"Who's running Nigeria?" blared a headline in this week's The Economist, aptly summarizing the state of affairs in beleaguered Nigeria — a major oil producer and African economic powerhouse whose economy appears to be as stricken as its ailing leader.
With Nigerian President Muhammadu Buhari in absentia suffering from an undisclosed illness, the country's National Bureau of Statistics reported this week that the economy contracted 1.5 percent last year for the first time in nearly 25 years. Although Vice President Yemi Osinbajo is handling day-to-day management of the country, analysts say Nigeria's mounting woes require steady leadership.
Like most OPEC member states, the former emerging market standout has found itself on the wrong side of oil prices that remain far too low to bolster an economy heavily reliant upon crude production.
The troubles of Africa's largest economy have been exacerbated by a debilitating currency shortage. The International Monetary Fund forecasts Nigeria will only see "modest growth" of less than 1 percent this year, and inflation is running in the double digits. It all suggests relief for the beleaguered country appears far off.
"Shortage of foreign exchange is very severe," explained Win Thin, global head of emerging market currency research at Brown Brothers Harriman. "Foreign investors today face very long delays in repatriating funds out of Nigeria."
The shortages were first caused by lower oil prices, but policymakers ultimately made the situation worse by pegging the Nigerian naira [its official currency] at a rate analysts say was overvalued. "As such, markets are not clearing and there are shortages of FX," he added.