Nigeria is Africa’s biggest oil exporter and has been affected by a slump in global crude prices which accounts for about 70 percent of the country’s income.
Investments have also fallen in Nigeria as investors expect a devaluation of the country's currency 'naira' due to the slump in oil revenues.
Africa analyst at Capital Economics, John Ashbourne told Reuters: “This is probably the economy’s worst performance since the mid-1990s”, in relation to the GDP figures.
Speculation has been rife that the naira may soon be devalued after the country’s vice president said last week that currency policies needed to changed to encourage investment.
The central bank has imposed currency restrictions but maintained the naira’s peg against the dollar and President Muhammadu Buhari has rejected calls by the International Monetary Fund (IMF) for a more flexible exchange rate. The naira has been officially set at 199 to the dollar since March 2015.
The governor of Nigeria’s central bank on Tuesday said Africa’s largest economy is headed into an imminent recession, adding that he would partially loosen the local currency’s peg to the dollar, a policy he said had helped bring about the hardship. “Options are very limited,” said the governor. “To avoid complicating conditions, the committee decided on the least risky option.”