Damper on oil gusher
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.