In July 2018 the International Monetary Fund (IMF) released its world economic outlook report which projected that the Nigerian economy would grow by 2.1% in 2018 and 2.3% in 2019. In its October 2018 Regional Economic Outlook for Sub-Saharan Africa, this projection was revised down to 1.9% for 2018. Nigeria’s annual inflation rate increased to 11.23% in August 2018 and economic growth in the second quarter of 2018 declined to 1.5% from 1.95% recorded in the first quarter. At a presentation for the regional outlook in Abuja last week, IMF senior resident representative for Nigeria Amine Mati reportedly stated that improvement in the non-oil sector was also responsible for the predicted growth, which is interesting considering that Nigeria’s economic structure is not very diversified.
In March 2017, Nigeria released its Economic Recovery and Growth Plan (ERGP) for 2017 to 2020 which aims to “restore economic growth while leveraging the ingenuity and resilience of the Nigerian people” and build a globally competitive economy. According to the plan, the economy was expected to grow by 2.19% in 2017 (this after a contraction of -1.6% in 2016 and a recession in the second quarter of that year) however it only grew by 0.8%. Real GDP is expected to reach a 7% growth rate by 2020. I must say the plan is rather overambitious given the time period, but it’s definately more stimulating than President Cyril Ramaphosa’s economic stimulus package.
Perhaps the slow economic growth could be attributed to political uncertainty due to the upcoming general elections which will be held on the 16th of February 2019. Escalating trade tensions or maybe even weak business confidence could also be to blame (Let us not forget how the Central Bank of Nigeria deducted R75 million from Stanbic’s account and the $8.13bn it ordered MTN South Africa to refund plus the $2bn tax bill handed to MTN, seriously, what is going on with MTN in Nigeria). Whatever the case, the Nigerian government is hard at work with plans to sell state-owned companies in order to fund its 2018 budget instead of borrowing more money. Commendable seen as more than 50% of its revenue is spent on debt interest payments.
Aggregate growth rate for the Sub-Saharan region is expected to reach 3.1% in 2018 and 3.8% in 2019. This is said to be held back by its three largest economies (Nigeria, South Africa and Angola). South Africa and Angola’s growth projections are 0.8% and -0.1% in 2018 respectively.