A tortuous recovery ahead

The slow road out of recession

A modest recovery is underway in our view, based upon fiscal expansion, a pick-up in oil output in a less unstable Niger Delta, and investment in pockets of the economy such as petrochemicals and agriculture. We see the return to y/y positive growth, albeit marginally, in Q1 2017. A new negative this year has been the sense of drift as a consequence of the president’s ill-health.

Same again with the budget

We are again in May and the budget has not yet been passed. This recurring institutional logjam is another obstacle to enduring strong recovery.

Time surely for some tax rate increases

The 2017 budget proposals have set a challenging target for non-oil revenue. The FGN seeks to boost coverage and compliance rather than introduce the VAT and other tax rate increases that would deliver its objectives more rapidly. Below-target collections reduce the scope for higher capital spending.

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