Africa's biggest economy, Nigeria admits 'struggling to keep going'

Muhammadu Buhari, elected in March in one of the most applauded and surprising elections in Africa of recent years, will take over as Nigeria president with an economy lined with thorns.

 

The country has already borrowed more than half the amount it budgeted for the full year as it struggles to deal with lower income from oil, Finance Minister Ngozi Okonjo-Iweala said.

Africa’s biggest crude oil producer and economy has sold 473 billion naira ($2.4 billion) so far in domestic and external debt this year, within the budgeted allowance of 882 billion naira for 2015, she told reporters on Tuesday in the capital, Abuja.

“We’ve had to manage the first half on a month-by-month basis,” Okonjo-Iweala said. “We’ve had a cash-flow crunch.”

"Under the 2015 spending plan approved by lawmakers last month, Nigeria, which relies on oil for about 70% of government spending, will run a fiscal deficit of 1.09% of gross domestic product," she said.

“Under very difficult circumstance, we’ve managed to keep the country going,” said Okonjo-Iweala, who is part of President Goodluck Jonathan’s outgoing government, which will be formally replaced on May 29, when President-elect Buhari is due to be inaugurated. 

The price of Brent crude has fallen more than 40% since last year’s peak in June.

Nigeria isn’t the worst-affected of oil-producing nations because it has made improvements in agricultural output and its inflation rate is still holding below double figures, Okonjo- Iweala said.

Inflation rate climbed to 8.5% in March, the country’s statistics agency said last month.

Angola, sub-Saharan Africa’s third-largest economy, has been negotiating a $500 million line of credit with Paris-based Societe Generale SA as it also struggles to cope with plunging oil revenue.

The continent’s second-largest crude oil producer was also negotiating loans with Goldman Sachs Group Inc. and London-based Gemcorp Capital LLP, each for $250 million, and with Spain’s Banco Bilbao Vizcaya Argentaria SA, for 500 million euros ($537 million), reports said last month.

An oil price dip was a factor that led to Buhari’s ouster in 1985. While his short-lived economic record was hardly illustrious, Buhari was oil minister in 1976, and then head of the state-owned oil company.

Though, in that sense, his victory could be seen as a poisoned chalice, he is likely to get a more sympathetic ride this time round from Nigerians given he was hired to clean up graft and instil order in the often chaotic economy.