IMF forecasts that Nigeria's economy will grow by 2.3% during the course of 2019

NIGERIA'S economy is poised to grow by 2.3% during the course of 2019 according to the latest forecast by the International Monetary Fund (IMF) which is expected to have a negligible event because the population is expected to increase by 2.5%.

According to the IMF forecast, across sub-Saharan Africa, there should be overall economic growth of 3.8% on par with the global forecast of 3.7%. Analysts say that the region’s growth will be led again by Ethiopia, Rwanda, Ghana, Ivory Coast, Senegal, Benin, Kenya, Uganda, Tanzania and Burkina Faso which remain in the top 10.

Growth is driven by a combination of the steady rebound of commodity prices, an improvement in the global economy and improved capital market access after several of the countries made valiant attempts to get their fiscal books in order following the commodity price slump of 2014/15. However, those numbers would be even better were it not for the underwhelming projections from the continent’s big two Nigeria and South Africa.

Both economies are recovering from a pretty tough 2018 and both have presidential elections this year. Nigeria is expected to see an expansion of 2.3%, more than the 1.9% of 2018, while South Africa's economy will expand by 1.4%, which is, again, an improvement on the 0.8% growth it saw last year.

Washington DC think-tank, Brookings, noted in this year’s Foresight Africa report, that this kind of growth does not look great compared with 2.5% annual population growth. Brahima Coulibaly, the director of Brookings’ Africa Growth Initiative, said the elephant in the room must be addressed when it comes to African economies this year and that is rising debt.

He added: “If you leave out the big two and Angola, aggregate growth for sub-Saharan Africa rises to 5.7% for 2019. About half of the world’s fastest-growing economies will be located on the continent, with 20 economies expanding at an average rate of 5% or higher over the next five years, faster than the 3.6% rate for the global economy.

 “We’re coming to the end of a decade of cheap debt which some African countries piled on in the latter half of that decade. There’s a real risk, with the likelihood of global recession in 2020, commodity prices will fall as demand drops, so several African countries might struggle to manage their debt servicing, especially if interest rates continue to rise.

“At least 14 countries are either in debt distress or at high risk of debt distress up from six countries just five years earlier. These countries currently have total debt of around $160bn, of which $90bn is external debt.”

Mr Coulibaly added that Africa’s growing debt is a ticking time bomb, adding that the average debt to gross domestic product (GDP) ratio rose to 57% in 2017 and has hit extremes in countries including Cape Verde, Eritrea, Congo Brazzaville and Mozambique where it exceeds 100% of GDP. He pointed out that as the global economic environment changes updating debt management strategies should be a priority for African policymakers in 2019 and they will need to take bold steps to strengthen governance around tax revenue collection.