The Black Gold Curse: Examining the Link Between Nigeria's Oil Sector and Inequality

The abundance of oil reserves and revenues in Nigeria, while providing significant economic benefits, has also resulted in a noticeable income inequality among its population, with over 50% living below the poverty line. This study aims to investigate the complex relationship between oil sector performance and inequality in Nigeria between 1980 and 2025. Phillips–Perron unit root and KPSS tests revealed that all variables were stationary at first difference. The study then conducted further analysis using Autoregressive Distributed Lag (ARDL) bounds tests. The findings revealed that while increased oil revenue reduces income inequality among Nigerians, increased oil sector output does not. Furthermore, the government's spending patterns exacerbate the income inequality, necessitating more targeted and strategic spending to reduce the disparity in incomes. This study concludes with the following recommendations: Proper management and reinvestment of oil revenues into productive sectors like agriculture and manufacturing can create employment opportunities, reduce poverty, and subsequently reduce inequality. Tackling systemic corruption is crucial to fully harness the economic benefits of oil revenues, while investing in other mineral resources can help reduce the dependence on oil, promote economic diversification, and contribute to income equality. In addition, increasing transparency and accountability in the oil sector, as well as encouraging participation of stakeholders in decision-making, can contribute to a more equitable distribution of oil wealth among the Nigerian population