Damper on oil gusher

Finweek English Edition - - Economic Trends & Analysis -

NIGE­RIA HAS LONG EX­ERTED a ma­jor neg­a­tive ef­fect on the over­all eco­nomic per­for­mance of sub-Sa­ha­ran Africa and, in­deed, the con­ti­nent gen­er­ally. That’s be­cause Nige­ria has for decades com­bined a huge pop­u­la­tion (cur­rently es­ti­mated at around 140m) with medi­ocre to poor growth in real gross do­mes­tic prod­uct.

But the cur­rent re­newed boom in oil prices has nec­es­sar­ily brought ma­jor ben­e­fits to Nige­ria. Oil now ac­counts for 98% of to­tal ex­port rev­enues. How­ever, Stan­dard Bank notes it’s the non-oil sec­tors – heav­ily re­liant as they mostly are on oil rev­enues for ul­ti­mate fi­nanc­ing – that are the prime driv­ers to­day of GDP.

But thanks above all to the oil gusher, Nige­ria is on track for av­er­age an­nual rises in GDP of nearly 10,0% for the six years 2003-09. But real per capita in­comes in Nige­ria in 2010 will still be only about one-tenth of those in South Africa – ap­pre­cia­bly more than the gap be­tween the United States and SA.

Stan­dard says: “Over­all, medi­umterm prospects in Nige­ria de­pend on, among oth­ers, com­mit­ment to pru­dent macroe­co­nomic poli­cies and con­tin­ued at­tempts to di­ver­sify the ex­port base.” It adds, hope­fully: “We ex­pect the coun­try to con­tinue tak­ing ad­van­tage of high oil prices to en­act pos­i­tive and pro­gres­sive re­forms.”

But even if that hope is re­alised – and Nige­ria has had a long his­tory of lost op­por­tu­ni­ties – the chal­lenges will re­main im­mense.

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