High oil prices threaten Nigeria’s economic stability, warns investment expert Samson Esemuede.
Rising oil prices generate more public funds but inflate prices within the economy which decreases purchasing value.
Additional revenue from increased oil prices will lose value through inflation which reduces purchasing power of citizens.
Esemuede makes it clear that Nigeria achieves its best economic results when the global market values oil at a moderate rate.
The economy becomes unstable when prices reach either extremely high or low points.
Throughout its history the Nigerian economy has maintained heavy dependence on exporting oil products.
The economic dependence on oil export makes this country exposed to worldwide oil price movements.
In the period from 2014 through to 2016 Nigeria saw its GDP growth rate decrease to 2.7% during the year 2015.
In 2016 Nigeria entered its first economic recession during the past quarter-century while its economy shrank by 1.6%.
High Oil prices create higher expenses for products which eventually drives up the inflation levels.
The situation puts pressure on household financial resources leading to more poverty throughout the population.
During September 2024 Nigerian inflation reached 32.7% because food and energy prices continue to increase.
The Central Bank of Nigeria stands prepared to activate every available tool they possess for inflation management purposes.
Prolonged inflationary trends turn into serious threats for maintaining economic steadiness while diminishing growth potential.
The Nigerian government is working to find alternative energy sources as a solution against the negative impacts of expensive oil costs.
Through its CNG program the federal government seeks to extract natural gas reserves in Nigeria.
Also, the government seeks to lower transportation expenditures while decreasing the usage of gasoline products.
The government plans to transform 1 million vehicles into CNG vehicles during the following three-year period while more than 100,000 vehicles already function with CNG technology.
The adoption of alternative energy faces barriers because infrastructure is deficient and people have low knowledge about these resources.
The observations of Esemuede contradict popular thinking which states that rising oil prices automatically benefit oil nations particularly Nigeria.
The expert emphasizes that nations must achieve equilibrium in oil rates to achieve sustainable financial expansion.
High oil prices generate higher government funding yet threaten the economic stability of Nigeria.
To tackle these risks both strategic oil price control and energy source variety need to be implemented.
