Frustration and anxiety seem to have gripped the commercial capital Lagos as reports suggest this week that the economy of Africa’s second-largest oil producer, Nigeria, has slipped into recession.
Recession means that a country’s economy has failed to grow for two successive quarters of a given year. Officially, this means that the continent’s most populous nation (180 million) has lost its first spot of Africa’s largest economy to South Africa.
Recent figures suggest that Nigeria’s economy has contracted by 2.06% between April and June this year, in the back of weaker oil prices. The country gets most of its foreign revenue from crude oil (70%).
Nigeria, which is battling a deadly terrorist insurgency in the north-east, has also lost its first place of Africa’s biggest oil producer to Angola.
However, oil exports have also been hardly hit by another episode of armed conflict launched by a radical ethnic group in the south-east.
“A lot of Nigeria’s current predicament could have been avoided,” the BBC quoted Kevin Daly, an Aberdeen Asset Management expert, as saying. “The country is so reliant on oil precisely because its leaders haven’t diversified the economy,” Daly added.
As if that was not enough, the country seems to starring at a rising inflation (17.1%) and a serious cash crisis, as its currency (Naira) seems to have taken a dive.
This is good news for South Africa, which despite battling chronic problems of state corruption and political back-stabbing, seems to be doing ‘quite well’ thanks to its much-diversified economy.
South Africa’s mining activities contribute about 5% to the country’s GDP, while tourism and manufacturing give 8% and 15%, respectively.