The Nigerian economy has experienced a lot of investment for oil. However, recent suspicions of corruption threaten the stability of Nigeria's economy. The central bank governor, Sanusi Lamido Sanusi, had to step. She is being suspended by President Goodluck Ebele Jonathan for suspicions of financial corruption. Recently, Nigeria has experienced other economic challenges, such as instability in the Nigerian banking system in 2009. The other problem is that there has been reports that there is corruption within the Nigerian oil industry. It is suspected that there has been 1 billion dollars per month in fraud and mismanagement of revenues from supplying oil. There is concern that this corruption will hurt confidence in the Nigerian economy. If financial confidence is not strong, investors are less likely to invest in Nigeria.
Prior to this, Nigeria has had a stable economy with few concerns. Nigeria had a strong GDP, a young population for its workforce and revenues from oil. However, revenues have decreased to $49 billion dollars in April 2013 (a decrease of $7 billion dollars). Furthermore, the suspension of the governor of Nigeria's central bank has damaged confidence in the Nigerian economy as the naira (Nigeria's currency) has declined due to a lack of bond trading.
Corruption in Nigeria will hurt its economy. Smart investors won't make any investments in a corrupt economy because its unstable and unpredictable. Even though the Nigerians brought this upon themselves, it is still unfortunate to see. I don't see things turning around for Nigeria until their internal corruption is dealt with.
ReplyDeleteI completely agree with Dylan. It seems like we underestimate the power of personal property protection and stability as instruments for economic growth. Seeing an article like this, however, is a good reminder that people are risk averse and confidence is key to investment.
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