The Influence of Oil Price Uncertainty on Economic Activities in Nigeria

Samson Ogege,Tarila Boloupremo

doi:10.5195/emaj.2020.195

Abstract

This paper seeks to appraise the uncertainty of oil price influence on the activities of Nigerian economy with regard to human development in Nigeria. The research utilized the annual time series data spanning between 1981-2018, and the stationarity of the observed variables was tested by carrying out a unit root test and the stationarity of most of the observed variables were revealed at first difference. The secondary data employed were analyzed with the aid of least square technique of data analysis to assess the association between the observed variables. In response to the outcomes of the analysis, it was revealed that crude oil price positively and insignificantly influences life expectancy, but significantly influences consumption per capital and contrarily, it revealed negative and insignificant influence on physical quality of life and education index. It was inferred by the study that, there is existence of a comparative association of oil price with the indicators of Nigerian economic development. However, there is divergence of influence of the mechanisms of economic attributes as well as performance indicators. The study recommends that, a strict measure of monetary policy should be adopted by the government to regulate the rates of interest and inflation in the economy on a regular basis.

Highlights

It has become a tradition for the Nigerian economy to be exclusively dependent on crude oil and it has as well become a yardstick for determining the national budget and planning, revenue sharing and the allocation of capital
The analysis shows that, about 76.6% of the influence of the prices of crude oil on the growth of Nigerian economy is accounted for by the mix of input variables used in this model, while the variation of 23.4% is caused by the variables not considered in the model
This study investigates the uncertainty of oil price influence on the activities of Nigerian economy with regard to human development and results of the

Summary

Introduction

It has become a tradition for the Nigerian economy to be exclusively dependent on crude oil and it has as well become a yardstick for determining the national budget and planning, revenue sharing and the allocation of capital. It is quite significant to assert that, the determinant factors of oil price are exogenous in nature and are beyond the control of Nigeria. It causes stagnation in the Naira value and that Nigeria as a country does not have the potential to independently control the causes of the upward and downward movement in the oil price. Due to the significant role crude oil plays in revamping and resuscitating the country’s economy as well as its political fate, it has become the main source of generating revenue for the Nigerian economy. Crude oil’s influence on the economic activities of Nigeria has been ascertained to be positive and negative. Its influence is positive in the sense that it presents a lot of benefits to the country in diverse means, and has negatively ended up to be a curse (Ogwumike and Ogunleye, 2008)

Methods

Findings

Discussion

Conclusion