Wednesday, February 1, 2012

Non-Oil Sectors to Boost Economic Growth in Nigeria


Nigerian economy is expected to grow by 7 per cent in 2012 and 2013, thanks to solid performance in industries outside of its bedrock oil sector, a research by Reuters has revealed.

The forecasts, based on a poll of 11 analysts, painted a strikingly positive outlook for the nation's economy, which has started 2012 on a decidedly shaky footing.

The decision by the Federal Government to remove subsidy from the pump price of fuel sparked protest and a nationwide strike embarked upon by organised labour to force government to reverse its decision, a situation that resulted to a huge loss to the economy.

"President Goodluck Jonathan was forced to row back on the removal of costly fuel subsidies after a wave of strikes and protests, Boko Haram has dramatically stepped up a three-year insurgency.

The group, whose name means "Western education is sinful" in northern Nigeria's Hausa language, has killed nearly 1,000 people since 2009, including at least 178 last week in a series of gun and bomb attacks in Kano, Nigeria's second biggest city," reported Reuters

"The political battle to end the petrol price subsidy in January is in many ways a microcosm of the wider political battle within the political elite over the reform process," Citibank said in a note.

"Its eventual outcome will be a clear indication of the potential speed with which the current government can implement structural reforms in 2012." GDP growth in Africa's most populous nation dipped to 7.4 per cent in the third quarter of 2011, a year earlier, from 7.7 per cent in the second quarter. The government's forecast for 7.0 per cent in 2011 is in line with Reuters' consensus. Despite the political instability, analysts said the allure of such a huge consumer market will continue to attract investment.

"We expect to see strong growth in Nigeria, bolstered by robust expansion in the non-oil sectors, particularly retail, telecoms and construction," said Gregan Anderson of London-based risk consultancy, Business Monitor International.

The poll suggested inflation would average 10.7 per cent in 2012 before easing to 10.4 per cent next year. The main factors driving prices would be food and fuel, as well as the weak naira currency.

Consumer inflation edged down slightly in December to 10.3 per cent, although food inflation quickened to 11 per cent from 9.6 per cent the previous month. The central bank raised rates last year by 600 basis points to 12 per cent to support a struggling naira and keep inflation in single digits.

The naira is expected to ease slightly to 162.2 against the dollar by the end of the first quarter, firm to 161.8 three months later, and end finally firming to its current level of 160 at the end of the year.

This Day

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Video - Navigating Nigeria's petroleum industry 


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