Economy
From The Report: Nigeria 2016
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As Africa’s most populous nation, and with the biggest oil and gas reserves in the region, Nigeria has long been one of the continent’s sought-after markets, but also one of its most complex and challenging. A GDP rebasing in 2014 modernised the country’s statistical measurements, expanding GDP to N94.14trn ($155.1bn at the time of printing) in 2015. As the current government approaches the end of its second year in power, the outlook for Nigeria’s economy remains unclear. Through an expansionary budget and a war on corruption, President Muhammadu Buhari hopes to usher in an era of long-term, inclusive growth. However, lower oil prices and a still fragile global economy will likely pose significant challenges through 2017.

This chapter contains interviews with Kemi Adeosun, Minister of Finance; Tunde Fowler, Executive Chairman, Federal Inland Revenue Service; Laoye Jaiyeola, CEO, Nigerian Economic Summit Group; Hajiya Ladi Katagum, Acting Executive Secretary, Nigerian Investment Promotion Commission; and Razia Khan, Chief Economist, Africa, Standard Chartered.

Articles from this Chapter

Overview

Pause for thought: The pace of growth has slowed with the drop in oil prices
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As Africa’s most populous nation, and with the biggest oil and gas reserves in the region, Nigeria has long been one of the continent’s sought-after markets, but also one of its most complex and challenging. A GDP rebasing in 2014 modernised the country’s statistical measurements, expanding GDP to N94.14trn ($155.1bn at the time of printing) in 2015 according to the National Bureau of Statistics (NBS). This made Nigeria the continent’s largest economy, a title held through most of 2016, when…

Interview

Greater accountability: OBG talks to Kemi Adeosun, Minister of Finance
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Interview:Kemi Adeosun What measures can be taken to help stabilise government revenues over the medium term? KEMIADEOSUN: Our perspective on lower global oil prices is that the situation presents an opportunity to re-strategise and take a close examination of how government money is allocated. In the past, we spent 90% of the budget on recurrent expenditures and only 10% on capital expenditure. This has led to an infrastructure deficit that in turn led to a situation in which, aside…

Analysis

Building for the future: Expansionary budget brings increased infrastructure spending
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After a series of delays, Nigeria’s expansionary 2016 budget, which President Muhammadu Buhari submitted to the National Assembly in December 2015, was approved in March 2016. The proposed N6.08trn ($19.2bn) budget represented a 22% increase over the previous year. Revenues Revenue in 2016 will take a major hit from continued low oil prices, reducing projected oil revenue by 50% from N1.64trn ($5.2bn) in 2015 to N820bn ($2.6bn) in 2016. Encouragingly, the budget envisions a N240bn ($757.7m),…

Interview

Base jump: OBG talks to Tunde Fowler, Executive Chairman, Federal Inland Revenue Service (FIRS)
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Interview:Tunde Fowler What more can be done, in your opinion, to widen Nigeria’s tax base? TUNDE FOWLER: Widening the tax base was the first step we undertook, and over the past few months we have increased the number of active taxpayers from 500,000 to roughly 900,000. We are aiming to get the Nigerian population active and up-to-date on tax rules. Although we have laws stipulating that firms should remit value-added tax (VAT) every month, we have had situations in which some companies…

Interview

Fresh momentum: OBG talks to Laoye Jaiyeola, CEO, Nigerian Economic Summit Group (NESG)
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Interview:Laoye Jaiyeola How can the government and the private sector work together to encourage inclusive growth? LAOYE JAIYEOLA: Collaboration between the private and public sector is critical to foster sustainable economic growth, and NESG’s purpose is to facilitate dialogue between government and business. Our objective is to create an environment in which businesses can thrive. In some ways, engaging with the government has become more complicated over time. Beyond the executive office,…

Analysis

Work to be done: Creating jobs for a rapidly growing population is a high priority
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With a population of 184m, three-quarters of whom are under the age of 30, job creation is critical for Nigeria to sustain its headline growth. Unemployment is increasing rapidly. The official rate climbed from 8.2% in the first quarter of 2015 to 9.9% in third quarter and 10.4% by the year’s end. The ranks of the underemployed – those working less than full time or in jobs not commensurate with their skills and/or education level – rose to 18.7% in the fourth quarter of 2015, from 17.4% the…

Interview

Options aplenty: OBG talks to Hajiya Ladi Katagum, Acting Executive Secretary, Nigerian Investment Promotion Commission (NIPC)
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Interview:Hajiya Ladi Katagum From which countries has Nigeria seen the greatest increase in foreign direct investment (FDI)? HAJIYA LADI KATAGUM: The UK continues to be the most important source of FDI in Nigeria and is likely to maintain this position because of our historical relationship and deep-rooted economic ties. The UK is followed by the US, Belgium, Saudi Arabia and Qatar. Countries such as the Netherlands, China, Egypt, UAE and South Africa have also shown a growing interest…

Analysis

Currency conundrum: A free float regime has replaced the fixed exchange rate
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The history of the naira as it has alternated between fixed and floating exchange rate regimes has always been closely tied to the price of oil. In June 2016 the Central Bank of Nigeria (CBN) introduced a flexible interbank exchange rate market, effectively floating the naira in a departure from recent policy. The currency’s value has since dropped by more than 35%, trading at around N400:$1 in mid-August, but the policy shift is expected to restore investor confidence. According to the CBN, over…

Interview

The case for deregulation: OBG talks to Razia Khan, Chief Economist, Africa, Standard Chartered
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Interview:Razia Khan How quickly do you believe the administration’s diversification efforts can yield results? RAZIA KHAN: Low oil prices and reduced oil output should act as a spur to wider reform in Nigeria. When oil prices were in triple digits, it was always unlikely that there would be sufficient momentum behind diversification, and reform was a nice-to-have rather than an economic necessity. Clearly, in a world where Nigeria is forced to budget for lower oil prices for years to come,…