Oil collapse, a delayed devaluation, and Nigeria's 2016 recession

Nigeria's economy and currency are heavily tied to oil, which historically supplied around 90% of export earnings and roughly two-thirds of government revenue, and when crude prices collapsed from above 100 dollars a barrel in 2014 to around 30 dollars in early 2016, the naira came under severe pressure. The Central Bank of Nigeria initially resisted devaluing, holding the official rate near 197 naira per dollar through most of 2015 and early 2016 even as foreign reserves fell and a parallel black-market rate diverged sharply from the official one. That delay, critics argued, deepened the damage: GDP contracted 0.4% in the first quarter of 2016 and 2.1% in the second, pushing Nigeria into its first recession in 25 years, with full-year output shrinking roughly 1.6%. On 20 June 2016 the CBN finally floated the naira, which immediately depreciated from 197 to around 253 naira per dollar before drifting further to around 280-305 by year-end, a cumulative loss of more than 40% of its value. The episode left the CBN managing a multiple-exchange-rate system for years afterward as it tried to balance stability against further devaluation.