A cross section of local and offshore experts believes the Nigerian situation remains bright and optimistic in 2O16 despite a deluge of challenges.
According to a report by Kate Douglas, last year was tough for Nigeria, not only because it felt the effects of a collapsed oil price, but also the cumulative impact of election tensions that created uncertainties in the national economy.
“Nigeria is not growing in per capita terms – it’s true, it did not in 2015. But the oil price has halved so you can understand why.
The more positive way of looking at it is that this is an economy that’s still growing, that still provides opportunity to foreign investors, that is led by a president who is determined to reduce corruption in a country that unfortunately has a known reputation for it… and a president that seems more capable of reducing the ethnic tensions that have existed in Nigeria,” notes Renaissance Capital’s Global Chief Economist, Charles Robertson.
“So you have an improving security situation, improving anti-corruption policies, and a country still growing [around] 3%, even when its primary export has just halved in price. It would be unwise to write-off Nigeria.”
Anna Rosenberg, H ead of Frontier Strategy Group’s sub-Saharan Africa Research practice, agrees. Her firm recently ranked all sub-Saharan African countries in terms of their resilience to external shocks – with Nigeria scoring quite high.
“So while its main economic trajectory in 2016 is going to be tough, I think that at the end Nigeria is going to get out of it fine, and relatively strengthened,” comments Rosenberg.
According to Edward George, Ecobank’s Head of Research, “we do expect a bit of a pick-up this year, but Nigerians are grappling with very big problems.”
Nigeria’s 2016 budget, revealed in December, was calculated with Brent crude – which contributes the largest share of the country’s foreign exchange reserves – estimated at a price of US$38 per barrel, greatly reduced from last year’s benchmark of $53 per barrel. However, this week Brent crude fell to below $28.
“There are some really difficult decisions to make in terms of public spending and trying to control foreign exchange reserves. And the biggest challenge for them this year is really the currency,” continues George.
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