COVID-19 Pandemic, Oil Slump and the Nigerian Economy

Abstract

The COVID-19 pandemic came as a shock to the global economy and its impact was well felt. However, it came with the possibility of implementing structural policies and reforms. The pandemic slowed down economic activities in the global market and translated into crashed oil prices, which gave room for reforms such as subsidy removal. Nigeria maximized the opportunity to remove the full subsidy on petroleum products, especially Premium Motor Spirit (PMS). But the possibility was not last enough for the populace to enjoy. COVID-19 pandemic and its consequence on oil price had affected the Nigerian economy by ways of fiscal constraint, loss of revenue, the exit of businesses in the market, job cuts and soaring unemployment rate. Exchange rate fluctuation is prevalent, the inflation rate is on the rise and thereby, poverty incidence has increased. In cushioning the effect of the pandemic, governments at all levels, religious bodies, businesses and individuals donated towards the fight and support of people during the pandemic. Nigeria should maintain a strong economic basis, single its double sides of being exporter and importer at the same time; and ensure local refining of the petroleum products. Also, it has come of age for developing a national package to forestall a similar crisis in an instance of similar occurrence.

Impact of Oil Price Shocks and Economic Growth in Nigeria: Evidence from 1990-2021

“…Trade can help mitigate the negative impact of oil price shocks, but the relationship between oil price and other hydrocarbon prices is complex and varies depending on supply and demand shocks. The consequence of oil price changes has become more pronounced in recent years in Nigeria, especially in the aftermath of covid-19 pandemic, the ongoing conflict in Ukraine, global financial crisis, instability in the middle East due to Gaza conflict and unconventional monetary policy (Bello andGidgibi 2022: Moshiri andkheirandish, 2024) Nigeria, as one of the leading oil-producing nations in Africa, has been significantly influenced by the global dynamics of oil prices. The volatility and unpredictability of oil prices have long been recognized as a critical factor affecting various dimensions of the country's economy.…”