Nigeria’s president Muhammadu Buhari and his
administration have spent much of the last two and half years since he came to
office championing the idea that for Africa’s largest economy to have any hope
of making meaningful progress it needs to diversify away
from its reliance on oil.
But that day has not come. In fact, president
Buhari will be relieved oil prices and local production have both picked up
pace in the last few months because they have combined to help Nigeria record
two consecutive quarters of economic growth for the first time since the end of
2015.
It might seem like a minor milestone, but
after five straight quarters of the economy shrinking, it represents much more.
Over the past year, Nigeria had been mired in its first recession in over two
decades but latest data from Nigeria’s statistics bureau (NBS) shows that the
country’s recovery, albeit slow, is on track. It recorded 1.4% growth in the
third quarter.
Nigeria’s recession was triggered mainly by
troubles in its oil sector. The fall in global oil prices coincided with a brief resumption in
militancy in Nigeria’s oil-rich down south which caused oil production levels
to fall to 20-year lows. As a result, Nigeria’s oil revenues fell sharply
and, to stem the bleeding, the central bank set up currency controls to
conserve its foreign reserves but that spawned a dollarshortage which hit local businesses hard.
As always, the turnaround in Nigeria’s
economic fortunes is linked to its oil. In the third quarter of 2017, oil
production has reached its highest point since the first quarter of 2016, NBS data
shows. Nigeria’s president Buhari will certainly be hoping the growth streak
continues. With only one full year left in office, Buhari has proposed a $23.9 billion recordbudget for 2018. But to fund it, Nigeria will have to step up
its oil production even more as the budget is based on oil production of 2.3
million barrels per day—around 200,000 more than it currently produces.
Another way the government plans to shore up
the deficit budget is through external borrowing. Its latest dollar eurobond
launch is looking to raise at least $2.5 billion and is reportedly on course to do so.
It follows on the heels of a $1 billion eurobond loanraised in February.
Source: Quartz Africa
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