International Journal of Economics, Finance and Management Sciences 2014; 2(2): 153-158 Published online March 30, 2014 (http://www.sciencepublishinggroup.com/j/ijefm) doi: 10.11648/j.ijefm.20140202.16 Nigeria’s oil rent can still count: Lessons from Kuwait Olusegun Barnabas Obasaju 1, * , Babatunde Sunday Adekunle 1 , David Eseosa Obadiaru 2 1 Department of Economics, College of Business and Social Sciences, Covenant University, Omu-Aran, Nigeria 2 Department of Accounting and Finance, Covenant University, Omu-Aran, Nigeria Email address: obasajubarnabas@gmail.com (O. B. Obasaju), saboyam@yahoo.com (B. S. Adekunle), esosobas@gmail.com (D. E. Obadiaru) To cite this article: Olusegun Barnabas Obasaju, Babatunde Sunday Adekunle, David Eseosa Obadiaru. Nigeria’s Oil Rent can still Count: Lessons from Kuwait. International Journal of Economics, Finance and Management Sciences. Vol. 2, No. 2, 2014, pp. 153-158. doi: 10.11648/j.ijefm.20140202.16 Abstract: Nigeria and Kuwait were former British colonies, both having oil-based economies with exports of over 2.4 million barrels of oil per day and oil exports accounting for a clear majority of their export earnings. But funnily enough, the standards of living of the citizens of these two are poles apart as Kuwait’s oil rent has been successfully used to benefit its citizens while Nigerians still grapple with low living standards in the midst of plenty. This study employs a comparative approach in assessing the nexus between oil rents and living standards for both countries and seeks to draw the attention of Nigeria to the oil rent distribution channels of Kuwait. The conclusion of the study is that Nigeria can still change the fortunes of her citizenry by tapping into the wealth of knowledge from Kuwait’s oil rent distribution channels. Keywords: Nigeria, Kuwait, Comparative, Channel of Distribution, Oil rent, Living Standards 1. Introduction Globally, crude oil has played a predominant role in providing much of the energy that drives the economy in both industrialised and developing countries. With respect to the strategic nature of the Petroleum Industry as the predominant source of global energy, it has become a prime source of revenue generation to many countries, Kuwait and Nigeria inclusive. These two countries have some denominators in common: former British colonies; members of OPEC; oil exports account for about 95% of their total exports; ranked 10 th and 11 th position (Nigeria and Kuwait respectively) in the world in terms of total oil production with the former producing about 2, 458, 000 barrels per day and the latter about 2, 450, 000 barrels per day as at 2010; the former ranked 10 th position and the latter 9 th position in terms of the value of oil exports i.e. with oil revenue of US$ 87.923 billion and US$ 88.214 billion as at 2010 (1). However, despite all these similarities, the standards of living for both countries are incomparable as an average Nigerian would not even see the ‘brake light’ of an average Kuwaiti as the latter is far ahead. In the case of Kuwait, (2) stated “Oil wealth has transformed Kuwait within decades from a modest, trade-based desert emirate into a modern city-state. It has also created a relatively egalitarian economy based on an extensive distributive system that provides Kuwaiti citizens with essential services including free healthcare, education and social security. Therefore, the most important fact about Kuwait’s oil wealth is that it has been successfully used to benefit its citizens. This feat has been achieved through a broad distributive welfare state. On the flip side, Iweala (3) stated “Nigeria squandered its oil windfall of the 1970s which led to three decades of economic stagnation and the degradation of public institutions. The reason was a mix of bad fiscal and macroeconomic policy, corruption and poor governance.” These and more are pointers to the fact that the welfare situations of the two countries are dissimilar in spite of a number of similarities between them. Importantly, the term rent could mean different things, but in this work, we take the standard economists’ definition of rents as payments to a factor of production over and above that required to induce it to do its work (4). This definition implies that resource rents are any payments to the owner of a natural resource that remain once labour (including highly skilled labour), capital (including technology) and any other inputs to the extraction of the resource have been paid. It is also worthy of note that the management of oil rents in an economy like Nigeria is dependent on the government since oil revenues accrue to her (the government). Now, suffice it to say that this paper does not intend to emphasize the woes that betide Nigeria if she continues her