Economy
IMF projects a negative growth for Nigeria, sub-Saharan Africa in 2020
By Omoh Gabriel
The IMF has that Nigeria economy will drop by 3.4 per cent thus plunging it into another round of recession. The multilateral financial institution in its global economic forecast that was embargoed until today projected significant economic contractions in oil-exporting countries, with Nigeria’s GDP forecast to fall 3.4 per cent this year after growing 2.2 per cent in 2019. It however said that the Nigeria economy will recover in 2021 by a growth of 2.4 per cent. Angola’s economy IMF said is expected to remain in recession, contracting by 1.4 per cent in 2020. It said that South Africa which growth was 0.2 per cent in 2019 will decline to a growth of –5.8 per cent in 2020 but recover to 4.0 per cent in 2021. Global economic output is said which was 2.9 per cent in 2019 will fall by –3.0 per cent in 2020 and grow by 5.8 per cent in 2021. The United States of America’s economy the IMF data showed is projected to fall by–5.9 per cent in 2020 and rise to 4.7 per cent in 2021
It said “Across countries in sub-Sahara Africa, the less diversified economies, such as Nigeria or Angola, will be hit the hardest, reflecting the impact of lower commodity prices and containment efforts. Among the non- resource intensive countries, those dependent on tourism (such as Cabo Verde, Mauritius, São Tomé & Príncipe or Seychelles) are expected to witness a severe contraction due to extensive travel restrictions, while emerging and frontier economies (such as South Africa, Ghana) will face the consequences of large capital outflows and tightening financial conditions. The policy priority is to ramp up health capacity and spending to save lives and contain the virus outbreak. The pandemic is reaching the shores of the continent at a time when budgetary space to absorb such shocks was limited in most countries, thus complicating the appropriate policy response”.
According to the IMF “Sub-Saharan Africa is facing an unprecedented health and economic crisis. COVID-19 outbreak threatens to exact a heavy human toll, upend the livelihood of vulnerable groups, damage businesses and retard the region’s growth in the years to come. No country will be spared. As of the 9th of April, over 6,200 cases have been confirmed across 43 countries in the region, with South Africa, Cameroon, and Burkina Faso being the most affected. The region must deal with three large shocks: disrupted production and reduced demand; global recession; sharp decline in commodity prices. Growth in sub-Saharan Africa in 2020 is projected to contract at –1.6 percent, the lowest level on record.
“Fiscal, monetary and financial policies should be used to protect vulnerable groups, mitigate economic losses and support the recovery: the immediate priority is for countries to do whatever it takes to ramp up public health expenditures to contain the virus outbreak, irrespective of the fiscal space and debt positions; sizeable, timely and temporary fiscal support is crucial to protect the most affected people and firms, including those in the informal sector. Policies could include cash transfers or support in-kind to help people under strain, including through digital technologies, and targeted and temporary support to hard-hit sectors and a more supportive monetary stance and injection of liquidity can play an important role in sustaining firms and jobs.
“Broad-based support from all development partners is essential to address the sizable financing needs including debt relief for the most impacted countries. The IMF is making [$100] billion available via rapid-disbursing emergency facilities. In addition, the IMF’s Catastrophe Containment and Relief Trust can provide grants to the poorest countries to pay off debt to the Fund. Subject to the decisive actions, growth in the region is projected to recover in 2021 to around the 4 percent mark. However, the depth of the slowdown in 2020 and the speed of recovery will depend on several factors, including how the pandemic interacts with weak local health systems, the effectiveness of national containment efforts, and the strength of support from the international community.
Sub-Saharan Africa’s gross domestic product is expected to contract 1.6% this year, compared 3.1% growth last year, as the coronavirus pandemic wrecks the region’s economies, the International Monetary Fund said on Tuesday . Various African governments have imposed lockdowns and curfews to curb the spread of the coronavirus, but the restrictions are putting pressure on most economies — some of which were already in recession. The IMF said in its World Economic Outlook that GDP was projected to fall sharply in South Africa, the continent’s most advanced economy. The country’s GDP is projected to contract 5.8% in 2020 from growth of 0.2% in 2019.
