By Doaa Hussein
Nigeria is deemed to be Africa’s largest economy, and its biggest oil exporter. It has a relatively high population of 173 million, which leads to high budget deficit (is deemed to double to 2.2 trillion naira or $11 billion), as well as inflation rate (expected 9.4 per cent hike this fiscal year). In this report, MEO will tackle the country’s economic state, as well as real challenges facing its progress.
Economic overview
The African country marked 6.3 per cent GDP growth in 2014, due to high oil prices last year, compared to the 5 per cent growth, forecasted by The IMF (International Monetary Fund) report this year. The dipping oil price crisis is heavily affecting the Nigerian economy, due to its huge reliance on its oil reserves, encompassing 90 per cent of the country’s exports and roughly 75 per cent of its consolidated budgetary revenues.
On the other hand, some other sectors contribute to the investment and trade exchange in the country such as telecommunications, real estate, manufacturing, construction, entertainment. The previously mentioned industries have increased their shares of The GDP in the recent years, as indicated by the World Bank numbers.
Nevertheless, The Oil crisis will continue to furnish strong challenges for the government’s development plans, and will hinder its attempts of launching any new ambitious projects.
Development barriers:
A manifold problem, even larger than the oil historical plummet, shapes a real threat to any economic reforms in Nigeria. Boko Haram is a terrorist group, which practices all forms of crimes from sexual abuses to killing on the already poor Nigerian nation. (Nigerian Vice President Yemi Osinbajo indicated last August that 100 million Nigerian are living under the poverty line).
This has devastating implications on the country, starting with displacement of million Nigerian citizens who seek shelter, and continuing to serious destruction of the state’s infra- structure which have been built for years.
Another challenge to be is the mounting unemployment rate, which leaves the citizens between poverty and depression. The trading economics site estimated a 9.9 per cent unemployment rate in 2015, which hovers above only 6.4 per cent last year, which reflects the real slowing down of the economy.
The Nigerian government will be poised to deal with difficulty of financing major programmes, and reconstructing already devastated North East by Boko Haram insurgents. A 5 year development plan, started in 2010, aimed at strategies and actions of implementing energy sector to expand output, as well as open the door for more private local and foreign investments, especially in social assistance.
Nevertheless, The Nigerian president, Muhammad Buhari has announced this year his plans to move the government spending higher to 20 per cent by next year, he will basically depend on heavy loans from IMF (International Monetary Fund), or world rich countries.
The first budget of the new regime, since the election of the new president in March, would have expenditure of $31bn (£20.8bn) in 2016 on infrastructure and the economy, especially mining and agriculture sectors.
“The 2016 budget, as outlined, is designed to ensure that we revive our economy, deliver inclusive growth to Nigerians and create a significant number of jobs,” Mr. Buhari said in a speech to the Nigerian nation earlier this month, according to BBC.
