Nigeria falls back into another recession
A drop in oil prices amid the COVID-19 pandemic has led to declining economic growth rates in Nigeria. Like many African countries, Nigeria relies heavily on its extractive sector – particularly oil, which accounts for 70% of its income. Over the past two years, the price of oil has fallen from a high of 256.37 a barrel in 2018 to $104.14 today.
The fall of the Nigerian currency – the Naira – has placed an additional burden on ordinary citizens who have complained of higher prices.
According to Kevin Daly of Aberdeen Asset Management, “A lot of Nigeria’s current predicament could have been avoided.”
The Nigerian economic disaster has been worsened by the Central Bank of Nigeria’s failed attempt to boost the Naira. The Bank’s monetary program had an adverse impact in the foreign exchange market which hurt its currency and ruined the country’s reputation as having a sound monetary policy.
With the approval of a new COVID-19 vaccine, the global economy is expected to rebound in the second quarter of 2021. However, without a sound policy to diversify the Nigerian economy – the country will remain at risk of external shocks and deteriorating economic conditions.