Yemisi Izuora

Nigeria’s economy, Africa’s biggest, expanded at its slowest pace in more than a year in the fourth quarter as oil prices fell.
Growth in gross domestic product slowed to an annual 5.9 percent in the three months to Dec. 31 compared with 6.2 percent in the third quarter, according to information on the National Bureau of Statistics’ website.

While the oil industry “experienced production and price challenges in the quarter,” average daily crude output rose to 2.18 million barrels from 2.15 million barrels a quarter earlier, the statistics office said.

The price of Brent Crude oil averaged $77.34 a barrel in the quarter, $32 cheaper than the same period in 2013. The price of the commodity has slipped further, averaging $53.41 a barrel so far this year.

Nigeria, Africa’s biggest oil producer, relies on crude for 70 percent of its export income and the industry accounts for about 12.5 percent of GDP. The plunge in the price has helped push down the value of the naira, Nigeria’s currency, by 19 percent against the dollar over the past six months for the biggest decline of 24 African currencies monitored by Bloomberg. The country plans to hold general elections starting on March 28 after a six-week postponement.

Oil production remains below the government’s current “optimistic” benchmark of 2.28 million barrels a day and down from a peak of as much as 2.3 million barrels, Gareth Brickman and Catherine Bennett, analysts with Johannesburg-based ETM Analytics, said in an e-mailed note on Monday. Slowing growth in non-oil sectors is adding to economic pressures, they said.
Non-oil industry expansion eased in the quarter to 6.4 percent from 7.5 percent a quarter earlier.

“The naira’s sharp depreciation, topside risks to inflation as a result, uncertainty over the political landscape and tightening monetary and credit conditions looks set to keep the stagflationary pressure on for at least the first half of this year,” Brickman and Bennett said.

The impact of elections and scaling back of public spending because of the decline in oil prices may slow growth further to 5 percent in the first quarter and 4.5 percent the next, Bismarck Rewane, chief executive officer of Financial Derivatives Co. in the commercial capital Lagos, said Monday.

“We’re just beginning to see the impact the reduction in government spending is having on all of the economic activities of the country and it’s going to go lower than this,” he said.