Lagos - Nigeria's economy is projected to have contracted 1.54 percent in 2016, according to a budget ministry document, with Africa’s most populous country mired in its first recession in a quarter of a century.
Nigeria is heavily dependent on crude oil exports to fuel its economy, but low global prices and militant attacks on the south eastern Delta oil hub have hammered those exports and slashed government revenues.
“The Nigerian economy, in response to both external and internal economic pressures, inevitably contracted and is currently in recession with a projected growth of -1.54percent for 2016,” the document released on Saturday said.
The budget ministry draft, called “Key issues in the Economic Recovery and Growth Plan”, said the recession was also caused by growth dependent on consumption rather than investment and “huge leaks in government resources through corruption and inefficient spending”.
The International Monetary Fund has predicted that Nigeria’s economy would shrink 1.8percent in 2016. Final official figures are due to be released by Nigeria on February 28.
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President Muhammadu Buhari’s government came to power on a pledge to diversify the economy, fight corruption and tackle the Islamist Boko Haram insurgency in the north east. But Buhari’s critics say the administration has made little headway, with the economy in recession, corruption still endemic and Boko Haram continuing to carry out attacks.
Nigeria’s central bank, backed by Buhari, has also kept the naira rate to the dollar at 40percent above the unofficial - or parallel - market rate, which has dried up dollar supplies on official channels.
The government is now formulating an “Economic Recovery and Growth Plan” for 2017 to 2020.
“First-class infrastructure and an economic environment that supports the private sector and enables it to expand, take risk and employ people are essential to achieve Nigeria’s aspirations for a dynamic, competitive economy,” the budget ministry’s document on the plan said.
Nigeria also plans to increase oil production to 2.5 million barrels per day by 2020, the document said. In January the vice president said production was 1.7 to 1.8 million barrels per day. The government also wants to improve domestic refineries so that petroleum product imports can be cut by 60 percent by 2018, said the document.