Nigeria is preparing for a long period of low oil prices, Muhammadu Buhari, president of Africa’s largest oil producer, said Friday at an energy event.
Nigeria diversifies away from oil, which relies heavily on its foreign exchange gains, the president added. Africa’s largest oil producer, which is also the continent’s largest economy, wants to expand non-oil sectors to diversify its revenue, Buhari said, as cited through Nigerian media.
The oil and fuel industry continues to contribute to Nigeria’s economic progression and economic growth, accounting for about 10% of gross domestic product (GDP), the president added.
Nigeria, like oil-producing countries, is suffering the double blow of the coronavirus-related economic recession and falling oil prices.
In the last quarter of this year, Nigeria’s economy shrank by 6.1% year-on-year due to low oil costs and blockades in the country to curb coronavirus.
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After the OPEC agreement began in May, Fitch Ratings said Nigeria’s participation in the deal would lead to “a deeper economic downturn and budget deficit and increased pressure on external finances as a result of falling oil prices.”
The value of Nigeria’s balanced budget, the value of oil to which Nigeria balances its budget, is very high, at US$133, consistent with the barrel, given the remarkably low non-oil budget contributions, Fitch said.
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