The fall of crude oil prices in 2014 has left oil exporting countries in a scramble to develop effective economic policy to minimize the effect of the crisis. The decision of the Nigerian government to peg the naira after the fall of oil prices in 2014 was heavily influenced by past Nigerian attitudes toward the IMF, and while the peg did help to keep inflation at a lower level than other oil exporting countries, the strict control of the naira failed to address the deeper structural issue of lack of diversification in the Nigerian economy.
In 2014 oil prices around the world fell due to increased U.S. production of fossil fuels and a growing use of alternative forms of energy. Many oil exporting countries who were economically dependent on …show more content…
President Buhari previously ruled Nigeria from 1983 to 1985 after his role as one of the major military leaders in the coup to overthrow the democratically elected president, Shehu Shagari. Buhari argued the coup was justified due to corruption in the government and the economic decline of the country after the oil boom of the 1970s. When oil prices began to fall under Buhari’s rule, he ignored advice to allow the naira to depreciate and refused financial assistance from the IMF. Buhari was ousted in another coup by General Ibrahim Banbangia who ruled from August 27, 1985 to August 27, …show more content…
A correctly valued currency would make Nigerian goods more competitive both at home and abroad, helping to strengthen domestic industry. While the devaluation of the naira would cause extreme inflation, this would be a small and temporary price to pay for a more diversified economy that would not be so dependent on oil prices. The fall of oil prices in 2014 could have been a chance for the Nigerian economy to rebuild around a more diversified basket of exports and prevent future crises. Buhari’s decision to peg the naira weighed short term economic effects over long term stability, largely due to domestic pressures from the Nigerian people to guard against inflation and resist partnering with the IMF. Buhari’s decisions have created a probability of another oil crisis in the Nigerian economy, if oil prices drop again as the world switches to cleaner forms of energy, and if the United States continues to invest in new ways to extract
In 2014 oil prices around the world fell due to increased U.S. production of fossil fuels and a growing use of alternative forms of energy. Many oil exporting countries who were economically dependent on …show more content…
President Buhari previously ruled Nigeria from 1983 to 1985 after his role as one of the major military leaders in the coup to overthrow the democratically elected president, Shehu Shagari. Buhari argued the coup was justified due to corruption in the government and the economic decline of the country after the oil boom of the 1970s. When oil prices began to fall under Buhari’s rule, he ignored advice to allow the naira to depreciate and refused financial assistance from the IMF. Buhari was ousted in another coup by General Ibrahim Banbangia who ruled from August 27, 1985 to August 27, …show more content…
A correctly valued currency would make Nigerian goods more competitive both at home and abroad, helping to strengthen domestic industry. While the devaluation of the naira would cause extreme inflation, this would be a small and temporary price to pay for a more diversified economy that would not be so dependent on oil prices. The fall of oil prices in 2014 could have been a chance for the Nigerian economy to rebuild around a more diversified basket of exports and prevent future crises. Buhari’s decision to peg the naira weighed short term economic effects over long term stability, largely due to domestic pressures from the Nigerian people to guard against inflation and resist partnering with the IMF. Buhari’s decisions have created a probability of another oil crisis in the Nigerian economy, if oil prices drop again as the world switches to cleaner forms of energy, and if the United States continues to invest in new ways to extract