Sundry prob­lems plague Africa’s pow­er­house

Finweek English Edition - - INSIDE - BY DIANNA GAMES AND JANA MARAIS

Nige­ria’s f inance min­is­ter Ngozi Okonjo-Iweala has tried to put on a brave face in the face of the mul­ti­ple chal­lenges that Africa’s big­gest econ­omy now faces in the wake of a plunge in the price of crude oil – the source of 80% of the na­tion’s rev­enues.

Late last year, when the dam­age be­came ap­par­ent, she told the na­tion not to panic. “Panic is not a strat­egy. We are man­ag­ing the sit­u­a­tion to keep the econ­omy on a sta­ble sus­tain­able course and we will not lis­ten to those who want us to throw up our hands in de­spair and give up.”

But the in­domitable Okonjo-Iweala is shoul­der­ing the bur­den of try­ing to make ends meet with rapidly dwin­dling funds.

The na­ture of the cur­rent cri­sis is not new for Nige­ria. It has been caught out be­fore by crash­ing oil prices. But the sit­u­a­tion high­lights the fact that the coun­try re­mains struc­turally un­changed de­spite a re­bas­ing ex­er­cise com­pleted last year that showed an in­crease in GDP of 89%.

DES­PER­ATE MEA­SURES

The re­bas­ing re­vised down­wards the oil and gas sec­tor’s con­tri­bu­tion to GDP to 14.4% from 32.4%, while the con­tri­bu­tion of ser­vices, for ex­am­ple, nearly dou­bled to 52% of GDP and telecom­mu­ni­ca­tions jumped from al­most zero to 8.7%, show­ing growth in non-tra­di­tional sec­tors of the econ­omy.

But Nige­ria has failed to build a di­ver­si­fied ex­port bas­ket, thus en­sur­ing a de­pen­dency on one volatile com­mod­ity.

The big­gest casualty of the bud­get cuts was in­fra­struc­ture. The cap­i­tal ex­pen­di­ture bud­get was slashed by more than half de­spite the fact that i nfrastr uc­ture def ic­its are l argely

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