• Thursday, June 20, 2024
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Nigeria’s GDP growth eludes businesses, households

Top 10 largest economies by GDP in 2024

A whirring machine churns out prints at the Royalink Printing Press in Shomolu, the northern city of Nigeria’s commercial capital, while owner Tunji Adeyemi supervises. The copies are perfect, but business activities have slowed down in recent months.

Nigeria’s economy may have grown by 3.11 percent in the first quarter of 2022, according to the National Bureau of Statistics (NBS), but the fate of Adeyemi and other Nigerians fails to mirror Nigeria’s highest first-quarter growth in seven years, BusinessDay’s findings showed.

“Businesses are slow for me and my colleagues; people just want to survive first before thinking of printing anything,” Adeyemi, 66, said.

For Blessing Martins, the mother of two little daughters, the story is the same.

The forty-something-year-old mother and her children – Wale, 18, John, 11 and Mercy, 6 – are struggling to make enough money to pay for a place to lay their heads.

Every day, she rises before dawn to prepare a cooler of rice and a large pot of beans, as well as yams and an assortment of other staple foods to reheat and sell to customers from a roadside table in Lagos.

“Making profit requires a miracle,” Martins said.

Martins, like millions of micro, small and medium-sized business owners in Lagos and other parts of the country, are feeling the pinch from the weak growth in Africa’s biggest economy.

“More often, economists get carried away with improving numbers, whereas poor microeconomics policies seem to bite deeper,” Godwin Owoh, a professor of applied economics, said.

According to the NBS, Nigeria’s Q1 2022 growth rate was higher than the 0.51 percent growth rate recorded in the corresponding period of 2021 by 2.60 percent points but lower than the 3.98 percent recorded in Q4 2021 by 0.88 percent points.

“It’s difficult to explain the positive GDP to the ordinary businessman on the street, many of whom are still feeling the effect of policy flip-flops,” Owoh said.

Many Nigerians blame President Muhammadu Buhari’s government for exacerbating the impact of the oil and Covid crises by closing land borders, enacting import bans, and failing to deal with rising insecurity.

“What is the impact of GDP growth without jobs?” Muda Yusuf, immediate past director-general of the Lagos Chamber of Commerce and Industry, asked.

Nigeria’s official unemployment rate rocketed to 33.3 percent in the fourth quarter of 2020 from 27.1 percent in Q2 2020, meaning 23 million Nigerians were unemployed, the equivalent of the population of the Netherlands and Singapore combined.

Read also: SA, Egypt eye Nigeria’s crown as GDP gap narrows

Beyond rising unemployment, the surge in diesel prices is also taking a toll on homes and businesses across Nigeria, roiling operating budgets, household expenses and democratising anxiety along every social class in Nigeria.

Diesel prices, which are deregulated in Nigeria, have jumped from about N288 per litre in January to over N700 by the end of April.

Ice seller Ahmed Yusuf can only run four of his 40 freezers and had to cut his 300 employees to 50 amid a near-doubling in diesel costs. “We have collapsed financially,” he said.

The energy situation worsened in the first quarter of 2022 by prolonged power outages, occasioned by gas constraints in some power plants. The national grid collapsed twice in March.

Supply has begun to return to the pre-collapse levels, with the average supply now at 4,000 megawatts, but frequent outages occur and diesel prices are yet to moderate.

This situation has only worsened poverty across the country. A new World Bank report assessing poverty in Nigeria found that just prior to the outbreak of COVID-19, around four in 10 Nigerians were living in poverty.

Poverty was more concentrated in rural areas, where 52.1 percent of the population were poor, than urban areas, where 18.0 percent of the population were poor.

“The poverty gap index for Nigeria is 0.129; so vast resources are required to eliminate poverty in the country, especially in rural areas. Multiplying the poverty gap index by the poverty line and by Nigeria’s population shows that eliminating poverty in Nigeria would take almost N3.7 trillion per year,” said the World Bank report.