Nigerian officials speak as IMF forecasts 2.6 per cent growth in economy in 2017

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The federal government on Tuesday said it was optimistic of a modest recovery from recession and growth in the economy, as the International Monetary Fund, IMF, predicted a 2.6 per cent growth in the economy in 2017. Nigeria has witnessed a mixed fortune in her earnings from oil in the last three years either as a result of cuts in production in the wake of attacks on oil production facilities by militants in the Niger Delta region, or massive drop in crude oil prices at the international market.

From an average of 2.1 million barrels per day in 2013, production was cut by almost half by 2015, before gradual improvement in capacity to about 1.7 million barrels per day last year. The federal government recently announced production has increased to about 2 million barrels

An exemption from an oil output cut by the Organisation of Petroleum Exporting Countries, OPEC, in January 2017 has helped the country recover some losses, with oil prices hovering at about $50 per barrel. The Minister of Finance, Kemi Adeosun, said Nigeria was one of the several countries in sub-Saharan Africa worst hit by the difficult economic crisis in 2016, with regional growth estimated at about 1.4 per cent, the weakest outcome in more than two decades.

The minister said with the expected rebound in economic growth in 2017, there was need for the region to adopt a new business model driven by import substitution strategies to localise production, create jobs and achieve sustainable growth.

The minister was speaking in Abuja at the presentation of regional economic outlook on sub-Saharan Africa by the IMF.

“Sub-Saharan Africa has come a long way. There is every reason to believe that it will continue to grow and develop with appropriate policy responses,” she said.

Warning the region not to be business as usual, the minister said the business model of extracting and exporting raw commodities with little or no value-added should be jettisoned for a broad–based growth model.

Given the size of the informal sector and its contribution to employment and household income in the region, Mrs. Adeosun called for improvement in policies in the sector to realise its full potentials.

Nigeria, she noted, was one of the countries in the region hardest hit by the slump in global price of crude oil, pointing out that the country was still reeling with the budgetary impact of huge revenue losses and considerable balance of payment pressures.

To reduce the pressure, the minister said, government made efforts through a number of interventions, including growing the non-oil sector base through increased efficiency of tax and customs collections, reduce cost of doing business, support agriculture, provide infrastructure and manufacturing.

Besides, she said, government also tried to reflate the economy through special fiscal support to sub-nationals, which has resulted in improved security situation and investor confidence.

“It is heart-warming to say that Nigeria will be out of recession soon,” she said

The Governor of the Central Bank of Nigeria, Godwin Emefiele, said the bank has embarked on sustained interventions in the foreign exchange market to sustain liquidity in the market and ensure adequate supply of forex for investors in the critical sectors of the economy.

In his presentation, the Director of the IMF’s African Department, Abebe Selassie, called for the implementation of strong and sound policy measures to restart sub-Saharan Africa’s economic growth

In the report titled: “Regional Economic Outlook, Restarting the Growth Engine,” the IMF noted that although growth in the region dropped to about 1.4 per cent in 2016, there were bright prospects for a modest recovery of 2.6 percent in 2017.

“The overall weak outlook partly reflects insufficient policy adjustment,” Mr. Selassie said. “The delay in implementing much-needed adjustment policies is creating uncertainty, holding back investment, and risks generating even deeper difficulties in the future.”

He said the growth in Nigeria would be driven by a recovery in oil production in Nigeria, as against higher public spending in Angola, and fading of drought effects in South Africa.