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Insecurity, oil theft dampening Nigeria’s economic outlook — AfDB

By BusinessNews Staff on August 9, 2014

The African Development Bank Group on Thursday said that the drop in oil revenue occasioned by oil theft and pipeline vandalism as well as the security challenges in the North-East might dampen the positive economic outlook for Nigeria for the rest of the year and beyond.

The bank stated this in its African Economic Outlook 2014 report, which was inaugurated in Abuja.

The report, which covers 54 African countries, presents the current state of economic and social development as well as prospects for nations on the continent.

In recent times, Nigeria has been battling with serious disruptions to oil production and lifting operations occasioned by multiple leaks, pipeline vandalism and theft.

Apart from the decline in oil revenue, the report also listed the sluggish recovery of the global economy, continued agitation for resource control in the Niger Delta region, and possible distraction as a result of the 2015 general elections, as other factors that might affect the performance of the country’s economy.

It stated that while prospects in the country were being driven by performance in the activities in the non-oil sector such as agriculture, information and communication technology, and trade and services, the recent decline in oil production had become worrisome.

The report stated, “Growth of the oil sector was hampered throughout 2013 by supply disruptions arising from oil theft and pipeline vandalism, and by weak investment in upstream activities with no new oil finds

“Risks to Nigeria’s economic growth are sluggish recovery of the global economy, insecurity challenges in the North-eastern part of the country, continued agitation for resource control in the Niger Delta and possible distraction from the ongoing reforms as a result of the upcoming 2015 general elections.

“Negative growth of the oil sector may also continue to drag down overall growth until a lasting solution is found to the challenge of oil theft and weak investment in exploration due to uncertain state of play in the sector as a result of the non-passage of the Petroleum Industry Bill.”

The report also explained that the country was still facing the challenge of making its decade-long sustained growth more inclusive.

For instance, it noted that “poverty and unemployment remain prominent among the major challenges facing the country. One reason for that is that the benefits of economic growth have not sufficiently trickled down to the poor.”

Commenting on the report, the Country Director, AfDB, Mr. Ousmane Dore, explained that despite the challenges facing the country, social indicators were beginning to improve as efforts to achieve the Millennium Development Goals had been intensified through the implementation of social-sector reforms.

He said, “We believe that monetary policy has been successful because the country’s inflation rate currently stands at single digit.

“But there is a need to put in place policies that will help address poverty to match the tremendous growth, which Nigeria has recorded in recent times.”

[Punch]

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