May 28, 2020

Nigeria Economic Update (Issue 18)

he International Monetary Fund (IMF) recently announced the approval of $3.4 billion emergency support to Nigeria under its Rapid Financing Instrument (RFI) facility1. This support fund comes as part of efforts to assist the nation in mitigating potential balance of payment problems as a result of both the decline in oil revenue as well as the economic effects of the COVID-19 pandemic. The IMF has approved a total of $8.3 billion to countries in the sub-Saharan region under various financing schemes in order to mitigate the impact of the pandemic2. However, the fund to Nigeria is the single largest disbursement made to any nation within the region and it is expected to provide the country with the much-needed liquidity during this critical period. On the grounds that Nigeria is taking 100% of its quota under the RFI, the government is expected to pay a concession fee totaling about 1.05% with repayment period up to 5 years. Although, this loan is not expected to completely finance the government’s spending plans or avert the imminent recession, it will serve as a cushion for revenue shortage problems.

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Africa Economic Update (Issue 1)

Sub-Saharan Africa experienced its worst economic performance in over two decades in 2016, with growth slowing to 1.5 percent. The poor performance in South Africa and oil exporting countries is responsible for attenuating regional growth rate, due to their high collective contribution to regional GDP, despite robust performance in non-resource intensive countries. Growth in Sub-Saharan Africa is projected to slightly improve in 2017 (2.9 percent) and further strengthen in 2018 (3.6 percent). At the sub-regional level, growth prospect is estimated to be highest in West Africa (4.78 percent), attributable to 5.93 percent growth rate from West African Monetary Union (WAEMU) Countries. East Africa is expected to grow at 4.5 percent, Southern Africa 3 percent, and Central Africa 2 percent. Agricultural exporting countries are projected to grow at around 7 percent, while oil producing countries are estimated to grow at 1.9 percent, which indicates a recovery from the negative growth recorded in 2016.

Nigeria Economic Update (Issue 1)

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