Nigeria is currently in a technical recession. With sales from barrels of crude oil showing no sign of rising at any level, (International Brent crude oil futures were trading at 49 cents, or 1.1 percent, at $45.46 per barrel at 7:29 a.m. ET (1129 GMT) according to CNBC), the value of the naira trading against the pound at a figure of around NGN505, and the unemployment rate at a record low; the federal government is scrambling to figure out short-term and long-term methods to stabilize Africa’s biggest economy.
Sale of state assets
The Nigerian government is considering the sale of its assets as hinted at by Finance Minister Kemi Adeosun, as well as billionaire businessperson Aliko Dangote. Adeosun made said comments to CNBC Africa in response to questions about how the 2017 Budget would be funded. Dangote suggested the sale of assets to “beef up reserves” (CNBC Africa).
Cut in interest rates
Nigeria’s largest and most central bank the Central Bank of Nigeria (CBN) which acts independently of the government makes a decision today, September 20, 2016, on if it will choose to reduce interest rates, which the bank chose to increase in July. Finance Minister Adeosun has encouraged the CBN to reduce rates to allow for the government to borrow more domestically, and to increase the ability of the government to spend more to implement much needed capital projects (improvement of roads and infrastructure).
Bridging the gap between official and black market currency
Both Nigeria’s budget minister and finance minister have expressed concerns over the need to bridge the gap between the naira’s official value and black market currency rates. As of today the naira is trading at 312 to the USD and about 404 to the pound but the black market value is closer to 390 to the USD and as mentioned about 505 to the pound. Generally speaking the official value of the naira compared to black market value is a differential of about 25%.
Nigeria’s credit rating was downgraded to B from B+ by S&P Global Ratings on Friday. The international ratings agency forecast the Nigerian economy would shrink by 1 percent this year (CNBC Africa).