Nigerian growth rate seen rising from lowest this century

Nigeria’s economic growth is forecast to accelerate in 2016 from its slowest pace in 16 years, as the government increases investment in power and housing projects and tackles wasteful spending, the statistics agency said.

Growth in gross domestic product is forecast to be 3.8 percent in 2016 from an estimated 3 percent last year, the National Bureau of Statistics said in a report on Thursday. The plunge in oil prices that’s hammering government revenue is fueling a transformation of the economy, the agency said.

“The government is using the 2016 budget as an opportunity to reset and redirect the macroeconomic dynamics of the country,” according to the report. Proposals to plug fiscal leakages and invest at least 1.6 trillion naira ($8 billion) in capital projects are steps moving the economy in the right direction, the agency said.

The spending will help “jump start” economic growth, the agency said, predicting an annual average of 5.4 percent expansion over the three years from 2017.

Nigeria is Africa’s biggest economy and largest producer of oil, which generates about two-thirds of state revenue. The government is in talks for loans worth $3.5 billion from the World Bank and African Development Bank as it tries to combat sluggish growth with record spending this year. The borrowing could help cover Nigeria’s budget deficit, which is expected to widen to 3 trillion naira in 2016, up from an initial estimate of 2.2 trillion naira.