Lagarde urges Nigeria to diversify its economy away from oil

Christine Lagarde, Managing Director of the International Monetary Fund, is in the Nigerian capital, Abuja, for a visit aimed at strengthening the body's partnership with the West African country. As well as meeting the Nigerian president, she is set to hold talks with economic experts, ministers and leading industry figures.

Her visit comes at a time when Nigeria, Africa's leading economy, is facing serious challenges. Inflation is high, the number of unemployed people is rising and insufficient infrastructure, such as the lack of a reliable energy supply, is contributing to the slowdown of Nigeria's economy.

Oil is the country's main export, but a drastic fall in oil prices has reduced revenues, hitting Nigeria's economy hard. A continuing struggle against corruption is also hampering Nigeria's development.

No IMF loan needed

In spite of these challenges, IMF chief Lagarde was optimistic about Nigeria's economic health. She said she was not there to offer a loan, praising President Muhammadu Buhari for his response to the country's economic situation. "Given the determination and resilience displayed by the presidency and his team, I don't see why an IMF programme is going to be needed," she told reporters in Abuja.

However, Lagarde stressed the need for greater transparency in government, fiscal disciple, and job creation. She also pointed out the significance of Nigeria and its economy for the region, calling on the country to set an example. "Nigeria is one of those countries that has an impact not just on itself and its people but also on its neighbors," she said.

Lack of trust

Many Nigerians view international monetary lending institutions like the IMF with suspicion, accusing them of forcing difficult economic policies on the developing world. "Her visit is very strategic for Nigeria at a time when we are facing economic troubles on every side," one local resident of Abuja told DW, adding that she hoped the government would take Lagarde's advice about fiscal discipline seriously. Another said that although Lagarde and the IMF were not needed in the country, her visit could give the economy a much-needed boost.

The IMF chief last visited Nigeria four years ago. Lagarde maintains the size of Nigeria's economy and its regional power makes it an important partner for international financial institutions.

Call for diversification

In the 2016 budget plan, which President Buhari submitted to parliament in December last year, job creation, infrastructural development and a disciplined fiscal policy were the main focus for the first quarter of the financial year.

Lagarde said it was not her place to "approve or comment on the budget." But she disclosed the IMF would be conducting a review "to really assess whether the financing is in place."

Because the price of oil is weak, the IMF wants Nigeria to look towards other means to generate revenue – notably income tax. Whether President Buhari would change the budget to include this, as well as more trade ties with the country's neighbors, is yet unclear.