Nigeria’s gross domestic product is expected to shrink in 2016 by 1.6 per cent after slipping into a recession in August, according to the AfDB. The economy has taken a hit after the global price of crude – worth 90 per cent of its exports and 70 per cent of government revenue crashed.
However the African Development Bank has also announced its approval of the first instalment of $1 billion loan to Nigeria to help President Muhammadu Buhari combat the ‘crisis situation’ situation in the country.
The AfDB said that the $600 million loan was the “first tranche of a US $1 billion budget support loan” to help Nigeria overcome her recession. According to the AfDB President, Akinwumi Adesina, “We must think through innovative solutions to support our regional member countries in crisis situations like this. It will help the Nigerian government create fiscal space to facilitate a smooth implementation of the government’s budget, support fiscal and structural reforms, and improve the targeting of social sector spending.”
While the bank also added that the last tranche of $400 million will be approved in 2017. It would be recalled that Buhari introduced a record budget designed to stimulate growth earlier this year, but has struggled to attract funding even as the senate recently rejected his plan to borrow some $30 billion from abroad to finance key projects and plug budget deficits in the next three years.
On-going rebel attacks on oil infrastructure in the country’s oil-producing southern swamplands have compounded Buhari’s headache, slashing production at a time the country desperately needs the money from the oil sector.
In a recent note by BMI Research, a London-based research firm, support for Buhari is slipping as a result of his handling of the economy, analysts warn. The president scored a 41 per cent approval rating in a September poll, compared with 80 per cent around the same time in 2015.
BMI research has also warned that the “Falling popularity and increasing criticism from influential figures and close allies will limit President Muhammadu Buhari’s ability to enact the hard policy decisions needed to take Nigeria out of its present macroeconomic morass.
