It has banned imports of an estimated 900
products, having earlier imposed 30% tax and duty increases on some of them.
The list includes cellphones, building materials, vegetables and chocolate.
The share of oil and gas exports in total exports
in Algeria (95%) is similar to Nigeria’s. However, the list of banned items
does not seem influenced by import substitution policies. This is a temporary
measure that the authorities would be happy to abandon if a recovery in oil
revenues permitted. Algeria has a high import requirement and an elite
reluctant to open the economy.
In October Moody’s
downgraded Angola, another candidate for diversification, from B1 to B2
(the equivalent of B with Fitch and S&P). Like Nigeria, it saw recession in
2016 (-0.7% growth, compared with -1.6%).
At the start of the oil
price slide in mid-2014, Angola’s macro legacy was rather weaker. Its
governments have historically been large spenders, with total expenditure
averaging 39% of GDP in 2010-15. There was not therefore the choice of
aggressive fiscal expansion to kick start the economy, Nigeria-style. The debt
burden is far greater, too: public external debt in 2016 reached 42% of GDP,
and Moody’s saw a peak for total debt of 54% this year.
A combination of planning
and inheritance have favoured Nigeria: a very good package for external debt
relief in the 2000s, the fx reforms since Q1 2017, a huge population and a
predominant non-oil economy. Radical thinkers (not our style) might add the
FGN’s refusal ever to borrow from the IMF.
Straying into the
political economy, these producing nations share a track record for poor governance.
Abdelaziz Bouteflika has been president of Algeria since 1999, suffered a
stroke in 2013 and has become a declining influence. João Lourenço, the
president of Angola since August, has made some sweeping reforms in the
management of the economy to enhance efficiency but is no advocate of inclusive
Tens of members of the
Saudi princely and business elites have been staying against their will in the
Ritz-Carlton Hotel in Riyadh since November until they surrender what the
authorities insist are their corrupt gains over decades.
The length of this oil
price recovery is unclear but at some point the market will again slide.
Nigeria’s adjustment, while limited, looks relatively good.