GDP Growth Per Capita to Contract by 7.4% in Nigeria, Other African Oil Nations

Real GDP Growth Per Capita to Contract by 7.4% in Africa’s Oil Nations

The International Monetary Fund (IMF) on Tuesday said COVID-19 economic implications, both in terms of lockdowns and external shocks, will lead to Africa’s average real GDP growth per capita contracting by 4.9 percent and 7.4 percent for oil-dependent economies on the continent.

Speaking at the IEA Africa Ministerial Roundtable on COVID-19 impact on Africa’s Energy Sector, Abebe Aemro Selassie, Director of African Department, IMF, said while the average GDP growth rate was revised down from 3.8 percent to -2.8 percent for Africa in 2020, the growth rate in eight Africa’s oil-exporting nations will contract by 5.2 percent, down from 2.5 percent growth rate predicted in October 2019.

He said “The human toll will be steep especially in African oil exporters as measured by per capita growth. Indeed, we expect average real GDP growth per capita to reach -4.9 percent for the continent, and a staggering -7.4 percent in oil exporters.”

The economic crisis is expected to put government budget under tremendous pressuring this year and predicted to lead to a loss of $92 billion in fiscal revenue, a decline of a quarter when compared with the fund’s October prediction. For African oil exporters, loss in fiscal revenues of $34 billion was predicted when compared to the October projection.

The rise in financial burden amid falling revenue generation has pushed the continent debt burden to over 65 percent of GDP in 2020 on average.

He Selassie said “For African oil exporters the pandemic happened in an already difficult context. Since the oil price collapse of 2014, production and investment in the oil sector in most African oil exporters have been on a secular decline, for a combination of factors including structural issues, governance and security concerns in several countries (i.e., Nigeria and Libya).

“If this trend continues, limiting volumes, and if oil price persists in the $30-40 range, African oil exporters will have to face difficult fiscal challenges where most projected fiscal breakeven prices are greater than $50 and, in several cases, close to or greater than $100 (e.g., Algeria, Cameroon, Nigeria and Libya).”