“That the current uptick in Nigeria’s economy relies largely on its oil sector puts its chances of lasting at risk.”
That prediction, made by the World Bank in 2017, and based on decades of Nigeria’s dependence on oil, has proven astute. Amid a crippling coronavirus pandemic, demand for oil has crashed as global economies have been shut down. The resulting steep drop in oil prices mean Nigeria is back in painfully familiar territory: shorn of revenue and on the brink of its second recession in four years.
The price of Brent crude, which Nigeria’s oil is benchmarked against, has slumped by over 50% since opening on Jan. 1 at $66 per barrel. That’s a key pain point for Nigeria, given its initial $34 billion budget for 2020 was based on an assumed oil price of $57.