According to Hedley and Gokkent (2015), as a result of the negative shift in Nigeria’s current account and balance-of-payments, foreign investment is forecasted to decrease similar to the substantial reduction the country experienced in 2014. As a result, the Nigerian government has attempted to harden their monetary policies through the increase of government spending (utilizing international reserves and savings accounts) and alleviate the number of investor outflows (Hou et al, 2015; Hedley & Gokkent, 2015). For example, the Nigerian government’s oil savings account has depleted from a favorable amount of $21 billion in 2008, down to $2 billion in 2015 (Wallace & Mbachu, 2015). However, despite these changes and a subsequent 1% increase
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(2015), the oil price drop of 2014 displayed both benefits and drawbacks to the African nations of Nigeria and Tanzania in addition to numerous affects the worldwide oil market. Considering Nigeria is Africa’s leader in the exporting of crude oil, adverse effects stemming in the forms of decreased African oil value and reduced oil exports severely harmed the country’s profits, which accounts for two-thirds of the country’s total revenue (Hou et al., 2015; Wallace & Mbachu, 2015). These affects have caused the Nigerian government to enact stricter monetary policies by increasing government spending, which further enhances their trade and balance-of-payments deficit (Hou et al., 2015). Conversely, Tanzania has benefited tremendously from lower oil prices, which has allowed the country to recognize foreign capital inflows, growth within a number of vital industries, lower inflation rates, increased disposable income, and dramatic improvements of financial accounts (Hou et al., 2015; Five top offshore oil companies and their future outlook, 2014). However, in addition to the absence of decreased oil production from members within the OPEC, increased U.S. oil production, and decreased demand in industrialized countries have led to the supply of oil overtaking international demand (Krauss, 2015; Hou et al., 2015; Bowler, 2015). Furthermore, the appreciation of the U.S. dollar due to increased oil independence, along with the Eurozone’s deflationary characteristics and low interest rates are other causing countries to enact policy changes (similar to Nigeria) in order to increase overall demand and stimulate economic growth (Kelly, 2014; Hou et al., 2015). Despite these domestic and global issues, Nigeria’s enhanced concentration towards non-oil industries and growing authority within OPEC, should diminish the country’s dependence on oil revenues and assist in the improvements of their current account and balance-of-payments
(2015), the oil price drop of 2014 displayed both benefits and drawbacks to the African nations of Nigeria and Tanzania in addition to numerous affects the worldwide oil market. Considering Nigeria is Africa’s leader in the exporting of crude oil, adverse effects stemming in the forms of decreased African oil value and reduced oil exports severely harmed the country’s profits, which accounts for two-thirds of the country’s total revenue (Hou et al., 2015; Wallace & Mbachu, 2015). These affects have caused the Nigerian government to enact stricter monetary policies by increasing government spending, which further enhances their trade and balance-of-payments deficit (Hou et al., 2015). Conversely, Tanzania has benefited tremendously from lower oil prices, which has allowed the country to recognize foreign capital inflows, growth within a number of vital industries, lower inflation rates, increased disposable income, and dramatic improvements of financial accounts (Hou et al., 2015; Five top offshore oil companies and their future outlook, 2014). However, in addition to the absence of decreased oil production from members within the OPEC, increased U.S. oil production, and decreased demand in industrialized countries have led to the supply of oil overtaking international demand (Krauss, 2015; Hou et al., 2015; Bowler, 2015). Furthermore, the appreciation of the U.S. dollar due to increased oil independence, along with the Eurozone’s deflationary characteristics and low interest rates are other causing countries to enact policy changes (similar to Nigeria) in order to increase overall demand and stimulate economic growth (Kelly, 2014; Hou et al., 2015). Despite these domestic and global issues, Nigeria’s enhanced concentration towards non-oil industries and growing authority within OPEC, should diminish the country’s dependence on oil revenues and assist in the improvements of their current account and balance-of-payments