Washington DC — The International Monetary Fund (IMF) has projected a growth of 2.9 per cent for Nigeria in 2009 and 2.6 per cent in 2010, indicating a major decline from last year's 5.3 per cent growth.

In an interview with THISDAY at the on going World Bank/IMF meetings in Washington yesterday, Director for IMF Africa Department, Ms Antoinette Sayeh and Senior Resident Representative for Nigeria, David Nellor, said Nigeria was badly hit by the global financial crisis.

A decline in the price of oil, which accounts for about 90 per cent of the country's revenue, and the global credit crunch are some of the reasons aduced for the country's predicament.

The IMF officials, however, said Nigeria could regain lost ground with the right monetary exchange rate policies in addition to strengthening the regulatory environment.

Meanwhile, the Fund cut its growth forecast for Sub-Saharan Africa indicating it would decline to 1.5 percent in 2009, but would rise to 4 per cent in 2010.

Releasing the April 2009 Regional Economic Outlook for Sub-Saharan African region in Washington yesterday, Sayeh said these projections represent a sharp contrast to the pre-crisis level.

As far as the region's financial systems are concerned, Sayeh noted that the impact has been limited so far. With regard to Nigeria, the Fund's 2009 Outlook made the following observations: "The direct fallout from the global financial crisis on the Nigerian financial sector has been significant but not destabilising. Nigerian banks are not exposed to complex domestic or foreign financial instruments.

"Foreign ownership of banks is very low, reliance on foreign funding is limited and the pace of capital outflows has been restrained, partly due to capital account restrictions on the repatriations of proceeds." The report added that the global meltdown would likely increase credit risks and non-performing assets. Consequently, this could weaken the balance sheet of financial institutions and corporations.

Oil and other commodity exporters will be particularly hit by the situation, it stated, as fiscal and external positions weaken substantially.

To overcome the crisis, Sayeh advised that each African country should respond actively with adequate policies, depending on the circumstances within their domain.

She said: "The priority for all sub-Saharan African countries must be to contain the adverse impact of the crisis on growth and poverty, while preserving the hard-won gains of recent years, including macroeconomic stability and debt sustainability.

"The appropriate policy response depends on country specific circumstances. However, pressures to respond to weakening balance of payments positions with protectionist measures or by reverting to administrative controls need to be resisted," he said

Sayeh suggested that African countries should respond to the crisis by easing monetary policies where possible, monitoring financial vulnerabilities and acting in good time using the available fiscal space.

In explaining the use of fiscal space, the IMF director noted that countries with high reserves can draw down to finance their projects while others that have space for discretionary fiscal stimulus can fund social measures for the poor.

Meanwhile, former President Olusegun Obasanjo said yesterday in Kumasi, Ghana, that new competencies were required of African leaders to address contemporary challenges of development on the continent.

"Effective leadership is crucial in a complex world that is not waiting for Africa,"

he said in a keynote address at the 10th anniversary celebration of the enthronement of Otumfuo Osei Tutu II, Ashantehene, as King of Ashanti.

"New maps will be needed to navigate through the uncertainties of a complex world that may not wait for us," the former president said in the address delivered at Kwame Nkrumah University of Science and Technology (KNUST).

Obasanjo noted that Africa, like other regions of the world, was, indeed striving for change but lamented that "the region finds itself caught between the past and the future.

"However, it is salutary that a new and more melodious tune of democratic governance is sweeping through the continent and is gaining widespread acceptance." The address, a copy of which was made available to the News agency of Nigeria (NAN) in Abuja also noted that acceptance "is a product of the concerted effort of the political leadership, the efforts of struggles of pro-democracy movements in various African countries sustained by a renewed commitment to political, economic and social development."

He said though there may be imperfections in multi-party elections across Africa, the fact that they ever held represented a paradigm shift from "the old era of coups and unconstitutional governments".

The former president added that the emerging trend of democratic governance had invariably occasioned the significant improvement in the management of economies of African countries.

He said: "Macro-economic reforms, some still in the process, are already producing significant results in terms of growth and stability.

"The level of inflation is under control almost everywhere. Foreign Direct investment into Africa has increased significantly since the early 1990s," he said.

According to him, the trends are indications that democratic governance is not "some Sanskrit being foisted on a non-comprehending mob in the thick of the Savannah".

Obasanjo noted, however, that the great challenge before Africa today was to ensure that the new-found democratic transformation remained "people-led, people-centred, people-driven and people-focused".

The former president praised the conduct of elections recently in South Africa, where he was an international observer to the Natal Province.

Obasanjo said he was impressed by the vibrancy of democratic practice and the transparency of the Independent Electoral Commission of South Africa which, he said, was guaranteed by the method of nomination of members.