Maritime Illegal Oil Trading and Per Capita Income in Nigeria

Abstract

This paper evaluates the effect of illegal oil trading on the level of per capita income in Nigeria between 1995 and 2012. By employing the e-views econometric software, the unit root, co-integration and granger causality tests were carried out on the secondary data set, to make it amenable to the application of the vector autoregressive (VAR) modeling of the ordinary least square multiple regression. It was revealed, among others, that a significant relationship exists between the illegal oil trading and the level of per capita income in Nigeria. The paper further revealed that the volume of oil theft as an explanatory variable met the a priori expectation with its negative coefficient but together with the one-year lagged variables of the dependent variable was statistically significant in terms of contributions to the dependent variable. On the whole, the study concludes that illegal oil trading has a negative effect on the level of per capita income in Nigeria. The paper hence suggests judicious utilization and equitable distribution of oil wealth and job creation as a panacea to small scale oil theft and capital punishment as a solution to large scale oil theft which will eventually translate to appreciable level of per capita income in Nigeria.

Keywords: Per capita income, illegal oil trading, econometric, unit root, co-integration, granger causality.