….As Nigeria’s Growth Rate Remains Below SSA’s 3.6% Average
Despite claims by President Bola Tinubu that the ongoing reforms of his administration are yielding the desired results, particularly in terms of socio-economic benefits to the citizenry, the latest report by the International Monetary Fund (IMF) has indicated the reform measures are not yielding the desired results.
In its latest outlook report for sub-Sahara Africa (SSA) released on Friday, the IMF listed a few countries that had recorded some level of success their reforms but curiously Nigeria missed out on the list but featured amongst the nation’s whose reforms are failing to positively impact on the citizenry and economic growth.
The report estimated that the average economic growth rate in the SSA would remain at 3.6 per cent for the full year 2024, but Nigeria’s growth rate projection was put at 3.19 per cent, which is below the region’s average.
The IMF Deputy Director, Catherine Patillo, who highlighted the report’s findings in her presentation at the Lagos Business School, LBS, noted that macroeconomic imbalances in the region had started reducing with notable improvements in some countries, excluding Nigeria.
She said: ‘‘More than two-thirds of countries have undertaken fiscal consolidation. With the median primary balance is expected to narrow by 0.7 percentage points alone in 2024. And these have included notable improvements in Cote d’Ivoire, Ghana, and Zambia, among others.
‘‘On the imbalances side, median inflation has declined in many countries. And it’s already within or below the target band in about half the countries”, Patillo added.
But then, the IMF report identified Nigeria as one of the countries that have been unable to tame inflation, as the Fund’s Deputy Director maintained that ‘‘Inflation is still in double digits in almost one-third of countries, including Angola, Ethiopia, and Nigeria, and above target in almost half of the region, particularly where monetary policy is not anchored by exchange rate pegs’’.
On the foreign exchange (FX) rate in the region, the report reflected that FX rate was improving across most countries in the region, as Patillo noted that ‘‘looking further at exchange rates, we do see that foreign exchange pressures have largely abated since the end of 2023’’.
But then, Nigeria has recorded the worst FX rate instability and local currency depreciation so far this year even as the nation contended with the impact of debt burden on fiscal stability, amongst others in the region.
The report stated: ‘‘Debt service capacity remains low by historical standards. In almost one-quarter of countries, interest payments exceed 20 percent of revenues, a threshold statistically associated with a high probability of fiscal stress. And rising debt service burdens are already having a significant impact on the resources available for development spending.
‘‘The median ratio of interest payments to revenues (excluding grants) currently stands at 12 percent. Some three-quarters have already witnessed an increase in interest payments (relative to revenue) since the early 2010s (comparing the 2010–14 average with the 2019–24 average). In Angola, Ghana, Nigeria, and Zambia, this increase in interest payments alone absorbed a massive 15 percent of total revenue”, the IMF added.
Generally on the economic outlook in SSA, the IMF report painted a picture of mixed fortunes for the region but again, grouped Nigeria amongst the countries with not too bright outlook the current economic reforms and adjustments in Nigeria continued to encounter social and political resistance.
The Fund further clarified: ‘‘Resource-intensive countries (RICs) continue to grow at about half the rate of the rest of the region, with oil exporters struggling the most.
“Second, both domestic and external financing conditions remain tight. Third, the region has recently witnessed several episodes of political fragility and social unrest. Political and social pressures are making it increasingly challenging to implement policy adjustments and reforms.
”Significant increases are anticipated in Ghana, as it continues reestablishing macroeconomic stability; Botswana and Senegal, reflecting rising resource exports (diamonds, oil, and gas); and Malawi, Zambia, and Zimbabwe, as they recover from drought. Growth is also expected to improve in South Africa, given positive post-election sentiment and a reduction in power outages”, it added.
While listing Nigeria amongst those countries with what it called ‘‘adjustment fatigue’’, the IMF made some recommendations for addressing the challenges.
It canvased: “In the face of popular frustration, there is also an opportunity to work to mobilize support for large, deep reforms, of the sort that, for instance, Ethiopia, Ghana, Kenya, and Nigeria are pursuing.
‘‘Realizing this opportunity requires rethinking reform strategies, to build and maintain pro-growth coalitions among constituent leaders and the general public. This will require greater attention to communication and engagement strategies, reform design, compensatory measures, and rebuilding trust in public institutions”, the IMF added.
