The International Monetary Fund (IMF) latest report on Sub-Saharan Africa has revealed that Nigeria’s broad-based economic reforms have yet to deliver the desired impact, 18 months after their introduction.
Stakeholders in the food sector also argue that these reforms have failed to improve the basic necessities of life in the country.
While the IMF recognized progress in some nations, such as Côte d’Ivoire, Ghana, and Zambia, Nigeria was notably absent from the list of success stories.
Instead, the report highlighted Nigeria as struggling to meet reform targets, with its projected economic growth rate of 3.19% for 2024 falling below the regional average of 3.6%.
Speaking at the Lagos Business School, IMF Deputy Director Catherine Patillo emphasized that macroeconomic imbalances in the region are easing, but Nigeria remains excluded from this positive trend.
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She noted significant fiscal consolidation efforts across two-thirds of the region, with improvements seen in countries like Ghana and Zambia, while Nigeria lags behind.
Inflation remains a significant challenge for Nigeria. After briefly slowing in July and August, inflation resumed an upward trend in September and October, with analysts predicting continued increases through the end of the year.
At 33.8%, Nigeria’s inflation rate far exceeds the 21% target for 2024, placing it among the countries failing to curb inflation effectively.
The IMF report also highlighted Nigeria’s struggles with exchange rate instability and currency depreciation, contrasting with improvements in foreign exchange pressures across much of the region.
Additionally, Nigeria was identified as one of the countries facing significant debt burdens, with interest payments consuming a large share of government revenue.
The report, according to Vanguard, noted that in countries like Angola, Ghana, Nigeria, and Zambia, rising debt service costs have absorbed 15% of total revenue.
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It stated: ‘‘Debt service capacity remains low by historical standards. In almost one-quarter of countries, interest payments exceed 20 percent of revenues, a threshold statistically associated with a high probability of fiscal stress. And rising debt service burdens are already having a significant impact on the resources available for development spending.
‘‘The median ratio of interest payments to revenues (excluding grants) currently stands at 12 percent. Some three-quarters have already witnessed an increase in interest payments (relative to revenue) since the early 2010s (comparing the 2010–14 average with the 2019–24 average). In Angola, Ghana, Nigeria, and Zambia, this increase in interest payments alone absorbed a massive 15 percent of total revenue’’.
Looking ahead, the IMF painted a mixed picture for the region, categorizing Nigeria among the resource-intensive countries facing slower growth due to political and social resistance to reforms.
The report also emphasized that tight financing conditions and political instability are compounding Nigeria’s challenges.
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In contrast, countries like Ghana, Botswana, and Senegal are expected to achieve significant growth, driven by improved macroeconomic stability and rising resource exports.
The IMF recommended that countries like Nigeria rethink their reform strategies by focusing on better communication, compensatory measures, and rebuilding trust in public institutions to gain popular support for reforms.
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