There has been progress in the campaign against Boko Haram and President Muhammadu Buhari’s flagship fight against corruption. Higher oil prices will pump more cash into the economy, helping to ease extreme foreign exchange shortages that have hurt business. A $1bn Eurobond was nearly eight times oversubscribed, the Ministry of Finance said on 9 February. But pending a major fillip for the economy (including an eventual official devaluation of the naira), the outlook for Nigeria remains patchy, with investors holding back until they see clearer signs of the direction of business and politics.
The International Monetary Fund (IMF) forecasts growth at 0.8% this year. Gross domestic product contracted by an estimated 1.5% in 2016, but the IMF predicts 2.3% growth in 2018, and some economists are more bullish about the immediate outlook. Speaking at a mid-January Royal African Society event in London, Standard Chartered Bank’s Razia Khan envisaged 2.8% growth in 2017 but said the persistent “oil dependency problem” and underdeveloped domestic markets were holding back economic expansion. Major structural problems remain, and developments on the political front add to the uncertainty.
Buhari’s extended stay in London has led to speculation about his health. According to presidential spokesman Femi Adesina, he had a few routine tests at the start of his stay, but is basically taking annual leave with some breaks for work. Hard-working Vice-President Oluyemi Oluleke Osinbajo, a Yoruba from Lagos, is under increased scrutiny, given the precedent of Goodluck Jonathan replacing another ailing northerner, the late Umaru Musa Yar’Adua, in 2010.
On 13 February, Adesina reported a telephone conversation between Buhari and US President Donald Trump, which included an invitation to visit Washington at a “mutually convenient” date and discussion of improved co-operation in the fight against terrorism. Buhari asked for weapons, which have been blocked previously by concerns over the Nigerian army’s human rights reputation.
Buhari was carried into the presidency in 2015 on the back of the opposition All Progressives Congress (APC) election victory over the People’s Democratic Party (PDP). Previously the established ruling party, the PDP has been in meltdown since Buhari’s win, but now it is the APC coalition that is falling out as power-brokers look nervously to the future. Even a fit Buhari is far from certain of gaining a second term. Criticism has focused on his highly personalised style of rule, which has been especially apparent in the government’s controversial management of foreign exchange controls. Also in question is his approach to tacking opposition in the north and east, including a Shia movement in the north-west and the reviving Biafra secession movement, as well Boko Haram, which is in retreat but not yet vanquished, and Niger Delta militants.
The new Eurobond will help to finance deficits and support Buhari’s commitment to spend more to deliver capital projects; the draft 2017 budget envisages record N6.86trn ($22.5bn) spending to stimulate growth. Much depends on agreement over the government’s reform plans. Delays in this have held up disbursement of a $400m second tranche of the African Development Bank’s $1bn facility.
Critical issues include further currency reform, which Buhari has so far opposed, leading to a widening gap (now around 40%) between the naira’s official dollar exchange rate and the parallel market.
The oil price is rising, but Nigeria will be no easier a place to run when the president returns from his extended vacation.
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