The report painted a sluggish economy amid record-high unemployment rate, pushing the number of poverty to 87 million in Africa’s populous nation.
The global banking giant HSBC in a recent report outlined Nigeria’s economic shortcomings under President Muhammadu Buhari’s administration.
The report suggested that a second term for President Buhari risked prolonging economic stagnation for Africa’s largest economy.
The report titled, ‘Nigeria: Papering Over The Cracks’, painted a sluggish economy amid record-high unemployment rate, pushing the number of poverty to 87 million in Africa’s populous nation.
The government dismissed the report and tagged the global bank as one of the killers of Nigeria’s economy which supported the unbridled looting of state resources by leaders.
In a tensed statement released over the weekend by Garba Shehu, senior media aide to President Muhammadu Buhari, Nigeria accused HSBC of laundering money of the country’s military dictator, Sani Abacha.
Here are some issues raised in the report:
1. Sluggish economic growth
Economic growth remains sluggish, and reliant on the rebound in oil output while the non-oil economy, which accounts for about 90% of GDP, continues to languish with many service sectors still mired in contraction
2. Unemployment peek at record-high
Unemployment continues to rise, up almost three-fold in three years to 19% in Q3 2017, pushing the number in poverty to 87 million.
3. Faulty tax system
The report stated that the growth outlook may benefit from fiscal stimulus following the passage of the 2018 Budget but this expansionary stance may also prove to be a key source of macro risk if Nigeria fails to address its fiscal fault lines, including the ongoing reliance on oil revenues, inadequate non-oil tax collections and a large share of its budget directed to debt service.
4. Borrowing at an alarming rate
The decision to issue external debt to redeem more expensive short-term government securities is helping reduce debt service costs in the near term but exposes the fiscal position to exchange rate risk in the event of a future decline in oil prices and naira devaluation
5. Buhari’s rating is diminishing faster ahead of 2019 elections
Election-related spending may compound these fiscal concerns while the poll itself raises macro risks given political uncertainty, fractures within the ruling All Progressive Congress (APC), and President Buhari’s waning approval ratings.