Country Report Nigeria March 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.
• The forecast for real GDP growth has been lowered to 2.7% in 2009 (from 3.5%) with the banking sector suffering from the global financial crisis and new currency controls implemented by the Central Bank of Nigeria (CBN).
• 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 from will mean that inflation falls only slowly, to an average of 11% in 2009 and 8.5% in 2010.
• A slight increase in forecast oil prices means that Nigeria's overall current account is forecast to record a deficit of 11.7% of GDP in 2009 (previously 14.7% of GDP) and 7.3% of GDP in 2010 (previously 7.8% of GDP).

Monthly review

• The main militant group operating in the Niger Delta region has ended its ceasefire. Fears of mounting insecurity in the region have led to unions threatening strike action in protest.
• The Court of Appeal has ousted the governor of the south-western state of Ondo, in favour of an opposition candidate who was found to have received more votes in the April 2007 gubernatorial election.
• The CBN has further tightened its currency controls, heightening concerns in the market that the government is reversing important reforms liberalising the foreign-exchange regime.
• The National Assembly has passed the 2009 budget with total expenditure put 8% above the original spending plans submitted by Mr Yar'Adua.
• Mr Yar'Adua has forwarded a bill to parliament to amend Nigeria's Land Use Act in order to make land-transfer transactions easier.
• The government approved the release of N323.2bn (US$2.2bn) for various power projects aimed at achieving 6,000 mw of power generation in the country by the end of 2009.

Source: Country Report

This report covers the following industry codes:
SIC Code: 49
NAICS Code: 22