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Fluctuations in the global price of crude oil has become a major concern for
many economies who depend majorly on oil export for foreign exchange earnings. This
study therefore investigates the impact of crude oil price volatility on some selected
economic sectors (transport, agricultural and manufacturing sectors) in Nigeria from
1981q1 to 2015q4. Adopting the exponential generalized autoregressive
heteroskedasticity (EGARCH) model, the empirical result shows that a certain period of
low volatility is followed by another period of low volatility. Meanwhile, a period of high
volatility is followed by another period of high volatility. Crude oil price has a negative
impact and is statistically significant to transportation sector, manufacturing output, and
agricultural sector respectively. Based on the findings, the study recommends that the
government should reform the economy and diversify her export revenue base as a means
of minimizing reliance on crude oil and petroleum product. Some of these reforms include
fiscal prudence, reform in budgetary operations, export diversification, revival of non-oil
sectors, which will further shield the economy from the impact of oil price fluctuations.
The study further recommends that policy makers of net oil exporting countries like
Nigeria should give support to the restructuring of their economies in such a way that
their non-export will boost their domestic economy.
