IMF Lauds Nigeria’s Economic Growth Despite Challenges

The International Monetary Fund (IMF) has lauded Nigeria’s continued economic growth in the face of insurgency in its North-east as well as the large-scale oil theft witnessed in the last one year.

The Breton Woods institution attributed its strong growth projection for the country to the relatively high crude oil prices.

In its World Economic Outlook for 2014 titled, “Recovery Strengthens, Remains Uneven”, which was released yesterday, the IMF also predicted in the 218-page document that Nigeria’s growth would climb by 0.8 per cent, as major oil pipelines are repaired and production in the non-oil sector continues to expand.

In contrast, the organisation noted that economic growth in South Africa continued to decelerate due to industrial relations in the mining sector, tight electricity supply, anaemic private investment, and weak consumer and investor confidence.

“Growth in sub-Saharan Africa remained strong in 2013 at 4.8 per cent, virtually unchanged from 2012, underpinned by improved agricultural production and investment in natural resources and infrastructure.

“Growth in sub-Saharan Africa remains robust and is expected to accelerate in 2014. Growth is projected to accelerate to about 5.5 per cent in 2014, reflecting positive domestic supply-side developments and the strengthening global recovery.

“Tight global financing conditions or a slowdown in emerging market economies could generate some external headwinds, especially for middle-income countries with large external linkages, producers of natural resources, and frontier economies.”

However, it pointed out that risks could emanate from policy missteps in Nigeria and other African countries, security threats, and domestic political uncertainties ahead of elections.

Therefore, IMF urged policymakers in Nigeria and other countries on the continent to avoid the pro-cyclical fiscal stance in fast-growing countries, tackle emerging risks in countries facing major fiscal imbalances, address vulnerabilities in those countries more exposed to external shocks, and foster sustainable and inclusive growth.

In addition, it stated that growth was also robust in low-income and fragile states on the continent.

It listed the fragile countries to include Burundi, the Central African Republic, the Comoros, Democratic Republic of the Congo, Côte d’Ivoire, Eritrea, Guinea, Guinea-Bissau, Liberia, São Tomé and Príncipe, Togo and Zimbabwe.

“The currencies of South Africa and some frontier market economies weakened, reflecting tightening global monetary conditions and, in some instances, weak external or fiscal balances (Ghana, Nigeria, South Africa, Zambia).

“Growth is also expected to accelerate in other countries, including several fragile states, in the wake of an improved domestic political and security situation (Mali), massive investments in infrastructure and mining (Democratic Republic of the Congo, Mozambique, Niger), and maturing investments (Mozambique),” it stated.

According to the organisation, in several countries in Africa, the largest downside risks are domestic, including policy uncertainty, deteriorating security conditions, and industrial tensions.

On the other hand, it stressed that external risks are particularly important for natural resource exporters that could suffer from a slowdown in emerging markets and a shifting pattern in China from investment to consumption-led growth.

“To avoid a pro-cyclical fiscal stance and increase their resilience to shocks, fast-growing economies in the region should take advantage of the growth momentum to strengthen their fiscal balances.

“Throughout the region, urgent requirements include improving the efficiency of public expenditure; investing in strategic and carefully selected projects to develop energy supply and critical infrastructure; and implementing structural reforms aimed at promoting economic diversification, private investment, and competitiveness,” it added.

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