Country Report Nigeria April 2009

Outlook for 2009-10

• The world recession and consequent slump in oil prices is expected to hit Nigeria hard, representing a major challenge for the president, Umaru Yar'Adua, and his government.
• Economic policy reform will be slow, as the country stands at a crossroads between implementing tough, unpopular market reforms and pandering to nationalistic and pro-subsidy interest groups.
• The oil sector will continue to operate below potential, owing to militant action and OPEC quota cuts, depressing economic growth.
• Real GDP growth is forecast at 2.7% in 2009 with the banking sector suffering from the global financial crisis. Real GDP growth is expected to improve to 4.4% in 2010 in line with the beginning of a global recovery.
• Food and fuel prices are expected to ease in 2009-10, but a weaker currency and looser monetary policy will mean that inflation falls only slowly, to an average of 11.4% in 2009 and 8.5% in 2010.
• We have lowered our forecast for imports in 2009-10, which means that Nigeria's current account is forecast to record a deficit of 10.2% of GDP in 2009 (previously 11.7% of GDP) and 6.1% of GDP in 2010 (previously 7.3% of GDP).

Monthly review

• The cabinet has proposed a number of changes to the electoral system to enhance the credibility of future elections in the country, although there are concerns over how quickly they can be implemented.
• The Supreme Court has ordered that an appeal by a small political group against Mr Yar'Adua's victory in the April 2007 presidential ballot be heard. The decision has refuelled uncertainty over the president's political future.
• Mr Yar'Adua has said that his government is prepared to grant an amnesty to insurgents in the oil-producing Niger Delta region if they lay down their arms.
• The 2009 budget has been signed into law by Mr Yar'Adua, although the president remarked that Nigeria faces serious economic challenges this year.
• The CBN has announced a series of measures, including cutting its benchmark interest rate, to boost liquidity, stimulate the economy and alleviate the impact of the global economic recession.
• The CBN has further tightened foreign-exchange controls and set a 15% ceiling on deposit rates and a maximum lending rate of 22%.
• The Bureau for Public Enterprises has invited fresh bids for a majority stake in the former state monopoly, Nigerian Telecommunications.

Source: Country Report

This report covers the following industry codes:
SIC Code: 70;15;49
NAICS Code: 72;23;11;22