Perspective: How the Nigerian Economy Stands – Part 1
Gross domestic product movement, another way to say the rise and/or the fall of the Nigerian economy has not been impressive in the last six years. The nation has fallen more than the recorded increase in terms of economic performance in the period.
Population growth has outpaced marginal addition achieved in six years and per capita income has sloped downward. The only thing that has skyrocketed in the period is total public debt.
Data lacks emotion. Nigeria’s GDP has relatively stay stagnated with two times recession and moderate increase afterwards. Per capita, income data indicate a worsening condition of Nigerians with the threat of total elimination of the middle class.
One key shift has happened thus far. Wealth transfer. In a bid to boost food sufficiency, Agriculture has been supported with Central Bank money.
But that is yet to translate to cheaper foods for Nigeria. In fact, all food items are luxury due to heavy increases in prices, further worsen by declining naira value.
Key policy strategies have deviated, an unintended consequence of August 2019 land border closure resulted in an increased price level – a country with the lower comparative advantage that adopts mercantilists protectionists stance.
Persistent naira devaluation does not only damage Nigerians finances, it also has a run on the economic balance sheet. Nigeria plans for another GDP rebased, just as South Africa did in the latest announcement today.
Nigeria’s gross domestic product closed at N154.252 trillion at the current market price in 2020 amidst the pandemic after GDP loss of about 1.92%, data from the National Bureau of Statistics (NBS) show.
Recall that GDP was translated at the official rate of N379 to the United States dollar up till the end of the fourth quarter of 2020, meaning that total GDP was $406 billion.
After the naira devaluation that shifted the exchange rate N410 to a dollar, and given a tepid growth in the first quarter of the year, Nigeria’s GDP would be about $380 billion in dollar terms.
Few months into the present administration, the street had clamoured for an anti-corruption crusade saying, “if we do not kill corruption, Corruption will kill Nigeria”.
However, years after, it appears the crusaders have gone to bed while those on the other side of the divide join the ruling class.
The tantrum has changed after hunger reset many Nigerians brains amidst insecurities, high price levels, weak financial markets and joblessness.
The tantrum has changed again, “Give us our corruption back” after tasting the bitter side of mixed of concocted governance that has kept people largely unproductive with unemployment reaching its peak at 33.3% as of the last quarter of 2020.
The next president in Nigeria must be a pro-market disciple as the global trend has shown that populists’ governments often miss solid economic points and lost the right political economic compass for guidance.
If Nigeria’s macroeconomic data is anything to go by in explaining how the Nigerian economy stands, then the scenario painted remains gloomy after more than N20 trillion has been added to the debt burden.
However, the progressives appear unfazed while millions of Nigerians slipped into poverty due to low economic beat.
“If we don’t kill corruption, corruption will kill the country”; the usual refrain that brought down past administration by those seeking Abuja seats to participate in the governance of the largest economy Africa appears to have slow down.
Unfortunately, Nigerians lives have not gotten better or near it six years after the progressive takes reins of power. In the last 10 years, the Nigerian economic growth peaked at 6.22% in 2014 amidst heated debate about who the next President would be in 2015.
Critics had maintained that former President Goodluck Jonathan has lost control with wild, weird corruption allegations in his cabinet. Oil prices behaved well during the period, helping the economy to grow in addition to Abuja pro-market stance.
In 2015, gross domestic product expanded 2.79%, the lowest between 2010 and 2015 when power was transferred to the progressives.
Real gross domestic product growth was positive and relatively ahead of about 3% average population growth record in Nigeria. In 2011, Nigerian economic size saw a 5.31% growth, followed by 4.21% in 2012, 5.5% in 2013, peaked at 6.22% in 2014 and sloped downward to 2.79% in 2015.
Just a year after the power transition, GDP growth worsen. Nigeria’s slipped into recession as oil turned red. GDP lost 1.58% in 2016 but expanded 0.82% a year after.
Thus, the size of the Nigerian economy stays below the 2015 total given the difference in growth and decline rate.
This put pressure on Nigerians uncompetitive per capita income that was followed by local currency devaluation and upward inflation adjustment.
In 2018, Nigerians groan under the heavyweight of local and international borrowings which took a significant chunk of the budget size amidst persistent fiscal slippage. Total public borrowings expanded while GDP expanded 1.91% in 2018.
Effectively, it took GDP growth recorded in 2017 and 2018 to wipe off effects on 1.58% GDP loss in 2016. However, economic growth consolidated on this which then resulted in the best GDP growth under the progressives which came at 2.27%.
The best real GDP growth rate recorded between 2016 and 2020 was the worst growth achieved between 2010 and 2015. Then, for the second time in five years, Nigeria fell into recession in 2020 with a 1.92% GDP loss.
UPDATE: in the second quarter of 2021, Nigeria’s economy expanded 5.1%. In truth, the largest economy in Africa did not really grow but recovered from initial losses seen last year.
It is sufficient to note that the Nigerian data shows that in the last six years, per capita income continues to stay in the red as population growth moves faster in the economic trajectory.
Perspective: How the Nigerian Economy Stands – Part 1