Nigerian President Says GDP to Expand 8.9% Next Year

Abuja, Nigeria | December 03, 2008 by D-8 Secretariat

President Umaru Yar’Adua

Nigeria’s economic growth will accelerate to 8.9 percent next year, led by non-oil industries, President Umaru Yar’Adua said.

Growth will pick up from about 7 percent this year, even as the oil industry contracts for a second year, Yar’Adua said in a budget speech in Abuja today.

Oil production will drop to 2.29 million barrels a day next year from 2.45 million barrels in 2008, the president said. Nigeria is Africa’s biggest oil producer and crude accounts for about 80 percent of government revenue and 90 percent of exports.

“You won’t even get 6 percent next year if oil prices are down,” said Ayo Teriba, Chief Executive Officer of Economics Associates, a Lagos-based company that advises businesses.

Total fiscal expenditure in Africa’s most populous nation will reach 2.87 trillion naira ($23.9 billion) in 2009, Yar-Adua said, while tax revenue will total 1.77 trillion naira. About 797 billion naira will be spent on providing power, roads and bridges in a bid to improve the business environment, the president said.

“The 2009 budget is to deliver on our promises to reduce poverty and attain our millennium development goals,” he said.

Next year’s budget is based on an estimated oil price of $45 a barrel, Yar-Adua added. Crude plunged 62 percent in New York in the past six months and was trading as low as $47.36 a barrel today.

Under Control

The performance of the 2008 budget had been “mixed and far from satisfactory,” Yar’Adua said in the speech, broadcast live on television, blaming violence in the Niger Delta area and the global credit crunch.

The budget deficit of about 1.1 trillion naira will be financed in part by the proceeds of the government asset sales and domestic borrowing.

The deficit “remains relatively under control,” Samia Gadio, an analyst with Renaissance Capital, said in a note to clients. “Furthermore, the fact that a sizeable proportion of the aggregate 2008 budget has not been executed should mitigate the effect of the 2009 budget proposal’s contractionary fiscal stance.”

Among the plans for next year, 88.5 billion naira will be spent on improving the country’s electricity supply and 77 billion naira will go to the Niger Delta oil-producing region, Yar-Adua said.

Building a national and trans-Saharan gas pipeline network is estimated to cost about 19 billion naira, and the completion of the country’s first standard-gauge railway line linking the central Nigeria city of Ajaokuta with the oil hub of Warri in the delta will cost 12.4 billion naira.

In addition, about 8 billion naira has been earmarked for building two bridges over the nation’s two largest rivers, the Niger and Benue, Yar’Adua said.

D-8 Secretariat is very keen to encourage that Nigeria as member state of D-8 joins actively in D-8 Working Group on Microfinance and D-8 Working Group on Micro, Small and Medium Enterprises. Last year for Microfinance the meeting was in Jakarta, Indonesia, and for developing data and indicators of MSME was conducted in May 2007 in Islamabad,  Pakistan.

News Contributor: Bloomberg.

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