The effect of global commodity price fluctuations on Nigeria’s economy: Evidence from NNPC (2000–2020).
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Background of the Study :
Global commodity price fluctuations have profound implications for economies that are heavily dependent on primary exports. In Nigeria, the Nigerian National Petroleum Corporation (NNPC) plays a pivotal role in managing the country’s oil revenues, which constitute a major portion of national income. Between 2000 and 2020, Nigeria has experienced significant volatility in global oil prices, directly impacting government revenue, foreign exchange earnings, and overall economic stability (Ibrahim, 2023). These fluctuations affect investment decisions, fiscal planning, and balance-of-payment dynamics. The study examines how price shocks—both upward and downward—affect the performance of the NNPC and, by extension, the Nigerian economy. It explores transmission mechanisms, such as budget deficits and inflationary pressures, that arise from price volatility. In addition, the research considers the role of global market trends and geopolitical events that influence commodity prices and their subsequent impact on economic policy formulation. The analysis incorporates empirical data, historical trends, and policy responses to provide a comprehensive evaluation of the resilience of Nigeria’s economy amid external shocks (Adebola, 2024; Chukwuma, 2025).
Statement of the Problem
Despite various policy interventions, Nigeria’s economy remains vulnerable to global oil price volatility. Fluctuations in commodity prices have led to unpredictable revenue streams for the NNPC, resulting in budgetary uncertainties and economic instability. These price shocks contribute to inflation, reduced public investment, and depreciating currency values. The challenge lies in bridging the gap between policy design and the actual mitigation of these external shocks. This study investigates the impact of commodity price fluctuations on economic stability and seeks to identify measures that can buffer adverse effects on the national economy (Ibrahim, 2023).
Objectives of the Study:
To evaluate the impact of global commodity price fluctuations on Nigeria’s economic performance.
To analyze the response mechanisms of the NNPC to price volatility.
To recommend policy measures to mitigate adverse effects.
Research Questions:
How do global commodity price fluctuations affect Nigeria’s economy?
What strategies does the NNPC employ to manage price volatility?
What policy interventions can enhance economic stability amid price shocks?
Research Hypotheses:
H1: Global commodity price fluctuations significantly affect Nigeria’s economic performance.
H2: Inefficient response mechanisms at the NNPC exacerbate economic instability.
H3: Comprehensive policy interventions can mitigate the adverse effects of price volatility.
Significance of the Study
This study is significant as it provides a detailed evaluation of the effects of global commodity price fluctuations on Nigeria’s economy through the performance of the NNPC. The findings will inform policymakers about vulnerabilities in revenue generation and economic planning, guiding the development of robust strategies to enhance economic resilience. Improved management of price volatility will contribute to more stable economic growth and fiscal sustainability (Chukwuma, 2025).
Scope and Limitations of the Study:
Limited to the topic only.
Definitions of Terms:
– Commodity Price Fluctuations: Variations in the market prices of primary commodities.
– NNPC: The Nigerian National Petroleum Corporation responsible for oil revenue management.
– Economic Stability: The capacity of an economy to maintain steady growth and low volatility.
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