Nigeria is already moving out of recession — Udoma

Minister of Budget and National Planning, Senator Udo Udoma

The Minister of Budget and National Planning, Senator Udo Udoma, on Thursday said that the country was already moving out of economic recession.

Udoma stated this in Abuja while inaugurating the Joint Planning Committee for the 23rd Nigerian Economic Summit.

The summit, to be held in October this year, is the single largest gathering of economic and financial experts from the private and public sectors.

The theme of this year’s summit is: ‘Actualising the Economic Recovery and Growth Plan: Opportunities, productivity and employment’.

However, the Federal Government and the International Monetary Fund have disagreed over how much the economy will grow this year, with the government saying 2.2 percent and the Fund opting for just 0.8 percent.

Either will be an improvement on last year, when Nigeria suffered its first recession in more than two decades as low crude prices and oil production slashed government revenues and caused chronic dollar shortages.

The government’s forecasts, seen by Reuters on Thursday, are contained in a document titled: ‘2018-2020 Medium Term Fiscal Framework and Strategy Paper’ dated July 27, which forms the basis for its 2018 budget.

It projects a big bounce back, to 2.2 per cent this year, 4.8 per cent in 2018 and 4.5 per cent in 2019, before reaching seven per cent in 2020.

The IMF, however, is not as bullish, saying on Wednesday it expected the Nigerian economy to grow by 0.8 per cent this year, with threats to growth remaining elevated.

Udoma said that while national debates in the past had centred on how the country could get out of recession, such was no longer the case with the adoption of the ERGP.

He stated that as the country was already on its way out of recession, the current efforts of the Federal Government were on how to build the current momentum of the growth trajectory.

This, according to him, has become imperative so as to ensure that the growth is maintained post-recession with positive impact on the people.

The minister said, “The 23rd Nigerian Economic Summit is coming at a time when the national debate is no longer about how to get out of recession; we are already moving in that direction with the adoption of the ERGP.

“Focus will, therefore, be on specific sectors such as infrastructure, manufacturing, renewable energy, housing, agribusiness, creative industries, retail trade and digitalisation. The summit will essentially be used to see how we can intensify efforts to implement the ERGP to create opportunities, tackle unemployment and improve productivity in Nigeria.”

Udoma added that the summit would be used to get stakeholders’ commitments toward a private sector led investment approach as set out in the ERGP.

He explained that the summit would also complement the Federal Government’s effort to create over 15 million direct jobs by 2020 through agriculture, manufacturing, construction and services, among others.

The Chief Executive Officer, Nigerian Economic Summit Group, Mr. Laoye Jaiyeola, said the committee would deliver a summit that would meet all expected outcomes.

He told the minister that the committee will use the summit to promote and support the actualisation of the ERGP.

Commenting on the growth projection, the Africa economist at Capital Economics, John Ashbourne, said, “I think that risks are to the downside rather than the upside, but 2.2 per cent isn’t outside the range of the possible now that oil prices and oil output are recovering.”

The country expects oil production to hit 2.3 million barrels per day and a price of $45 per barrel. It said oil production reached 1.9 million barrels between January and June 2017, including condensates.

Nigeria has promised OPEC to cap its crude oil output at 1.8 million bpd, although it does not include condensates in this total.

The country’s economy contracted by 0.5 per cent in the first quarter, its smallest fall in five quarters of decline.

The government projects the naira’s exchange rate to the dollar, which has traded at around 305 on the official market since 2016, to remain stable, while inflation will decline but remain in double-digits at 12.42 per cent next year.

The country has at least six exchange rates, which it has used to mask pressure on the naira after a drop in oil price caused foreign investors to flee, triggering a currency crisis.

The Central Bank of Nigeria has been working to converge the rates through dollar interventions but that is burning out reserves.

“Should there be any harmonisation in FX rates, as encouraged by the multilateral agencies, then an FX assumption of 305 is likely to prove unrealistic,” said Razia Khan, chief economist Africa at Standard Chartered Bank.
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