Nigeria’s economy nosedived into a recession official data revealed Wednesday with oil production hammered by militant attacks on pipelines and foreign investment at a “record” low.
Output in the three months to the end of June was -2.06 percent with the oil sector reporting a double-digit decline following a wave of attacks by rebels in the oil-producing south.
The slowdown was recorded across many sectors in a sign that Africa’s largest economy is wrestling with deeper structural issues than just the low price of crude.
Foreign investors, wary of the Nigerian government’s controversial currency peg, avoided putting money into the country leading to a “record” decline in capital importation, reported Nigeria’s National Bureau of Statistics.
The $647.1 million worth of capital imported into Nigeria in the second quarter represented a “fall of 75.73 per cent” compared to 2015.
“This provisional figure would be the lowest level of capital imported into the economy on record, and would also represent the largest year on year decrease,” said the statistics agency.
“There was considerable uncertainty surrounding future exchange rate policy which may have deterred investors,” added the statistics agency.
Nigerian President Muhammadu Buhari’s government finally devalued the naira in June after upholding the currency peg for months, yet experts say the negative impact of the controversial monetary policy will still be felt in months to come.
“It’s really, really grim,” John Ashbourne, Africa economist at research firm Capital Economics, told AFP.
“I think people underestimated the degree to which the oil sector would contract,” said Ashbourne, speaking from London.
“Investors want to see some direction from Buhari, there is a sense that the policies they have implemented so far aren’t working,” Ashbourne said.
“Nigeria is very dependant on foreign investment to improve the infrastructure and get the economy back on track, we need investor confidence,” he said, “people are staying away because they don’t have any faith that things are turning around.”
This year Nigeria’s domestic product could contract by 1.8 per cent, according to the International Monetary Fund.