Nigeria is widely seen as having the greatest natural resources on the African continent and the most potential for development. After two generations of misrule, it is desperate for a new start.

Nigeria is the fabulously wealthy African giant of 114 million people whose leaders have officially stolen about £220bn from the country – almost as much as all western aid to all of sub-Saharan Africa in the last 40 years.

But it is also one of the poorest countries in the world with an average income of less than £4 a week, where every other person lives in absolute poverty, and where one in five children dies before the age of five.

Yet the country with the most dangerous slums in Africa is widely seen as having the greatest natural resources on the continent and the most potential for development. After two generations of misrule, it is desperate for a new start.

That Nigeria can be both so rich and so poor at the same time is down to oil, first extracted in the Niger delta in the 1950s and now increasingly being pumped from off shore.

But instead of providing the simple kickstart for development that everyone first hoped for, the 100bn barrels that have been extracted since independence in 1961 have divided the nation, allowed successive military rulers to steal billions of pounds, led to civil war and a massive growth in arms trading, and led to endemic corruption at every level of life.

In fact, according to the British government yesterday, oil only provides each Nigerian an average of about 53 cents – less than 30p – a year.

Yesterday both the Treasury and the Department for International Development were well aware that Nigeria is still widely regarded as one of the most corrupt countries in the world, and that Britain would be criticised for writing off the debt.

But Nigeria is changing, they said, and the case for helping the poor was now incontrovertible.

According to the DfID, the risk of any money saved in a debt write-off being further spent on arms, salted out of the country, or squandered on white elephant projects, is now negligible compared to even a few years ago.

“The current Nigerian administration has been making huge efforts in the past few years to tackle corruption,” said a spokeswoman.

“Ministers have been dismissed, and the government is committed to change. The money saved will be ring-fenced to tackle poverty, the spending will be monitored. They have committed the money to go to the poorest,” she added.

The write-off was applauded by development groups. “This is good news. Nigerians have been paying out in debt repayments nearly six times the amount they receive in aid,” said Romilly Greenhill, ActionAid policy officer.

But the write-off is also seen as setting a precedent, marking the first time a country outside the heavily indebted poor countries initiative is receiving major debt relief.

In another sign of changing times, ActionAid and Oxfam will sit on a steering committee monitoring a special Nigerian anti-poverty fund set up with the proceeds – expected to amount to $1bn a year.

John Vidal, The Guardian, July 1, 2005