State of Nigerian economy 2017 in review

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Nigeria in February 2017 – Nigeria’s economy is projected to have contracted 1.54 percent in 2016, according to a budget ministry document, with Africa’s most populous country mired in its first recession in a quarter of a century.

Nigeria is heavily dependent on crude oil exports to fuel its economy, but low global prices and militant attacks on the southeastern Delta oil hub have hammered those exports and slashed government revenues.

“The Nigerian economy, in response to both external and internal economic pressures, inevitably contracted and is currently in recession with a projected growth of -1.54 percent for 2016,” the document released to Reuters by the ministry on Saturday said.

The budget ministry draft, called “Key issues in the Economic Recovery and Growth Plan”, said the recession was also caused by growth dependent on consumption rather than investment and “huge leaks in government resources through corruption and inefficient spending”.

The International Monetary Fund has predicted that Nigeria’s economy would shrink 1.8 percent in 2016. Final official figures are due to be released by Nigeria on Feb. 28.

President Muhammadu Buhari’s government came to power on a pledge to diversify the economy, fight corruption and tackle the Islamist Boko Haram insurgency in the northeast.

But Buhari’s critics say the administration has made little headway, with the economy in recession, corruption still endemic and Boko Haram continuing to carry out attacks.

Nigeria’s central bank, backed by Buhari, has also kept the naira rate to the dollar at 40 percent above the unofficial – or parallel – market rate, which has dried up dollar supplies on official channels.

The government is now formulating an “Economic Recovery and Growth Plan” for 2017 to 2020.

“First-class infrastructure and an economic environment that supports the private sector and enables it to expand, take risk and employ people are essential to achieve Nigeria’s aspirations for a dynamic, competitive economy,” the budget ministry’s document on the plan said.

Nigeria also plans to increase oil production to 2.5 million barrels per day by 2020, the document said. In January the vice president said production was 1.7-1.8 million barrels per day.

The government also wants to improve domestic refineries so that petroleum product imports can be cut by 60 percent by 2018, said the document.

To lift growth, the plan will focus on building up Nigeria’s agriculture, energy and small and medium-sized businesses, the document said, adding that the country aims to have 10 gigawatts of power capacity by 2020.

Of particular concern is job creation, said the document, as unemployment steadily rises. The unemployment rate in the third quarter of 2016, the latest for which there is publicly available data, was 13.9 percent. At the end of 2015, the rate was 6.4 percent.

Nigeria in March 2017

Nigeria’s total debt rose to 19.15 trillion naira ($62.91 billion) as of March 2017, from 17.36 trillion naira at the end of last year, the Debt Management Office said on Monday.

Africa’s biggest economy, which slipped into recession last year for the first time in 25 years, raised $1 billion in February and $500 million in March from Eurobond sales.

The government intends to use the money raised to plug its budget deficit and fund infrastructure development. The record 7.44 trillion naira 2017 budget was passed by lawmakers last month but is yet to be signed into law by the presidency.

The government planned to spend 6.1 trillion naira last year as part of its bid to increase capital expenditure, but struggled to fund its budget. The 2017 plan projects a deficit of 2.21 trillion naira, implying a deficit equivalent to 2.18 percent of Nigerian GDP.

The external component of Nigeria’s debt stood at $13.80 billion at the end of the first quarter, against $11.40 billion at the end of December, the debt office said on its website.

Local debt fell to 11.97 trillion naira, against 13.88 trillion naira last year. ($1 = 304.38 naira)

LAGOS, Aug 14 (Reuters) – Nigeria’s Lagos state on Monday raised 85.14 billion naira ($271 million) in 7- and 10-year bonds to fund infrastructure and environmental projects, its commissioner for finance said on Monday.

The bond consists of 46.37 billion naira 7-year debt at a 16.75 percent rate and 38.77 billion naira via a 10-year paper with 17.25 percent interest, Akinyemi Ashade said in a statement.

The issue is the third tranche of a 500 billion naira debt programme approved by the state parliament last year and was sold through book building, Ashade said.

The state sold 60 bln naira worth of 5-year bonds last year, the first tranche of the debt programme planned to be issued over the next two to five years.

“We value the reputation we have earned as the most responsible issuer in the Nigerian capital markets and thank everyone who has worked with us to deliver a successful outcome,” Ashade said.

Lagos state is home to the commercial hub of Africa’s biggest economy, a sprawling city of more than 21 million people which badly needs infrastructure upgrades.

Stock brokers said the state paid higher interest than the inflation rate on the bond in a bid to lure investors into buying the debt.

Nigeria’s annual inflation was 16.1 percent in June, while data for July is being delayed by the National Bureau of Statistics (NBS) till Aug. 28.

Nigeria’s government paid 16.25 percent on its 10-year bond last month.

Most states in Nigeria depend on their share of federal oil revenues but Lagos has explored the debt market to fund its developmental projects.