Project Abstract

The global financial crisis of 2007-2008 had far-reaching consequences on economies around the world, including Nigeria. This study aims to provide an appraisal of the impact of the global financial crisis on the Nigerian economy. By analyzing various economic indicators, this research seeks to understand the extent to which Nigeria was affected by the crisis and how the economy responded to the challenges it posed. The global financial crisis originated in the United States with the collapse of the subprime mortgage market, which triggered a chain reaction leading to a worldwide economic downturn. Nigeria, as an emerging market economy, was not immune to the effects of the crisis. The country experienced a decline in export revenues due to falling oil prices, which significantly impacted its foreign exchange earnings. The financial sector in Nigeria also felt the effects of the crisis, with disruptions in global financial markets leading to reduced capital inflows and increased risk aversion among investors. The Nigerian government implemented various policy measures in response to the global financial crisis, including stimulus packages to boost domestic demand and support key sectors of the economy. The Central Bank of Nigeria also took steps to stabilize the financial system and ensure the continued flow of credit to the economy. These policy interventions helped to mitigate the impact of the crisis on the Nigerian economy and supported its recovery in the years following the global financial meltdown. Through a comprehensive analysis of economic data and policy responses, this study sheds light on the specific ways in which the global financial crisis affected Nigeria. By examining key indicators such as GDP growth, inflation, exchange rates, and foreign direct investment, this research provides valuable insights into the vulnerabilities and resilience of the Nigerian economy in the face of external shocks. The findings of this study will contribute to the existing literature on the impact of global financial crises on emerging market economies and provide policymakers in Nigeria with valuable lessons for managing future economic challenges. Ultimately, by understanding the effects of the global financial crisis on the Nigerian economy, this research aims to inform strategies for building a more resilient and sustainable economic future for the country.

Project Overview

The world economy is facing the most severe financial crisis since the Great Depression of the last century. The risk of global recession has heightened significantly and volatility of commodity prices, which is the mainstay of most developing countries like Nigeria, has increased further. If this situation continues to deteriorate, developing countries could be in great jeopardy.

Time series data relating to the period 1990-2008 were collected and analysed accordingly, using the econometric technique of multiple regression. Statistical tests of significance were also carried out in order to determine the possible impacts of the current global financial crisis on the Nigerian economy. The tests include: Correlation Coefficient (R); Coefficient of Multiple Determination (R2); t–Test; F-statistic and Durbin-Watson test.

The findings of this study revealed that the financial crisis was responsible for the fluctuation in crude oil prices, external reserves, exchange rates, decline in export, lower portfolio and foreign direct investment (FDI) inflow, fall in equity market, decline in remittance from abroad, dwindling economic growth, etc.

It was concluded that the Federal Government should come up with intervention policies that will minimise these effects and jumpstart the economy and that business operators should learn to do things using resources at their disposal to develop and expand at manageable level to stem the tide of the crisis.