23 August 2016, Lagos – An Economist, Mr Uche Uwaleke has said that the recent International Monetary Fund ranking of Nigeria’s economy will dampen the confidence of foreign investors who attach importance to the size of an economy.
Uwaleke, who is an Associate Professor and Head, Banking and Finance Department, Nasarawa State University, said this in Abuja on Tuesday.
South Africa is now the biggest economy on the African continent, a position it reclaimed from Nigeria.
Bloomberg, in a report, noted that the Gross Domestic Product published by the International Monetary Fund estimated the size of South Africa’s economy at $301 billion while Nigeria’s GDP was $296 billion.
Bloomberg noted that the rand had gained more than 16 per cent against the U.S. currency since the start of 2016 while Nigeria’s naira lost more than a third of its value.
He said, “I am optimistic that Nigeria will regain its position as the biggest economy in Africa soon given its enormous human and material resources.
“The last GDP rebasing revealed a lot of potentials in Nigeria, especially with respect to diversification away from oil revenue.”
Uwaleke, however, said the possible negative effect might not be significant and would likely be temporary as soon the naira began to appreciate against the dollar in the forex market.
He said the economy had been plagued by over dependence on oil revenue accounting for more than 90 per cent of the Forex earnings and 70 per cent of total revenue.
He said, “Consequently, the economy took a nosedive following the collapse of oil price in the international market.
“Unlike South Africa, the country lacks adequate infrastructure which support production.
“This is because the size of an economy as measured by GDP reflects the value of goods and services produced in that economy over a period of time usually one year.”
Uwaleke advised that the government should intensify export-driven diversification efforts, especially through agriculture and solid minerals.
“I believe that investment in enabling infrastructure such as power will go a long way in encouraging both local and foreign investors in Nigeria.”