Latest statistics on Nigeria's
economy show that the country is experiencing a strong and healthy growth. For
the fist time in decades, the non-oil sectors are growing significantly faster
than the oil sector. Successful and credible economic reforms last year had
re-established confidence in Nigeria
as a foreign investment location.
According to the latest review of the Nigerian economy by
the International Monetary Fund (IMF), Africa's most populous
state is currently experiencing a major economic recovery. An IMF mission that
recently had visited Abuja and Lagos
this week presented its conclusions on macroeconomic trends in Nigeria
during 2004 and 2005.
Preliminary data of Nigeria's
Federal Office of Statistics (FOS) had suggested that the national economy grew
strongly last year, benefiting from an improved macroeconomic environment. Real
GDP is estimated by the FOS to have increased around 6 percent, which is more
than double the annual population growth. The best indication of an economic
recovery was however that growth in the non-oil economy had been even higher,
estimated at 7.4 percent.
Nigerian authorities further had reported about US$ 2
billion in new foreign direct investment commitments in the non-oil economy,
mainly in food and beverages, leather goods, and telecommunications. Nigeria
thus was beginning to attract a larger part of foreign non-oil investments in Africa
due to its improved credibility and reputation.
Several important reforms had been initiated in 2004
"to enhance the transparency and accountability of public sector policies
and institutions and to address Nigeria's
deep-rooted macroeconomic and structural challenges," the IMF reported.
These efforts to increase transparency and fight corruption had improved the
business climate and investment environment in the country.
According to the IMF, the key objectives of Nigeria's
2004 reform programme had been achieved, namely to
"restore macroeconomic stability, enhance predictability and transparency
of policies, and reduce the economy's vulnerability to oil price shocks."
Prudent management of the significant oil revenue windfall, along with tight
monetary policy, had contributed to "lower inflation, a more stable exchange
rate, and a significant build-up of international reserves."
Challenges however remained formidable, the IMF noted.
"Nigeria
continues to suffer from the legacy of decades of misguided policies.
Corruption, the poor state of basic infrastructure, and weak institutions
remain the major deterrents to investment, sustainable growth, and improvements
in social welfare. The reform programme still meets
resistance from entrenched interests which may make it difficult to pass
crucial legislation," the Fund said.
The IMF mission had also been disappointed by several
trends. "Employment growth remained sluggish and the cost of doing
business in Nigeria
continued to be unfavourably high," the Fund
reported. Further, the pace of privatisation
"was disappointing."
Nigeria's
medium-term economic prospects were nevertheless said to be good,
"provided the authorities continue to build on the achievements made
during 2004," according to the IMF's assessment.
The Nigerian government was urged not to overspend and see to that tax revenues
increased during the next few years.
This year, however, expectations were high in any manner.
Real GDP was projected to grow by 7 percent on the basis of higher crude oil
and gas production, and non-oil GDP by 5 percent, the IMF said. Nigerian
authorities in 2005 intend to implement a budget with a significant spending
increase, primarily reflecting more funds to fight poverty and strengthen the
infrastructure.
5/6/05
Source: afrol.com
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