Nigeria’s economy slowed in the final quarter of 2015 from the previous three months and annual growth remained far weaker than the previous year after the plunge in crude prices slashed government revenues and weakened the currency.
The Nigerian Bureau of Statistics (NBS) said year-on-year growth during the three months to December rose 2.11%, up from 2.84% in the third quarter, and lower than the 5.94% annual pace recorded a year earlier. Economic challenges have been mounting as cheap oil slashes vital revenues from crude sales, forcing the central bank to introduce currency curbs to conserve foreign exchange reserves which have fallen to a more than 11-year low. President Muhammadu Buhari has rejected calls by the International Monetary Fund to lift foreign exchange curbs and allow a more flexible rate for the naira currency, backing the central bank’s actions.
The tight dollar restrictions have forced domestic lenders to delay hard currency loan and trade repayments to foreign banks and increased the risk of default, bankers say. Foreign funds fled Nigerian assets as the oil price decline worsened, further weakening the naira and helping fuel inflation which is currently outside the central bank’s target range at 9.6%. The NBS said oil production was 2.16 million barrels per day in the fourth quarter, slightly lower than 2.17 million barrels recorded in July-September but more than the 2.05 million bpd pumped in the second quarter.
h3. Nigeria to blame
Nigeria only has itself to blame for its current economic troubles, President Muhammadu Buhari said in an interview broadcast on Saturday, criticising previous governments for an over-reliance on crude revenues. Africa’s biggest oil producer and leading economy has been struggling with the slump in global crude prices for nearly two years, which has slashed the majority of government revenues. The country’s junior oil minister last Thursday said some oil-producing countries, including Russia, would meet in Moscow on March 20 to discuss a way out of the slump.
Asked if the world’s biggest supplier Saudi Arabia and policies of the Organisation of the Petroleum Exporting Countries had hit smaller producers, Buhari told Al-Jazeera English Opec had to “act together to save the situation”. Countries, including Nigeria, “have to live by” market forces, he said, ruling out a Nigerian withdrawal from the body. But he added: “Opec as an organisation has to be mindful of economic conditions in each member country because that will influence that country’s ability to go along with Opec decisions.
“Nigeria, we were unable to diversify our economy, hence we are much more disadvantaged by the lower oil prices and Opec may try to help us out but really, it’s basically our own fault.” Buhari, who took office in May last year, has made reducing Nigeria’s reliance on crude revenues a key plank of his economic policy alongside ending decades of corruption and impunity. But those efforts have been hamstrung as cash-flow problems caused by the global oil shock as well as previous administrations’ failure to save crude revenue when prices were high.
Buhari again said he would not devalue the naira currency or lift strict foreign exchange controls that critics say have strangled investment and growth in the import-dependent country. “Nigeria can only afford to live within its means,” he said.