General News
Will Nigeria’s economy gather momentum during the second half of 2019?
The news that Nigeria’s economy cooled down to 2.05 percent in the first quarter of 2019 compared to 2.38 percent in Q4’18 has left investors wondering about the chances of growth gathering momentum during the second half of the year. On the one hand, it’s an encouraging sign we’ve seen the fastest first-quarter growth since 2015, driven mainly by the non-oil sector which grew 2.47 percent. On the other hand, the Oil sector shrank by 2.4 percent, sending a worrying signal that the sector isn’t doing as well as it should be even amid rising Oil prices.
It is becoming increasingly clear that economic growth is unlikely to reach the ambitious Economic Recover and Growth Plan (ERGP) target of seven percent but it may hit the Central Bank of Nigeria’s target of 2.47 percent. For this to happen, the growth trend in the Oil sector would need to rebound and the services sector would need to sustain its current strength. Added momentum could stem from Oil prices should they hit a bullish streak going forward, supporting the economy as the Oil trade still accounts for a handsome chunk of the nation’s foreign exchange earnings.
There are other potential areas of growth. Regionally there is a significant development which could increase economic efficiencies and trade within Africa – the African Continental Free Trade Area (AfCFTA) which comes into effect on May 30. Although Nigeria hasn’t yet joined AfCFTA, there’s still a chance it will do so, once discussions are completed with stakeholders. In addition to opening intra-Africa trade relations, the AfCFTA gives multi-national companies the chance to set up in one African country and be passported to another 52 countries within a common market made up of over one billion people. Increased access to foreign expertise and investment could improve local manufacturing and processing systems while driving more growth and jobs creation. In the best-case scenario, standardised trading agreements across AfCFTA may open up trading channels which could lead to increased company sales, revenues and profits. Nigeria sells just 12.7 percent of its total exports to other African countries, so if the treaty is ratified there’s scope for increased government and company revenues from a boost in trade.
In general, there needs to be a stronger push in diversifying away from Oil reliance to other sources of sustainable growth. An important part of sustainable growth is investment sentiment and the current economic stability along with easing inflationary pressures which may lead to a more dovish Central Bank of Nigeria (CBN) monetary policy by way of interest rate cuts. If so, a reduction in interest rates would stimulate borrowing and investment from local businesses, which in turn would support economic growth. A more robust economy plus foreign exchange reserves rising towards $45 billion would likely provide ammunition for the CBN to defend the Naira.
Another factor impacting on Nigeria’s recovery is the external threat of the US-China trade negotiations which could end up pressuring Oil prices if the result is a global slowdown, meaning less demand for Oil. The USD is staying strong amid the trade tensions and should they intensify further, they will hit emerging markets where it hurts – in their currency exchanges. This would undermine the Naira while pressuring consumer spending and on top of that, falling Oil prices would likely dent government revenues.
Looking ahead, there is scope for Nigeria’s economy to gather momentum in the second half of the year, provided some key basics of growth are kept in focus: supportive monetary policy; keeping consumer spending healthy; sustaining investor confidence; and improving economic infrastructure, particularly in the Oil sector. Even if the risks stemming from US-China trade disputes are out of Nigeria’s hands, shoring up the domestic economy could help it weather any storms. The worst-case alternative is less attractive. If a global slowdown is triggered due to the trade tensions, economic growth in Nigeria may follow suit, meaning the CBN will face more difficult challenges to support the Naira and wider economy through monetary policy.
Uche Nnaji, Minister of Innovation, Science and Technology, has emphasized the crucial role of Science, Technology, and Innovation (ST&I) in tackling national challenges and fostering economic growth.
Speaking at the launch of the Sankore Project, a collaborative initiative between Nigeria and Ghana, Nnaji highlighted how ST&I can drive economic diversification, job creation, climate resilience, improved public health, food security, and sustainable energy development.
“The Sankore Project promises to deliver innovative solutions that will significantly enhance economic growth, improve public service delivery, and raise living standards across our region,” Nnaji stated.
He added that the initiative aligns with President Bola Ahmed Tinubu’s 8-point agenda, particularly in advancing technology, capacity building, and economic growth.
The project, supported by the UK’s International Development arm, is backed by an accountable grant delivery mechanism worth up to £1.9 million. It aims to strengthen ST&I systems in both Nigeria and Ghana through structured project delivery and rigorous monitoring of impacts.
Susan Mshana, Deputy Development Director at the British High Commission, explained that the funding, provided by the UK’s Foreign Commonwealth Development Office, will be executed in two work streams to reinforce science and technology partnerships between the UK, Nigeria, and Ghana.
