The latest International Monetary Fund (IMF) report on the economic outlook for sub-Saharan Africa has revealed that Nigeria’s ongoing economic reforms have yet to deliver substantial results 18 months after their introduction.
Presented at the Lagos Business School by IMF Deputy Director Catherine Patillo, the report praised countries like Côte d’Ivoire, Ghana, and Zambia for successful reform implementations.
While sub-Saharan Africa’s average economic growth for 2024 is projected at 3.6 per cent, Nigeria’s growth rate of 3.19 per cent remains below this benchmark.
Patillo noted that while several countries have achieved fiscal consolidation and reduced macroeconomic imbalances, Nigeria continues to lag in critical areas.
“More than two-thirds of countries have undertaken fiscal consolidation, with the median primary balance narrowing by 0.7 percentage points in 2024. These include notable improvements in Côte d’Ivoire, Ghana, and Zambia,” she said.
The IMF stated that Nigeria’s escalating inflation is a major concern.
After a brief slowdown in July and August, inflation resumed in Nigeria its upward trend in, reaching 33.8 per cent in October, exceeding the 21 per cent target set for 2024.
Analysts predict further increases through the end of the year, which will put additional strain on household incomes and economic stability.
Currency instability also emerged as a key issue. While other nations in the region are experiencing reduced foreign exchange pressures, Nigeria continues to grapple with significant depreciation and volatility of its local currency.
The IMF labelled Nigeria as one of the worst-performing countries in terms of exchange rate stability.
Nigeria’s fiscal health was another area of scrutiny, particularly its heavy debt servicing obligations.
The report revealed that rising interest payments consume a disproportionate share of the country’s revenue, limiting funds available for development.
“In Angola, Ghana, Nigeria, and Zambia, this increase in interest payments alone absorbed a massive 15 per cent of total revenue,” the IMF stated.
Nigeria’s struggles were attributed to several factors, including adjustment fatigue, public resistance to reforms, and inadequate communication strategies.
The IMF identified these as key reasons the reforms failed to gain public trust and deliver measurable improvements.
“Resource-intensive countries continue to grow at about half the rate of the rest of the region, with oil exporters struggling the most,” the report noted.
Political unrest, public dissatisfaction, and financing constraints were also highlighted as impediments to reform implementation in Nigeria.
To address these challenges, the IMF advised Nigeria to rethink its reform strategies.
Recommendations included better communication and engagement with the public, adopting compensatory measures to alleviate economic hardship, and rebuilding trust in government institutions.
“This will require greater attention to communication and engagement strategies, reform design, compensatory measures, and rebuilding trust in public institutions,” the report stated.