Challenges from Nigeria's Economic Recovery

17 Pages Posted: 3 Jan 2006

Date Written: September 2005


This piece documents the facts of the supply-side recovery in Nigeria in the last few years and identifies the triggers. It then discusses the challenges the new turn of events pose to policy makers, who are only just responding to the previous downturn. Data that have become available since reforms were announced mid 2004 are presented here to show that the economy had indeed entered a recovery phase since 1999, long before the economic team was assembled. Stagnation has finally given way to strong broad-based economic growth. The large fiscal deficits, the financing of which inflicted inflation, devaluation, and high interest rates, have also now given way to fiscal surpluses. Thus, the economy has changed dramatically, but the policy documents are not yet acknowledging the changes, much less reflect them. The growing disconnect between economic facts and government reforms portend grave risks for the sustainability of the recovery. Unanticipated positive external shocks have stimulated supply-side recovery and provided unexpected funds abroad. Nigeria now has abundant resources that can be used to translate the current windfall to improved living standards and additional capacity for economic growth. It is hoped that this piece will stimulate the necessary debate to ensure that the boom is not left unmanaged.

Keywords: Commodity prices, oil prices, oil sector, non-oil commodity prices, non-oil sector, external reserves, boom, bust, Nigeria

JEL Classification: N17, O55

Suggested Citation

Teriba, Ayo, Challenges from Nigeria's Economic Recovery (September 2005). Available at SSRN: or

Ayo Teriba (Contact Author)

Economic Associates ( email )

1st Floor Lindev Plaza, 16 Amodu Ojikutu Street
PO Box 70909
Victoria Island Lagos
+234 1 461 0802 (Phone)
+234 1 461 0805 (Fax)


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