With two recessions within five years and a pandemic, Nigeria continues to struggle to contain its worsening social and economic indicators.
According to the World Bank, by the end of 2021, Nigeria’s GDP is likely to approach its 2010 level, thus reversing a full decade of economic growth.
These five charts give a picture of Nigeria’s struggling economy.
Kidnapping, insecurity worse than ever
From the north to the south, the problem of insecurity has continued to threaten the future of Nigeria.
When President Muhammadu Buhari announced the appointment of new service chiefs on January 26, 2021, Nigerians cheered as they hoped this would help improve the security challenges but since the service chiefs assumed office, the wave of insecurity has raged even stronger.
Kidnapping has surged to its highest in at least a decade, according to data from the Armed Conflict Location & Event Data Project. From about 45 people kidnapped in 2010, the number jumped to 445 in 2014 when Chibok girls were abducted and 1200 in the first half of 2021.
The kidnap for ransom business is booming across northern Nigeria, and schoolchildren are its hottest commodity. Nearly 900 students have been taken from schools in mass abductions since December, according to the United Nations.
This only adds to the long list of other security troubles in the country, including violence in the north stirred by Fulani herdsmen. Nigeria has also been named the third-most terrorised countries in the world, according to the Global Terrorism Index.
The rising spate of insecurity does little favours for an economy that hasn’t grown in per capita terms since 2015. It spooks both local and foreign investment and adds to Nigeria’s unemployment crisis.
Unemployment is second highest in the world
In addition to spiralling insecurity and violence across the country, the Nigerian economy has been on a downward slope, forcing millions of citizens out of jobs and depriving them of livelihoods.
At 33.3 percent, Nigeria’s unemployment rate is the second highest in the world.
Its economic growth over the last six years has not been able to match its population growth rate of 2.6 percent, this means the economy is not creating more opportunities to accommodate a fast-rising population. This continues to increase the number of jobless people.
The Nigerian economy contracted 1.92 percent in 2020 compared to a growth of 3.5 percent in 2014.
GDP Per Capita lags peers
MINT is an acronym referring to the economies of Mexico, Indonesia, Nigeria, and Turkey. The investment firm Fidelity, a top asset management firm selected these countries in 2011 as a group that they expected would show strong growth and provide high returns for investors over the coming decade.
Among these countries, Nigeria has the lowest GDP per capita among the MINT countries even as far back as 2015.
Per Capita GDP shows how much economic production value can be attributed to each individual citizen. It breaks down a country’s economic output per person and is calculated by dividing the GDP of a country by its population.
Nigeria recorded a Per Capita GDP growth of -4.57 percent in 2020, its worst contraction in more than six years. This means Nigerians are poorer than in 2015.
According to the World Bank, Nigeria’s GDP per capita is projected to continue declining because the economy is forecast to grow more slowly than the population.
Foreign investors reduce exposure to Nigeria
Foreign investors are also increasingly reducing their exposure to the Nigerian economy.
According to the World Bank, foreign direct investment dropped to $3.2 billion in 2019 from a peak of $8.8 billion in 2011.
Factors such as insecurity, inconsistent government policies and weak economic growth continue to discourage investors.
According to a global investment trends monitor report released by the United Nations’ Conference on Trade and Development (UNCTAD), Foreign Direct Investment (FDI) inflow hit $2.6 billion in 2020, the lowest since 2005.
Shoprite recently sold its operations in Nigeria stating that the reason for exiting was the country’s unfavourable business environment.
Wasteful petrol subsidy
The Federal government’s attempt to keep Nigerians hooked on cheap petrol has cost Nigeria an estimated N2.96 trillion in the last five years, according to data from the Nigerian National Petroleum Corporation (NNPC).
The Nigerian government has continued to subsidise petrol, paying the difference between the cost of production and the cost charged to customers in order to make them more affordable.
This amount could have been allocated for the development of the health, education and defence sector which would have increased the economic growth and living standards of Nigeria’s teeming population.
An analysis by the transparency campaign group Public Private Development Centre showed that it would cost N28 million to build primary healthcare centres and N17 million for a 3-classroom blocks. This means that N2.96 trillion can build 105,714 primary health centres or 174,117 blocks of classrooms needed across the country.
As long as the subsidy regime stays, the economy pays the price.
