Nigeria is Africa’s biggest oil producer. But the fall in crude oil prices has Nigerians preparing for a below average economy this year.
Nigeria’s economy has long been linked to oil. The country now produces more than two million barrels of oil a day.
Experts are worried, however, because crude oil prices have fallen below $30 a barrel. In 2014, oil was still valued at over $100 a barrel.
Nearly 70 percent of the Nigerian government’s revenue comes from the sale of oil. Oil makes up over two-thirds of Nigeria’s exports. That puts the country in a difficult position, according to energy experts.
“Oil is basically government’s main source of revenue of running the economy, or running the budget,” said Dolapo Oni, Ecobank’s Head of Energy Research.
When elected in 2015, President Muhammadu Buhari promised to provide jobs and to stop corruption. Those promises led to a 25 percent proposed budget increase over the year before.
Experts says the price of oil may force the government to rethink promised projects.
“If the promises are waiting while the government is spending money on luxuries…then there will be a crisis,” financial expert Bismarck Rewane said.
Dolapo Oni said that the price decline would also lead to major changes to the country’s oil industry. Among those changes are reforms to the fuel subsidy system that keeps fuel prices low. Other changes would be to the state-owned Nigerian National Petroleum Corporation. Both of these have been accused of waste by industry experts and civil society.
I’m Mario Ritter.
Words in This Story
revenue – n. money that is made by or paid to a business or organization
subsidies – n. money that is paid by the government to keep the price of a product or service low
crude - adj. unprocessed
barrel - n. a form of measurement equal to about 160 liters