Insurgency To Impede Nigeria’s GDP Growth- Okonjo-Iweala

VENTURES AFRICA – Insurgency by Islamist sect group Boko Haram will knock off half a percentage point from Nigeria’s economic growth in 2014 just like it did in 2013, according to Ngozi Okonjo-Iweala, Nigeria’s finance minister.

“We are expecting about 6.75 percent growth in 2014 and we have accounted for the impact of the insurgency which we think will take half a percentage point off GDP growth,” Reuters quoted the minister as saying in an interview.

The former World Bank vice-president, who visited Berlin, Germany Tuesday said although violence in Nigeria’s North-east might discourage some potential foreign investors, existing investors were keeping faith. She noted that agriculture in the sub-region is the hardest hit in terms of economic impact, but the country is poised to maintain its “strong fundamentals despite challenges”.

Financial investors are not panicking, Okonjo-Iweala says, citing a yield of 4 to 5 percent of government bonds as evidence.

“The prices are quite reasonable,” she says, “which is an objective assessment that investors may be looking at the long-term underlying fundamentals of the economy, which are strong.”

Okonjo-Iweala therefore sought the support of her German counterpart Wolfgang Schaeuble for the setting up of a Nigerian development bank, which she noted would help get small and medium-sized private enterprises more financing. This, according to her, could become an “engine for growth”.

After rebasing its GDP, Nigeria overtook South Africa as Africa’s largest economy, with telecoms and services sector showing strong growth (from 0.7 percent to 7 percent) services and telecoms, a sign that more focus on other sectors can make them key growth drivers.

The minister therefore said creating a secondary mortgage market could help foster growth in other sectors like housing, which she hoped could help as a sort of buffer for lost growth.

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