The Crisis Of The Nigerian Economy - 1681 Words

PROBLEM STATEMENT: Economy of many nations is currently at distress due to current plunge of oil price the international market. This sink in crude oil price produces an economic shock especially to the poor and developing Countries that depend on crude oil revenues to balance their budgets (Iwayemi, Fowowe, 2011; also see Effiong, 2014). Nigeria, being one of those nations, is currently experiencing economic crisis. For instance, many states in the federation presently can no longer pay their employees’ salaries or provide basic services to their citizens. They are borrowing money or requesting for bailout from the Federal government to fulfill their obligations to their people. The shocking effects of this oil price drop extended†¦show more content†¦Also, over dependent on crude oil revenues to balance the budget, lack of diversification of economy, and mismanagement of the revenues from crude oil sales. Others issues include oil thefts, pipeline vandalization, dwindling of oil r evenue in the country contributed to the problem. For example, Shuaibu, Mohammed, (2014), point out that, â€Å"over-reliance on crude oil for over 90 percent of Nigeria s foreign exchange earnings makes its external account susceptible to international crude oil price fluctuations†. The large amount of proceeds earned from oil boom years were not properly utilized for meaningful and sustainable development, as such, poverty continued to be in the rise and people remain deprived of efficient energy services and sustainable livelihoods. The crude oil glut therefore induced huge dislocation in the economy, joined with gross mismanagement of resources and resulted into borrowing leading to increase in external debt. Abam, et al (2014) agreed that the high proceeds obtained from crude oil export in all the boom years brought about an unsustainable spending profile, which led to economic catastrophe when global petroleum prices crashed in 1986 and other subsequent years (Niger ia–Economy 2005; Suleiman, 2010). Some experts believed that Nigerian current woes are caused by resource curse or Dutch disease, while others argued that problem is caused by