Nigeria Outlook 2017…Glass Half Full?
A Year of unrealized potentials
The year 2016 will be remembered as the year of what could have been, but wasn’t. A year that could have stood out and marked the resurgence of a great economy rather we witnessed the first recession in over 20years. The country also inherited most of the challenges of 2015 in 2016 among which is the commodities prices especially crude oil which put a huge pressure on its reserves and exchange rate.
The reduced capital flow into emerging markets and developing economies in the course of the year was a direct implication of the crude oil crises. Oil producing emerging economies like Nigeria bore the weight of this apathy and the effect especially in Nigeria was all but catastrophic.
The year however started with a lot of optimism in Nigeria. The country held its breath for the announcement of Ministers to make up the cabinet of the new Buhari administration. Also, the proposed N6.06trillion expansionary budget which was the highest figure in the Nation’s history also fuelled this optimism. The optimism however turned to scepticism when the budget padding saga began and the previously proposed swift implementation of the budget was halted in its tracks. That in addition to the volatile crude oil prices weighed in to scuttle any hope of a swift passage and appropriation of the 2016 budget.
The effect of the crash in crude oil prices on Nigeria’s foreign currency reserve as well as the value of the local currency resulted in a series of aggressive FX control policies by the Central Bank which constrained the access to FX of local manufacturers and importers. The economy went on a downward spiral from there until the country’s economy ultimately landed in a recession. Inflation spiked to an eleven year high, unemployment rate maintained an upward trajectory almost all through the year, Foreign Direct Investment dropped dramatically and almost everything that could go wrong in a fiscal year went wrong in 2016.
However, despite the doom and gloom that characterized the year, there were some positives that sustained hopes and sets the expectation for 2017.
The war on corruption was arguably one of the highlights of 2016 and very prominent members of the previous administration were held accountable for their financial impropriety. Also, the war on terrorism scored major points in 2016 as the renewed vigour of the new president resulted in the rescue of some of the kidnapped Chibok girls as well as drastically reduced the operations of the terrorist sect.
The oil cut agreement between OPEC and non OPEC member nations to mop up the supply glut and boost oil price stability renewed hope and optimism that despite the very harsh 2016, 2017 still has a fighting chance to achieve its potentials. Glass half full mirrors the challenges of 2016 and measures the opportunities and threats for 2017 and has chosen to focus on the prospects rather than the threats.