Well Damn!! There are some harsh words for the Nigerian Government in a new report on the country’s fast unraveling economy by CNBC.
“Nigeria is in trouble,” Steve Hanke, a professor of applied economics at Johns Hopkins, told CNBC in an interview.
“The currency is junk and the government is incompetent and corrupt,” said Johns Hopkins’ Hanke.
Oil gives Nigeria around 95 percent of its foreign earnings.
Should crude remain at current levels, PwC expects growth to contract and oil revenues to dwindle to $20 billion.
Meanwhile, the currency has already overshot PwC’s worst-case forecast for this year, blowing past 320 to the U.S. dollar recently.
Nigeria “is caught in a macro hurricane,” famed short seller James Chanos told the annual Sohn Investment Conference last week. With currency reserves running low, the country could have “a big problem” within a few years, he said. Calling the country “a borderline failed state,” Chanos added that he was shorting South African assets such as MTN, in part because of their exposure to Nigeria.
The outlook for Africa’s largest economy remains grim.
The extremist group Boko Haram has created significant political and security challenges for the embattled government of Muhammadu Buhari, and a new militant group the Niger Delta Avengers raise risks that could hit oil production.
Amid double-digit inflation, Nigeria’s foreign reserves are dwindling as the government races to shore up a swooning currency.
Weak growth — Nigeria’s economy expanded by less than 3 percent last year — has done little to curb soaring food prices, which have risen every month since December 2015.
Meanwhile, oil prices remain firmly under $50 per barrel, heightening the risk of what consulting firm PricewaterhouseCoopers noted in a 2015 report could become a “security shock,” as weak growth feeds political instability.
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