Following a challenging year for the Nigerian economy, in which recovery from the minor recession of 2016 has been more sluggish than anticipated, the outlook for 2019 is finally looking more positive. The IMF recently revised GDP growth predictions for the year ahead, forecasting that growth would hit a healthy 2.3%, up from previous estimates of 1.9%.
The reasons for this upgrade are various, having more to do with the condition of the global economy than domestic reasons. Rebounding oil prices after years of the decline in value of crude oil is a major contributor, with WTI and Brent crude set to hit $54 per barrel and $61 per barrel respectively – a significant increase over the past two years.
This has, in turn, helped push up the value of Nigeria’s exports, providing much-needed relief to the country’s diminished revenue flows. For 2020, growth is expected to surpass 3%, with the private sector accounting for much of this. Nigeria’s recovering private sector has been in part driven by the well-documented reverse flow in migration, which has seen growing numbers of Nigerian entrepreneurs and business people returning home to start ventures of their own.
Part of this rosier outlook can also be attributed to the growing technological infrastructure and readiness across the county. The country has been steadily moving up the ranks of the Networked Readiness Index, with citizens becoming increasingly tech-savvy and willing to adopt new technologies for economic purposes.
As a result, more and more Nigerians are becoming economically active. Private participation in the stock exchange, the NSE, is reaching record levels. The country has also become one of the global centers of the cryptocurrency boom, as citizens take advantage of access to bitcoin trading platforms to benefit from the flourishing e-currency market. Nigerian entrepreneurs and investors are now trading over $4 million worth of bitcoin every single week, which further demonstrates the country’s ability to adopt disruptive new technologies for economic purposes.
These factors and more have helped finally reverse the long decline of levels of foreign direct investment (FDI) into Nigeria, which began growing again in 2018 for the first time in several years. For its part, the Ministry of Industry, Trade, and Investment, under the leadership of Dr. Okechukwu Enelama, has been actively courting international investment throughout 2018 via conferences, trade fairs, and a number of summits that have taken place in Nigeria and beyond.
These flashes of positivism do not mean that severe challenges do not still remain. Spiraling levels of public debt present a significant threat to growth, whilst looming crises relating to unemployment in certain regions need to be addressed if economic expansion is to be sustained. The IMF’s growth upgrade did not come without several warnings, citing ongoing problems with the banking system and the heavy-handedness of the Central Bank in the foreign exchange market as further issues that must be addressed in 2019.
2019 could be a banner year for the Nigerian economy, but this all depends on how existing challenges are dealt with in the short term.
Source: Naija News