Ghana’s Minister of Environment, Science, and Technology, Dr. Ibrahim Murtala Muhammed, underscored the importance of collaboration in Africa’s development, urging Nigeria to take a leadership role in the continent’s innovation landscape.
“Nigeria is a sleeping giant that needs to wake up, so the rest of Africa can wake up. This initiative provides an opportunity to drive innovation, create jobs, and collectively overcome shared challenges”, Muhammed said.
He further stressed the need to commercialize research output, urging stakeholders to shift from skepticism to practical application.
As both nations forge ahead with the Sankore Project, stakeholders express optimism that the partnership will catalyze scientific breakthroughs and sustainable development in the region.
Nigeria has plans to launch a $40 million fund to support early-stage tech startups, aiming to strengthen the country’s entrepreneurial ecosystem and reduce young companies’ reliance on private investors.
The fund will be equally financed by the Japan International Cooperation Agency (JICA) and the Nigeria Sovereign Investment Authority (NSIA), which manages the national sovereign wealth fund.
Kashifu Inuwa Abdullahi, director general, National Information Technology Development Agency (NITDA), confirmed the final agreement would be signed within the next month.
The initiative is part of Nigeria’s Startup Act, adopted in October 2022, which aims to create a favorable environment for startups through tax incentives and financial support.
The act established a 10 billion naira (approximately $8.6 million) annual fund to finance certified startups through seed funding, grants, or loans.
According to Disrupt Africa, Nigeria’s startup ecosystem attracted over $2 billion in investments between January 2015 and August 2022, positioning the country as Africa’s leader.
Companies like Flutterwave, Andela, and Opay achieved multi-billion-dollar valuations.
, fundraising dropped to $224 million in 2023, down from $531 million in 2022 and over $1 billion in 2021.
This decline highlights the need for government intervention to revitalize the tech ecosystem amid investor caution.
The new fund marks a significant step for Nigeria, which aims to foster local innovation.
Currently, 12,948 companies are registered as startups, benefiting from a three-year tax exemption. Low awareness of the law’s benefits has prompted the government to plan a nationwide information campaign.
By facilitating access to funding, the initiative could strengthen support for existing startups and stimulate new tech ventures, reinforcing Nigeria’s position as a leading hub for digital innovation in Africa.
Eight countries – six of them in Africa, including Nigeria, Kenya and Lesotho – could soon run out of HIV drugs following the US government’s recent decision to pause foreign aid, the World Health Organization (WHO) has said.
US President Donald Trump announced the freeze on his first day in office in January as part of a review into government spending.
“Disruptions to HIV programmes could undo 20 years of progress,” Tedros Adhanom Ghebreyesus, WHO chief warned.
It could also lead to more than 10 million additional cases of HIV and three million HIV-related deaths, he added, noting this was “more than triple the number of deaths last year”.
Nigeria, Kenya, Lesotho, South Sudan, Burkina Faso and Mali – as well as Haiti and Ukraine – would run out of live-saving anti-retroviral (ARV) medicines in the coming months, Dr Tedros said at a press conference on Monday.
Trump’s executive order paused foreign aid support for an initial duration of 90 days in line with his “America First” foreign policy.
It has affected health programmes around the world, leaving shipments of critical medical supplies, including HIV drugs, greatly hampered.
The majority of the US Agency for International Development’s (USAID) programmes have since been terminated.
Despite a waiver issued in February for the US’s ground-breaking HIV programme, its work has severely impacted.
Known as the US President’s Emergency Plan for Aids Relief (Pepfar), it relies on logistical support from USAID and other organisations hit by the turmoil.
It has led to the “immediate stop to services for HIV treatment, testing and prevention in more than 50 countries”, Dr Tedros said.
Launched in 2003, Pepfar has enabled some of the world’s poorest people to access anti and has been credited with saving more than 26 million lives worldwide.
During his first days in office, Trump also announced that the US would pull out of the WHO, affecting funding for the global health agency.
“The US administration has been extremely generous over many years. And of course, it’s within its rights to decide what it supports and to what extent,” Dr Tedros said.
“But the US also has a responsibility to ensure that if it withdraws direct funding for countries, it’s done in an orderly and humane way that allows them to find alternative sources of funding.
An estimated 25 million people are living with HIV in sub-Saharan Africa, which is more than two-thirds of the global total 38 million people living with the disease.
In Nigeria, nearly two million people are living with HIV, with many relying on receiving aid-funded medicines.
Kenya has the seventh-largest number of people living with HIV in the world, at around 1.4 million, according to WHO data.
“We ask the US to reconsider its support for global health, which not only saves lives around the world, it also makes the US safer by preventing outbreaks from spreading internationally,” Dr Tedros said.
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