The President-elect may be confronted with further revenue decline immediately after his May 29 inauguration. This is just as China, which is the country’s largest crude oil buyer may soon cut its imports over declining Gross Domestic Product-GDP and growth rate rocking it’s economy.
China and India became Nigeria’s largest trading partners after the United States of America reduced its demand for the country’s crude following the discovery of shale gas and other cheaper, more efficient energy sources.
Besides being a major trading partner, China is a leading financier of major development and infrastructure projects in Nigeria, mobilising financial resources in support of private and public institutions across Africa, raising fears that such critical partnership might suddenly dry up if the Asian country’s slow growth persists.
The oil revenue decline which hit the country since June 2014 when falling global crude oil prices reduced government’s revenue by over 50 per cent amidst lack of market for the product.
It would be recalled that during the just concluded Spring Meetings in Washington DC, USA, during the meeting of Board of Governors of the International Monetary Fund (IMF) and the World Bank and finance ministers, discussions on how the country and other African countries that depend on crude and commodity exports would cope in view of the crisis rocking China’s economy.
Dr.NgoziOkonjo-Iweala, the Minister of Finance and Coordinating Minister for the Economy, earlier last week, while giving the highlights of the key issues discussed at the Board of Governors’ urged the incoming administration to build on the foundation already laid by the President Goodluck Jonathan administration since they are in line with the IMF/World Bank recommendations for countries affected by falling commodity prices.
The board had, among other things, called for fiscal restructuring in the economies of low income countries to enable them cope with impending resource constraints arising from low revenue streams.
But while commenting on the slow growth in China, Okonjo-Iweala said, “African countries must feel concerned about the slow growth in China because it is the largest trading partner in the continent.
If your major trading partner is recording slow growth, it means demand for your product will be affected and as growth slows down, they may be less enthusiastic to lend to African countries.
We are also worried that because they finance a lot of development projects, infrastructure finance may be affected too.”