The World Bank expects Nigeria’s economy to grow slightly less than 2 percent this year, largely driven by the non-oil industry and services sectors, as the approach of elections keeps foreign investors away, it said on Wednesday.
Nigeria emerged from a recession last year but growth remains fragile, with the government borrowing both at home and abroad to help fund its budget. It has raised almost $9 billion from the eurobond market since 2017 to boost growth.
“Nigeria’s emergence from recession remains sluggish, and sectoral growth patterns are unstable. In the second quarter of 2018, the oil sector contracted by 4.0 percent,” the bank said in a statement.
GDP grew by 0.83 percent last year after shrinking by 1.58 percent in 2016, its first annual contraction in 25 years. For this year, Nigeria’s central bank is projecting growth of 1.75 percent.
The World Bank said growth in the farm sector, which has been resilient in the past, had slowed to 1.2 percent under the impact of security challenges in the north.
The World Bank said non-oil industry and services, which make up more than half of Nigeria’s economy, had been boosted by growth in construction, transport and communication technology.
But it said investment in human capital, which the government has been seeking to boost, remained low compared with other countries.
Nigeria is largely dependent on its oil sector for government revenues and foreign exchange, but it has been constrained by a subsidy on petrol and other deductions, the bank said, noting that foreign investment was stagnant.
It said higher oil exports had helped current account data in the first half but non-oil revenue had come in lower than expected despite reforms to improve the economy.
The World Bank expected the fiscal deficit to widen in 2018, with portfolio investors exercising caution ahead of the election, despite rising local yields.