Country Forecast Nigeria September 2017 Updater

Country Forecast Nigeria September 2017 Updater

  • September 2017 •
  • Report ID: 1698418 •
  • Format: PDF


  • It is likely that the president, Muhammadu Buhari, will leave office on medical grounds before the next elections are due in 2019. This will create a period of political uncertainty, but robust constitutional provisions should help to avoid serious instability.
  • Distracted by political transition, the administration will struggle to tackle the high levels of poverty and the country's ethnic and religious divisions. This will create a potent mixture that will ignite into periodic violent instability.
  • The 2019 presidential and legislative elections will be a close contest between the ruling All Progressives Congress and the People's Democratic Party. Both parties will struggle with internal disunity in the run-up to the polls.
  • Policy reform-particularly in the vital oil industry-will be slow as a result of divisions in the political elite between advocates of tough, unpopular market reforms and those who prefer pandering to nationalistic and pro-subsidy interest groups. The latter group is likely to remain in the ascendancy.
  • The politicisation of economic policy will also slow the reform agenda. The Central Bank of Nigeria will not act completely independently, and the overall policy agenda will be manipulated by various powerful interest groups.
  • Fiscal expenditure will remain dominated by recurrent spending, despite efforts to boost capital investment. Currency devaluation will boost oil revenue in naira terms, but revenue will stay low as a proportion of GDP.
  • Growth will remain well below the levels needed to boost job creation and increase living standards, constrained by the country's crippling infrastructure deficit throughout the forecast period.
  • Although coming down from a spike in 2017, related to currency devaluation, inflation will generally remain high over the forecast period, amid further devaluation of the naira and expansionary fiscal policy.
  • The authorities will continue to interfere in the foreign-exchange market, although the degree of interference should lessen with oil prices recovering slightly from the 2016 nadir and wide economic confidence slowly improving.
  • The current account will retain only a small surplus over the forecast period, given muted prospects for the oil sector and recovering import demand. There is potential for non-oil exports, including agriculture and solid minerals, to grow, but the difficult business environment will restrict their development.


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