The International Monetary Fund (IMF) has reviewed upward the economic growth projections for Nigeria from 0.7 percent to 1.9 percent in 2018. If that occurs, Nigeria would have been well out of recession and unto the path of economic recovery and growth.
The Fund maintained the 0.8 percent gross domestic product (GDP) growth rate for 2017.
In a global economic outlook report released in January, the IMF had projected that Nigeria’s economy will grow at 0.7 per cent in 2018. The Fund had in October last year forecasted that the nation’s economy would grow at 0.2 per cent in 2018.
The current growth projection was contained in the Fund’s Regional Economic Outlook for Sub-Saharan Africa launched yesterday in Abuja, Nigeria’s capital.
The report was which was titled: “Sub Saharan Africa: Restarting the Growth Engine” Economic growth in sub-Saharan Africa should recover slightly to 2.6 percent this year after a more than two-decade low in 2016 as commodity exporters faced lower prices.
A modest recovery in growth, to 2.6 percent, is expected in 2017, but the report said the underlying regional momentum remains weak, and at this rate, sub-Saharan African growth will continue to fall well short of past trends of 5-6 percent, and barely exceed population growth.
The IMF noted that “many countries suffered a very substantial commodity price shock” adding that “insufficient policy adjustment accounts for the broad-based slowdown in growth momentum in the region.” This is especially the case among commodity exporters, notably oil exporters, such as Angola, Nigeria and the countries of the Central African Economic and Monetary Union (CEMAC) it said.
The Head of the IMF’s African department, Abebe Selassie, says strong policy decisions could turn things around. “Sub-Saharan Africa remains a region with tremendous potential for growth in the medium term, but with limited support expected from the external environment, strong and sound domestic policy measures are urgently needed to reap this potential,” Selassie said.
The IMF also said Sub-Saharan African countries “should strengthen social protection for the most vulnerable people. The current environment of low growth and widening macroeconomic imbalances risks reversing recent progress made in alleviating poverty.”
Speaking at the launch, the Governor, Central Bank of Nigeria (CBN) Mr. Godwin Emefiele said the impact of the forex policy has been positive as more local businesses are accessing forex to import those goods Nigeria don’t have capacity to produce.
He also said the ERGP is very robust and should be implemented quickly to spur economic growth.
The Minister of Finance, Mrs. Kemi Adeosun, said what’s important is that, with the Economic Recovery and Growth Plan, the government is on the right track. “We are doing the right thing by implementing the recommendations in the reforms – fiscal consolidation, investment in infrastructure, and all the things we need to get the economy on the path of growth is what we are doing. I think the ERGP is a right policy and the 2017 budget will be passed soon even as we release the next round of monies for capital projects” she said.
On the debt profile, she said Nigeria’s debt to GDP is lower than the average but her problem is the debt service that is relatively high. She noted that most of Nigeria’s debts mature in two years. “We are only borrowing for short term. We need to borrow for long term projects. What we are doing is refining the debts that are maturing in two years to longer term. We are trying to match debt service to revenue. Our revenue in Nigeria is very low. Tax to GDP is 6 percent. We are one of the lowest in Africa. It’s not that we are borrowing too much but our revenue is too low. The concern is how do we get the people to pay the right tax and how do we block the tax leakages?” she said.