South Africa entered a recession in the final quarter of last year as power cuts by state utility Eskom took a toll on the economy, while public finances were strained by bailouts to struggling state firms.
The country imposed some of the toughest restrictions on the continent to contain the coronavirus, including a five-week lockdown to the end of April. With production and spending curtailed, the economic outlook was set to remain grim. The IMF and the World Bank – which has also projected a recession for sub-Saharan Africa in 2020 – are racing to provide emergency funds to African countries and others to combat the coronavirus and mitigate the impact of sweeping shutdowns aiming at curbing its spread.
The Executive Board of the International Monetary Fund, IMF, in attempt to assist poorest African countries had on Monday approved immediate debt service relief for 25 of the IMF’s member countries under the Fund’s revamped Catastrophe Containment and Relief Trust (CCRT). The beneficiaries are: Afghanistan, Benin, Burkina Faso, Central African Republic, Chad, Comoros, Congo, D.R., The Gambia, Guinea, Guinea-Bissau, Haiti, Liberia, Madagascar, Malawi, Mali, Mozambique, Nepal, Niger, Rwanda, São Tomé and Príncipe, Sierra Leone, Solomon Islands, Tajikistan, Togo, and Yemen. Ms. Kristalina Georgieva, Managing Director of the Fund in a statement said deal is part of the Fund’s response to help address the impact of the COVID-19 pandemic. This provides grants to our poorest and most vulnerable members to cover their IMF debt obligations for an initial phase over the next six months and will help them channel more of their scarce financial resources towards vital emergency medical and other relief efforts. The CCRT can currently provide about US$500 million in grant-based debt service relief, including the recent US$185 million pledge by the U.K. and US$100 million provided by Japan as immediately available resources. Others, including China and the Netherlands, are also stepping forward with important contributions. I urge other donors to help us replenish the Trust’s resources and boost further our ability to provide additional debt service relief for a full two years to our poorest member countries,” she said.
The Arab Africa Trade Bridges (AATB) Program and the Federal Republic of Nigeria formalized a partnership with the signing of the AATB Membership Agreement, officially welcoming Nigeria as the Program’s newest member country. The signing ceremony took place in Abuja on the sidelines of the 5th AATB Board of Governors Meeting, hosted by the Federal Government of Nigeria.
The Membership Agreement was signed by Eng. Adeeb Y. Al Aama, the CEO of the International Islamic Trade Finance Corporation (ITFC) and AATB Program Secretary General, and H.E. Mr. Wale Edun, Minister of Finance and Coordinating Minister of the Economy, Federal Republic of Nigeria. The Agreement will provide a strategic and operational framework to support Nigeria’s efforts in trade competitiveness, promote export diversification, strengthen priority value chains, and advance capacity-building efforts in line with national development priorities. Areas of collaboration will include trade promotion, agribusiness modernization, SME development, businessmen missions, trade facilitation, logistics efficiency, and digital trade readiness.
The Honourable Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, called for deeper trade collaboration between African and Arab nations, stressing the importance of value-added Agribusiness and industrial partnerships for regional growth. Speaking in Abuja at the Agribusiness Matchmaking Forum ahead of the AATB Board of Governors Meeting, the Minister said the shifting global economy makes it essential for African and Arab nations to rely more on regional cooperation, investment and shared markets.
He highlighted projections showing Arab-Africa trade could grow by more than US$37 billion in the next three years and urged partners to prioritize value addition rather than raw commodity exports. He noted that Nigeria’s growing industrial base and upcoming National Single Window reforms will support efficiency, investment and private-sector expansion.
“This is a moment to turn opportunity into action”, he said. “By working together, we can build stronger value chains, create jobs and support prosperity across our regions”, Edun emphasized. “As African and Arab nations embark on this journey of deeper trade collaboration, the potential for growth and development is vast. With a shared vision and commitment to value-added partnerships, we can unlock new opportunities, drive economic growth, and create a brighter future for our people.”
