Nigeria needs a new economic model if it is to return to trend growth seen in the past after the coronavirus pandemic is over, according to Standard Chartered Africa economist Razia Khan.
Khan who spoke today at the Nigerian Stock Exchange (NSE) 2021 economic outlook conference, said while 2021 will bring some technical recovery for the global economy it will not be enough for Nigeria.
“Nigeria must make more structural reforms to reduce its vulnerability to the oil boom bust cycles,” Khan said.
“Nigeria must be able to attract inflows and savings from the rest of the world to finance its developmental needs, amid an unprecedented surge in liquidity creation by global central banks.”
There has been a significant amount of balance sheet expansion between the global economic crises of 2008 and now.
Response to Covid has been key to the recovery in global growth with the balance sheet of the Bank of Japan (BOJ), European Central Bank (ECB) U.S Federal Reserve rising to 140 percent of GDP, 70 percent of GDP and 35 percent of GDP respectively.
“This is a multiple of what we saw after the global financial crises,” Khan said.
The large wall of global liquidity created will be seeking outlets leading to yield seeking inflows and some emerging markets (EM)are set to benefit.
Nigeria however with its low bond yields, opaque FX markets and surging inflation will struggle to attract such inflows.
Oil dependent Nigeria has made little structural progress in the past 5 years with oil as a percentage of exports declining to 74.5 percent from 94 percent and oil as percentage of revenues declining to 35 percent from 57 percent.
Even so trend GDP growth has declined from 8 percent between 2004 and 2008, to 6.5 percent between 2009 and 2013 and now just 2 percent between 2014 and 2019.