Effects of Crashing Crude Oil Prices on Oil Producing Countries : Nigeria's perspective

Abstract

The objective of the thesis research was to carry out an extensive study and provide the impacts dwindling crude oil prices had on oil producing countries, using Nigeria as a case study and the palliative measures the government had put in place in managing the situation effectively.

In 2015, Nigeria emerged as having the largest economy in Africa, with an estimate of about $1.1 trillion. The country moved significantly from agriculture being the main sector of the economy to oil exploration since oil discovery in the late 1950s. Due to the overreliance on oil, several other sectors of the economy such as manufacturing, energy, transportation, banking and telecommunications are directly influenced and dependent on the activities within the oil sector.

In 2008, at the height of the global boom when crude oil price reached its record highest price, the other sectors of the economy experienced a positive turnaround. Without doubt, the country had witnessed around 3% fall in GDP since the start of when the global prices of crude oil crashed in 2014, the government revenues also declined and the other non-oil sectors of the economy also contracted as a result.

This thesis has provided in details both in facts and economic figures the negative effects the economy had suffered such as increase in external debt due to borrowing to finance capital projects, stagnated savings, job loss. The palliative measures which included economy policies and diversification plans the government had introduced to prevent further downturn of the economy and preventing future occurrence are also discussed herein.