Nigerian economic expansion tops BRICs as reforms accelerate

Nigeria’s economy expanded at a faster rate than the combined average for BRIC (Brazil, Russia, India, and China) countries over the 2012 and 2013 period as reforms in Africa’s largest economy accelerated.

Nigeria grew at an average of 6.45 percent for the past two years, compared with 4.06 percent for BRIC countries, although China grew faster than the BRIC average, according to data from the IMF’s latest World Economic Outlook (WEO), released last week for the spring meetings, entitled Recovery Strengthens, Remains Uneven.

The adjustments to the IMF forecasts made in January were upwards for some advanced economies and downwards for several emerging markets.

“The glow surrounding the BRICS has faded somewhat, with reductions in the Fund’s forecasts for 2014 growth from 2.3 percent to 1.8percent for Brazil, from 2.0 percent to 1.3 percent for Russia and from 2.8 percent to 2.3 percent for South Africa,” said FBN Capital analysts led by Gregory Kronsten, in a recent note.

“The commentary argues that the sell-off in emerging markets in late January was most painful in economies with large current-account deficits. We have made a similar argument (in Nigeria’s favor) about external balance sheets, and note from the statistical appendices that Nigeria is one of just five net external creditors in sub-Saharan Africa.”

Nigeria has enacted reforms in its banking, Agriculture and power sectors over the past 3 years. It has also set up a $1.5 billion Sovereign Wealth Fund (SWF), to better manage oil receipts.

Reforms in Nigeria’s agricultural sector has led to the attraction of private sector financing commitments with $4 billion in executed letters of intent for investments, according to Akinwunmi Adesina, Minister of Agriculture and Rural Development.

“Bank lending to the sector has increased by 614 percent from N3.5 billion in 2012 to N25 billion in 2013, while 9 million metric tons of food was added to the nation’s domestic food supply in a boost to farmers and consumers,” Adesina said at the NESG summit held in Abuja last year.

PATRICK ATUANYA