The World Bank has revealed that Nigeria faces a prospect of fragile economic recovery in 2017, given a high degree of fragility and risks from future shocks to the oil price or further unrest in the Niger Delta region, which is not yet fully stabilised.
The World Bank’s in its newly-released Bi-annual Economic Update said that Nigeria could build on the oil-driven economic recovery anticipated for it in 2017 by strengthening its macroeconomic policy framework and implementing the structural reforms needed to diversify the economy and break out of a boom and bust cycle.
The World Bank Senior Communication Officer in Nigeria Olufunke Olufon disclosed this in a statement issued Sunday in Abuja.
The World Bank added that in 2016, Nigeria experienced its first full year recession in 25 years, with global oil prices reaching a 13-year low and oil production was crushed by vandalism and militant attacks in the Niger Delta, resulting in severe contraction of oil GDP.
The economic update highlighted that although the oil sector represents only 8.4 per cent of GDP in 2016, lower foreign exchange earnings from oil exports have spillover effects on non-oil sectors – industry and services -dependent on imports of inputs and raw materials, and overall real GDP contracted by 1.5 per cent.
In the same vein, the President/Chairman of Council , Chartered Institute of Bankers of Nigeria (CIBN), Prof. Segun Ajibola has said the aggressive intervention by the Central Bank of Nigeria (CBN) will help stabilise the naira.
Ajibola, said this in an interview with journalists, on the sidelines of the institute’s 2017 annual general meeting that took place in Lagos recently.
According to the university don, the forex market in any part of the world is a very sensitive market and as such requires effective and constant “policing.”
He stressed that the intervention of the CBN is inevitable. “What is happening in the market normally is a function of the forces of demand and supply. So, with the intervention of the CBN, we have seen some improvement in the foreign exchange rate in terms of naira and dollar, because supply has improved.
“We only pray that Nigeria as a country would continue to generate more foreign exchange, either from oil and gas, or from non-oil exports, so that the intervention would be sustainable and we begin to feel the positive impact of the intervention in the economy. So, it has been very helpful, but sustainability remains the concern,” he added.
The CIBN boss also expressed optimism that the Nigerian economy would record positive growth this year.
“I believe the economy is recovering from the recession it found itself last year. The global oil market is recording some improvements and some other sectors of the economy are growing and making waves.
“With all these put together, we expect some modest improvement in the overall performance of the economy in 2017. And when this happens, it would rub off positively on the banking industry.
“As at today, there are still a lot of challenges in the industry, such as in the area of performance, by borrowers in particular, honouring their obligations as at when due.
“But, as the economy improves, we expect the improvement to positively impact the banking sector and financial institutions generally,” Ajibola added. At the meeting, the institute’s 2016 annual reports and accounts were considered and approved.