Welcome to the very first episode of CLRNNCast! In this episode, CLRNN is in conversation with Dr Joshua Bamfo.
Josh is an economist, as well as Partner & Head of the Transfer Pricing (TP) Services practice at Andersen Tax in Nigeria. He has 14 years of experience specializing in TP . He has worked for Big Four firms in Nigeria, South Africa, Ghana and the US. Prior to commencing his TP career, Josh was a visiting Assistant Professor of Economics at his alma mater, University of Delaware. He is an ardent speaker at various Economics & TP workshops & seminars and an author of numerous TP articles.
Josh discusses the state of the Nigerian economy in the lead up to 2020 and outlines the impact of both health and oil crises on the economy; including some unexpected surprises. He evaluates the palliatives provided by the government and suggests policy direction for the recovery phase.
He starts off by providing a picture of the state of the Nigerian economy prior to 2020. A quick review reveals that the Nigerian economy was at its healthiest in the lead up to 2014, when it was averaging around 6% GDP growth. This healthy growth was hit by oil price shocks arising from the surge in shale production, as well as challenges in the Niger Delta area of Nigeria. By 2015 GDP growth was declining and by 2016, Nigeria was in recession for the first time since 1991. The recession ended by the second quarter of 2017 but GDP growth has struggled ever since. The economy finally started to rebound by 2019, when GDP growth rate on the average was around 2.27%.
In 2020, the Nigerian economy was again hit by exogenous shocks, the Covid-19 pandemic hit, as well as another oil crisis. Josh in this interview examines the effects on the growth of the Nigerian economy, as well as its implications for revenue and FX. He notes:
“What we found interesting this year was that for q1 2020 we didn’t know whether we were going to have a contraction of the economy as early as q1, or is it going to be q2, because of the impact of covid. Actually, aspects of it started in January, but most of it started post-March in march into April. The result we got was a q1 year on year growth rate of, I think 1.87%. And that came as a bit of a surprise. But what was even more interesting was that this positive growth rate was mainly driven by the oil oil and gas sector.”
Josh also outlines and evaluates the palliatives provided by the Federal government and Central Bank of Nigeria. He says:
“So the adequacy is in two parts, we have to really look at whether we have enough palliative. And I think in general, the argument is yes, to some extent. It’s not as huge as what we’ve seen in some of the advanced economies, where there’s more injection of real funds into the economy because they can afford it but at least CBN has done its bit in targeting some key sectors to help out. But what is going to be more important with the second bit is the effectiveness of executing palliatives.”
He compares the Nigerian experience with those of other African countries including South Africa, Egypt, Morocco, Algeria, as well as the ‘African Tigers’: Ethiopia, Rwanda, Kenya, and Ghana.
He closes by examining the prognosis for the future and suggesting policy reforms.
The interview was recorded 15th June 2020. Covid-19 figures have since changed in Nigeria.
You can listen to the full interview below.