Nigeria’s economic worries are not yet over. Statistically, at least.
With negative growth recorded for the fifth consecutive quarter, Nigeria’s economy is mired in recession, according to newly published data by the National Bureau of Statistics (NBS). But, however slightly, the economy appears to be inching towards growth as even though the economy shrank by 0.52% in the first quarter of 2017, it represents an improvement compared to previous quarters.
Analysts suggest the slight improvement in GDP growth could mean the worst could be over for Nigeria’s economy. “The positive which can be taken from the figure is that the hemorrhaging has stopped, thus clearing the path to growth,” analysts at SBM Intelligence, a Lagos-based firm, commented in a note.
The negative growth rate since the start of last year has been mainly attributed to a drop in Nigeria’s foreign revenues, following the fall in price of oil—Nigeria’s main export. But just as critical, a brief resumption in militancy in the Niger Delta, the country’s oil-rich south last year saw oil production levels tank to 20-year lows, making a bad situation much worse. However, with a peace pact agreed with Niger Delta agitators, NBS data shows an uptick in average oil production levels which have now reached 1.8 million barrels per day (mbpd)—the highest point since the first quarter of 2016—but still some way off desired levels of around 2.2 mbpd.
Getting back to peak production levels is vital, not just for earnings but also to cushion the impact of a possible deal by OPEC to cut production. While OPEC agreed its first deal to cut production last November, Nigeria was exempt having suffered damage to its oil installations during militant attacks earlier in the year. But, with that deal set to be extended, that concession may no longer be available to Nigeria.
Just as importantly, the Nigerian government has also sought to stimulate growth by making it easier to do business in a country where excessive red-tape and corruption has often made things difficult. Last week, Nigeria’s presidency ordered reforms at local ports in a bid to boost exports and diversify its revenue sources and back in February, Nigeria’s Immigration Service relaxed its entry visa rules for tourists and investors.