Speaking during the event, Eng. Adeeb Y. Al Aama, Chief Executive Officer of ITFC and Secretary General of the AATB Program, stated: “We are pleased to welcome Nigeria to be part of the AATB Program. Nigeria stands as one of Africa’s most dynamic and resilient economies in Africa, with a rapidly expanding private sector and strong potential across agribusiness, energy, manufacturing, and digital industries. Through this Membership Agreement, we look forward to collaborating closely with Nigerian institutions to strengthen value chains, expand regional market access, enhance trade finance and investment opportunities, and support the country’s development priorities.”
The signing of this Agreement underscores AATB’s continued engagement with African countries and its evolving portfolio of programs supporting trade and investment. In recent years, AATB has worked on initiatives across agribusiness, textiles, logistics, digital trade, export readiness under the AfCFTA framework, and other regional initiatives such as the Common African Agro-Parks (CAAPs) Programme.
With Nigeria’s accession, the AATB Program extends it’s presence in the region and adds a key partner working toward advancing trade-led development and fostering inclusive economic growth.
Federal Executive Council (FEC) has approved the 2026–2028 Medium-Term Expenditure Framework (MTEF), a key fiscal document that outlines Nigeria’s revenue expectations, macroeconomic assumptions, and spending priorities for the next three years. The approval followed Wednesday’s FEC meeting presided over by President Bola Tinubu at the State House, Abuja. The Minister of Budget and Economic Planning, Senator Atiku Bagudu made this known after the meeting.
The Minister said the Federal Government is projecting a total revenue inflow of N34.33 trillion in 2026, including N4.98 trillion expected from government-owned enterprises. Bagudu said that the projected revenue is N6.55 trillion lower than earlier estimates, adding that federal allocations are expected to drop by about N9.4 trillion, representing a 16% decline compared to the 2025 budget.
He said that statutory transfers are expected to amount to about N3 trillion within the same fiscal year. On macroeconomic assumptions, FEC adopted an oil production benchmark of 2.6 million barrels per day (mbpd) for 2026, although a more conservative 1.8 mbpd will be used for budgeting purposes. An oil price benchmark of $64 per barrel and an exchange rate of N1,512 per dollar were also approved.
Bagudu said the exchange rate assumption reflects projections tied to economic and political developments ahead of the 2027 general elections. He said the exchange rate assumption took into account the fiscal outlook ahead of the 2027 general elections.
The minister said that all the parameters were based on macroeconomic analysis by the Budget Office and other relevant agencies. Bagudu said FEC also reviewed comments from cabinet members before approving the Medium-Term Fiscal Expenditure Ceiling (MFTEC), which sets expenditure limits. Earlier, the Senate approved the external borrowing plan of $21.5 billion presented by President Tinubu for consideration The loans, according to the Senate, were part of the MTEF and Fiscal Strategy Paper (FSP) for the 2025 budget.
The spot rate on Nigerian Treasury bills has been increased by 146 basis points by the Central Bank of Nigeria (CBN) following tight subscription levels at the main auction on Wednesday. The spot rate on Treasury bills with one-year maturity has now surpassed Nigeria’s 16.05% inflation by 145 basis points following a recent decision to keep the policy rate at 27%.
The Apex Bank came to the primary market with N700 billion Treasury bills offer size across standard tenors, including 91-day, 182-day and 364 day maturities. Details from the auction results showed that demand settled slightly above the total offers as investors began to seek higher returns on naira assets despite disinflation.
Total subscription came in at about N775 billion versus N700 billion offers floated at the main auction. The results showed rising appetite for duration as investors parked about 90% of their bids on Nigerian Treasury bills with 364 days maturity. The CBN opened N100 billion worth of 91 days bills for subscription, but the offer received underwhelming bids totalling N44.17 billion.
The CBN allotted N42.80 billion for the short-term instrument at the spot rate of 15.30%, the same as the previous auction. Total demand for 182 days Nigerian Treasury bills settled at N33.38 billion as against N150 billion that the authority pushed out for subscription. The CBN raised N30.36 billion from 182 days bills allotted to investors at the spot rate of 15.50%, the same as the previous auction.
Investors staked N697.29 billion on N450 billion in 364-day Treasury bills that was offered for subscription. The CBN raised N636.46 billion from the longest tenor at the spot rate of 17.50%, up from 16.04% at the previous auction.
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