, demonstrating the long-term consequences of mismanaging oil wealth.
Political and Environmental Consequences
The environmental cost of oil extraction, particularly in the Niger Delta, became increasingly evident. Oil spills, gas flaring, and ecological damage sparked discontent among host communities. By the 1990s, demands for greater resource control had evolved into political and militant movements.
Politically, the oil boom entrenched rentier governance, where access to state-controlled oil wealth determined power. This weakened accountability and reinforced centralised authority, shaping Nigeria’s political economy into the 21st century.
Despite these challenges, the boom years also left enduring legacies: the expansion of infrastructure, the establishment of higher institutions, and Nigeria’s emergence as a regional power.
The 1970s oil boom was a watershed in Nigeria’s history. It brought extraordinary revenues, rapid urban growth, and expanded public investment. Yet, it also introduced deep structural flaws, economic dependence, corruption, and inequality, that continue to shape the nation.
Had Nigeria invested its oil wealth more prudently in industrialisation and human capital, the period could have marked a lasting transformation. Instead, it became a cautionary tale about the perils of resource-driven economies. The lessons of that decade remain essential as Nigeria seeks to diversify its economy and build sustainable growth.
Author’s Note
This article provides a factual overview of Nigeria’s 1970s oil boom, highlighting how petroleum wealth reshaped the economy, governance, and society. While it accelerated national development, it also fostered corruption, dependency, and structural imbalances whose effects persist today.
References
- Falola, Toyin and Heaton, Matthew M. A History of Nigeria. Cambridge University Press, 2008.
- Watts, Michael. Curse of the Black Gold: 50 Years of Oil in the Niger Delta. PowerHouse Books, 2008.
- Forrest, Tom G. Politics and Economic Development in Nigeria. Westview Press, 1993.
