Sundry problems plague Africa’s powerhouse
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%.
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