In its own report, put together by its Global Research Unit, entitled, ‘Nigeria, Papering over the Cracks,’ HSBC said Nigeria’s current economic struggles look set to continue if Buhari wins a second term in office.
According to the financial institution, although the president’s “approval ratings sit near all time lows,” a development, it said, “largely reflects the impact of Nigeria’s painful recession in 2016-17 and the sustained economic hardship that has accompanied his presidency, including rapidly rising joblessness, and poverty,” the president will once again lead the APC into the 2019 elections.
It, however, stated, “A second term for Mr. Buhari raises the risk of limited economic progress and further fiscal deterioration, prolonging the stagnation of his first term, particularly if there is no move towards completing reform of the exchange rate system or fiscal adjustments that diversify government revenues away from oil.”
The multinational banking group, which is Europe’s largest by total assets, noted that while higher oil prices have brightened Nigeria’s macro outlook, boosting export earnings, improving the supply of foreign exchange, and supporting naira stability, the Buhari administration was yet to address the economy’s structural shortcomings.
It said, “Economic growth remains sluggish and reliant on the rebound in oil output while the non-oil economy, which accounts for about 90 per cent of GDP, continues to languish with many service sectors still mired in contraction.
“Joblessness continues to rise, up almost three-fold in three years to 19 per cent in Q3 2017, pushing the number in poverty to 87 million.
“Meanwhile, current account improvements may have pivoted on higher oil prices, but they also derive from on-going import restrictions and limited FX access for many sectors of the economy.”