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• Nigeria, the largest economy in sub-Saharan Africa, entered the club of lower-middle income countries in 2014 thanks to good economic performance; but since 2015, it has experienced an economic slowdown started by falling global oil prices. Real GDP growth fell from 6.3 percent in 2014 to 2.7 percent in 2015. Since 70 percent of government revenues come from the oil sector, the slowdown has posed major challenges for public finances.
• Our simulations confirm that the economic situation has a detrimental impact on food security in conflict-affected and already food-insecure states in the north-east. Commodity prices have soared because of pressure on the currency and import restrictions. Inflation is likely to rise further because of the recent unpegging of the naira and its consequent devaluation, as well as the increase in fuel prices. We estimate that this risks more than doubling the number of food insecure people in the states of Adamawa, Borno and Yobe from 2.5 million in March–May (as estimated by Cadre Harmonisé) to 5.5 million in September. In line with seasonal trends and if all else remains the same, food insecurity is expected to fall slightly to 4.4 million people in December 2016.
• The availability of government safety nets was already very limited before the crisis. In 2014, 0.03 percent of GDP was used on safety nets programmes, which is less than most other countries spend in sub-Saharan Africa. To tackle the problems of poverty and inequality, the new government has put social protection high on the agenda and allocated 9 percent of the 2016 budget to social protection activities. This includes transferring NGN5,000 per month to an estimated 25 million poor and vulnerable people. As the 2016 budget was signed in May, it is still unclear if and when these safety nets will be implemented. Our simulations show that the implementation of safety nets would not only offset the increase in food insecurity during the lean season, it would more than halve the number of foodinsecure people in the north-east by December, potentially to 1.9 million.
• A slight economic recovery is expected in 2017, from a growth rate of 2.1 percent in 2016 to 2.8 percent in 2017 as global oil prices are expected to rise again. However, the recovery could be hampered by record-low oil production. Production is likely to continue to fall because of unrest caused by the terrorist activities of a new generation of militants in the Niger Delta and policy uncertainty which restricts investments. At the moment, the rebels in the Niger Delta are likely to be a bigger threat to the recovery of the Nigerian economy than Boko Haram.