First economic power in Africa, Nigeria will enter recession in 2020 with the loss of 80%
of its oil revenues.
For Nigerian government officials, this is no longer in doubt. Their country will enter
recession following the disaster of the loss of 80% of its oil revenues. The explanation
lies in the excessive dependence of the hydrocarbons sector on an economy that has not been able to
to diversify. “We had to revise our budget downwards to bring it back to a base of 20 dollars per
barrel”, announced the director general of the Budget, Ben Akabueze.
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A reduced budget
The government had already announced in March a drastic reduction in its budget - established at 10,590 billion
naira, or 33.8 billion dollars - by around 15% due to the fall in the price of the barrel, in the
context of the coronavirus health crisis and the price war between the major oil powers. the
budget, initially calculated on the basis of a barrel at 57 dollars, was then revised on the basis of a barrel at 30
dollars. This time it has just been revised downwards on the basis of a barrel at less than 20 dollars. “ Nigeria is
faced with the double challenge of the Covid-19 pandemic and the collapse in the price of crude oil",
confirmed the Minister of Finance, Zainab Ahmed. “We had to reduce the budget by reviewing our
revenue projections to conform to current realities,” she added. “World markets
of rough are really slowing down and we are not able to sell that much rough
than before. »
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The pressure of Covid-19 accentuates the difficulties
According to Ben Akabueze, the Nigerian economy, "including the non-oil sector, is very largely dependent
oil trade, as it is highly dependent on imports" to source goods
manufactured as food products. Furthermore, "the government has to spend a lot
more in response to the crisis (...) Faced with an impending recession, what you are doing is trying to
spend to get by,” he added.
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An economy that will contract
According to forecasts by the International Monetary Fund (IMF), Nigeria, where oil production
accounts for more than half of revenues and 90% of export earnings, is expected to contract by at least
3.4% in 2020. Even before the health and economic crisis caused by the virus, the most populous country
of Africa with nearly 200 million inhabitants was already struggling to recover from a serious economic crisis
crossed in 2016-2017 and stagnated at around 2% growth per year. The IMF approved the week
latest $3.4 billion emergency funding to help Nigeria deal with crisis
current, a sum still insufficient for the English-speaking giant which hopes to borrow nearly 7 billion
dollars to the various international institutions.