The President Mohammadu Buhari’s administration showed remarkable strength when the economy slipped into recession, the first in 25 years, but was quickly able to bounce out in the last two years.
The economy of Africa biggest oil producer contracted in 2016 for the first time in 25 years as oil output slumped. While the economy expanded in the last two years, growth still lags in an increasing population, causing Nigerians to become poorer.
But the Nigerian stock market delivered one of the worst returns globally, according to data compiled by Bloomberg on the back of disappointing corporate earnings, weak sentiments and Buhari’s reluctance to push market friendly reforms.
Fines slapped on telecommunications company MTN Group Ltd. further unnerved investors.
Inflation has been above the central bank’s target of six per cent to nine per cent ever since Buhari took power in May 2015. Price growth has eased from the level of almost 20 per cent it reached in 2016 when the central bank loosened the naira peg, but investor uncertainty over a multiple exchange rate system and high food costs keep inflation elevated.
The naira has lost 45 per cent of its value against the dollar as a sharp drop in oil prices reduced export earnings which make up about 95% of Nigeria’s dollar income. The central bank loosened a currency peg in 2016 but to accommodate political resistance against further devaluation, it created a system of multiple exchange rates that critics say is opaque and subject to abuse.
