Africa’s two largest economies are experiencing economic headwinds with both South Africa and Nigeria having registered a slowdown and technical recession.
Economists say Nigeria has some tough decisions to take.
Bismarck Rewane, chief executive of Financial Derivatives Company told CNBC Africa that Nigeria’s performance in the second quarter was sub-optimal.
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Nigeria’s second quarter gross domestic product growth fell to 2.3 per cent from 6.5 per cent in the same comparable period. "This sharp drop indicates that the economy is suboptimal and underperforming in all parameters and also in line with the rest of the continent,” said Rewane.
“South Africa announced a contraction of 1.8 per cent negative growth which means that technically South Africa is in recession with Nigeria technically in a slowdown,” he added.
He said poor performance in the first and second quarter could be attributed to policy uncertainty.
“There was no policy direction in the first quarter after elections were postponed and in Q2 there were elections [which created policy uncertainty]. There were also problems in the north-east with Boko Haram,” he said.
“We had a bad first and second quarter, we will have a dreadful third quarter and we will begin to see a pick up the fourth quarter."
Rewane called for a new approach especially from the incoming finance minister.
“There is a need for a new covenant, new policy direction and blocking leakages to stimulate economy back into recovery,” he said.
“The incoming finance minister has to deal with the issue of supplementary budget as we have already spent more than what we were supposed to spend in 2015."
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