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ABSTRACT
The study is an investigation of the effect of oil dependency on the Nigerian Economy. The study adopted an Error Correction Model (ECMO which was used to rectify short term disequilibrium. The study was able to achieve a comprehensive interplay between variables under study encompassing both transient dynamics and sustained balance. The data on Oil dependency was adopted using trade data focusing on the percentage of oil exports relate to total exports. Lastly, data on global oil prices can be gotten from OPEC database. The result revealed that the impact of oil dependency on Nigeria’s economic growth as revealed by the empirical investigation presents a complex and nuanced picture which implied that abundant oil reserves have historically played a pivotal role in the country's economic landscape. This finding underscores the imperative for diversification and comprehensive policy reform. The negative relationship between oil dependency and both agricultural and manufacturing growth is evident of the vulnerability of the sector to oil price fluctuations and emphasizing the urgency of reducing reliance on oil exports. Agriculture, a sector with significant potential for growth and employment generation, requires substantial investment in infrastructure, research, and access to credit to thrive independently of oil revenues. The Study recommended that implement a comprehensive economic diversification strategy to reduce the country's heavy reliance on oil revenues. Encourage the development of nonoil sectors, such as agriculture, manufacturing, and services, through targeted policies and incentives. Maintain exchange rate stability to minimize uncertainty for businesses, including those in agriculture and manufacturing. Consider using monetary policy tools to manage exchange rate fluctuations. Increase public and private investment in the agricultural sector. Allocate resources to improve infrastructure, access to credit, and agricultural research and development to enhance productivity and value addition.
