Nigeria continues its recovery from the2016 recession, sustaining an estimated 2 percent growthratein 2019. The collapse of global oil prices during 2014–16,combined with lower domestic oil production, led to a suddenslowdown in economic activity. Nigeria’s annual real GDPgrowth rate, which averaged 7 percent from 2000 to 2014,fell to 2.7 percent in 2015 and to -1.6 percent in 2016.Growth rebounded to 0.8 percent in 2017, 1.9 percent in2018, and then plateaued at 2 percent in the first half of2019, where it is expected to remain for the rest of theyear. Services, particularly telecoms, remained the maindriver of growth in 2019, although trade started contractingamidst increasing use of policy measures aimed at importsubstitution. Agricultural growth picked up slightly butremains affected by insurgency in the Northeast region andongoing farmer-herder conflicts. Industrial performance wasmixed: growth in the oil sector remained stable, butmanufacturing production slowed in a context of weaker powersector supply. Overall, the slow pace of recovery in 2019 isattributable to weak consumer demand and lower public andprivate investment. The annual headline inflation rate fellfrom a peak of 15.7 percent in 2016 to a projected 11.6percent in 2019 but remains high and above the centralbank’s target of 6–9 percent. The focus section of thisreport analyzes the evolution of productivity in Nigeria andidentifies policies and institutions that can leverageproductivity growth to accelerate Nigeria’s economicexpansion and create new job opportunities. The analysishighlights four key priorities. First, ensuring policytransparency and predictability will be critical to reduceinvestment risk and promote growth outside the extractiveindustry. Second, investing in infrastructure, strengtheningland tenure security, improving educational outcomes, andliberalizing the trade regime and enhancing trade andtransport facilitation would help develop value chains andfacilitate the efficient reallocation of factors ofproduction, making Nigeria more cost-competitive. Third,reducing regulatory discretion would help attract foreignand domestic investment to the nonoil sector, encouragecompetition, and promote formalization.And fourth, improvingaccess to finance could enable new firms to compete withincumbents and allow more productive firms to scale up theiroperations. Actions in these areas would lay the groundworkfor Nigeria’s transition to a new economic model that moreeffectively utilizes its large, young population andabundant natural resources to support sustainable growth andpoverty reduction.
PDF
download
878987797
028-85220240
