The Impact on Economic Growth of Nigeria’s Oil Dependency

Since the discovery of oil in Nigeria in 1956, the production and dependence of oil has steadily increased and has had a great impact on its economy. With the recent decline in oil price and subsequent fall in economic growth, this research paper aims to show how limiting oil dependency has been for the growth pro-cess, which is measured by gross domestic product (GDP). The scope of the paper will touch on the nature and extent of Nigeria’s oil dependency in relation to its lack of diversification in the oil sector to the non-oil sector, particularly the manufacturing sector. Through the use of empirical methods such as Explora-tory Data Analysis (EDA), and a range of qualitative and quantitative data, the relationship between oil and GDP growth is studied to show the impact oil has had on the Nigerian economy since 1969. The findings of this research demonstrate there is a positive correlation be-tween oil dependency and GDP growth which is affected by a lack of diversification and the fluctuations in world oil price. The volatility of the economic growth can be attributed to the fluctuations in oil price, meanwhile the lack of sustained growth is a consequence of the lack of diversification. Therefore, it can be concluded that there is a need to introduce policies which promote di-versification from the oil sector into the non-oil sector, especially the manufacturing sector, so as to experience a sustained economic growth.