Nigeria's longstanding dependence on petroleum as its main source of foreign exchange came home to roost, following an international collapse in the demand for oil thanks to the lockdowns of the past two years.
By November of 2020, Africa’s largest economy was officially in another recession and witnessing an unprecedented slump in development.
Faced with a booming population that is projected to be the third largest in the world by 2050, Nigeria desperately needs to grow its economy, which was already in dire straits before the Covid-induced global meltdown tipped it over the edge.
With 86.9 million people already living in extreme poverty – the highest globally, according to data from the World Poverty Clock – the country’s latest recession has made matters even worse for the average Nigerian, battling with mass unemployment, hyperinflation, high food and energy prices, depression and sheer hopelessness.
The Nigerian system is devoid of social security safety nets. This has proven extremely damaging for the millions employed in the informal sector, which was already characterised by extremely low wages and a lack of stability.
Following the easing of lockdown restrictions and improved earnings from oil, the World Bank projected that the Nigerian economy will have grown by a modest 1.8 per cent in 2021, while the African Development Bank projects a 2.9 per cent growth for Nigeria in 2022.
The African Development Bank hinges its projection on Nigeria’s economic managers building on the 6.7 per cent growth of the non-oil sector in 2021.
The World Bank went further, noting that by the end of 2021, Nigeria's gross domestic product (GDP) is, at best, only likely to approach 2010 levels, effectively reversing a decade of economic growth. In essence, the largest economy on the African continent has been stagnant within the past decade.
In the course of writing this piece, NewsAfrica spoke to a financial expert about the state of the Nigerian economy.
The insider, who didn’t wish to be named, identified mismanagement of the economy due to endemic-systemic corruption as the reason for the present state of affairs.
If the government can sincerely tackle official graft, then resources earmarked for infrastructure improvements will be applied judiciously.
Taking a swipe at the government, Nigeria's former Central Bank governor Muhammad Sanusi alleged that 35 years of economic progress has been wiped away by President Buhari’s administration.
Nigeria’s main opposition party, the Peoples Democratic Party (PDP), hasn't spared the government either, claiming that ‘in the last six years, it has destroyed every sector of our national life with its manifest incompetence, unbridled corruption, treasury looting, impunity, exclusionist and restrictive economic policies that have brought the nation to her knees’.
The opposition further noted that before 2015, Nigeria had one of the fastest growing economy in the world ‘with a Fitch B+ rating and GDP of $574 billion’.
Those halcyon days are long gone. Currently, unemployment is at 33.3 per cent, inflation is at 17.38 per cent, and 60 million flourishing businesses have collapsed.
The Nigerian naira, which exchanged at N167 to the dollar in 2015, has collapsed, with N415 now needed to buy one US dollar.
Tough conditions: A young trader arranges onions for sale at a Lagos food market.
Pressed on what it intends to do in response to the negative economic trend, the Finance Ministry said it planned to launch a medium-term national development initiative in October of 2021 that will lift 100 million people out of poverty within 10 years.
Lofty intentions, but officials have yet to make it plain how the so-called ‘National Agenda 2050’ will achieve its aims in the face of yet more negative projections from the World Bank and other global rating agencies concerning the Nigerian economy.
The global bank projects that GDP per capita will continue to decline because the economy is expected to grow more slowly than the population.
If adequately harnessed, the vast Nigerian population could be the catalyst for economic growth.
However, the reverse is sadly the case with prevalent high unemployment and many more underemployed.
Massive government borrowing and the threat posed by a global switch to renewable energy will also pose a challenge to future growth and the stated aims of National Agenda 2050.
Over time, experts have repeatedly warned about the need for Nigeria to diversify its economy away from an over-dependence on oil and gas as its main source of revenue.
The informal private sector has been identified as the main powerhouse from which a majority of the population is energised.
If the government could get to grips with critical infrastructure – electricity, transport network, security – the informal sector could actually help lift millions out of extreme poverty.
This is possible because most Nigerians are already doing so much by themselves without help from government.
It remains a mystery to observers how Nigeria can be home to unparalleled material wealth and grinding poverty at the same time.
With a determined push, though, perhaps Nigerians can eliminate this contradictory narrative for good.