NIGERIA
Is Nigeria ready for revival?
Nigeria was once feted as Africa ' s leading economy. However, attacks on its oil infrastructure and a dollar liquidity crunch have pushed it into recession. But the government is determined to push through strategies that will revive this regional powerhouse.
Nigeria’ s ascent to assume the mantle of Africa’ s leading economy is one of the more impressive emerging market growth stories of recent times. But, in common with many of the country’ s peers, this trajectory has been volatile, characterised by surging highs and challenging lows. The past two years have been no exception, as lower oil prices have hit the economy hard. Today, Nigeria is dealing with several vexing problems, including a dollar liquidity crunch and growing insecurity in the oil-producing Niger Delta.
In July, inflation hit an 11-year high of 17.1 %, while second-quarter growth figures revealed that the economy had entered into a recession for the first time in more than 20 years. These difficulties are having a material impact on the wellbeing of a population that is increasing more quickly than gross domestic product( GDP) growth, which is projected to contract by about 1.8 % this year.
Infrastructure spending
But the authorities are responding to these setbacks with a mix of policy changes and supportive spending plans to bring about positive change. In June, the Central Bank of Nigeria
( CBN) implemented a flexible exchange rate for the naira, while the administration of president Muhammadu Buhari is trying to push ahead with ambitious spending plans to develop the country’ s infrastructure.
For Nigeria, there will be no easy or immediate fix, though the government is now handling the situation with an improved set of policy tools. With further reforms, there is a strong chance it will be able to bounce back more quickly than expected. To its advantage, Nigeria boasts a solid banking system, a large emerging middle class and an investment opportunity suite that spans multiple sectors. Leveraging this potential while shielding it from the worst of the current crisis is now at the top of the government’ s agenda.
Indeed, a number of business leaders view the current environment as an opportunity to achieve lasting economic reform.“ Nigeria’ s economy is facing a number of serious challenges today. But there is an abundance of latent potential and I think the current situation will be a turning point in terms of achieving
IN JUNE, THE CENTRAL BANK OF NIGERIA( CBN) IMPLEMENTED A FLEXIBLE EXCHANGE RATE FOR THE NAIRA
48 Business Times Africa | 2016