Nigeria’s promise fades as economy stutters
When Jim O’Neill, the renowned British economist who coined BRICS, popularised the term ‘MINT’ in 2013, he had high expectations of the group of four countries – Mexico, Indonesia, Nigeria and Turkey.
The four countries were billed to be the next economic giants, thanks to their favourable demographics and resources.
The former Goldman Sachs chief economist, O’Neill, travelled to all four countries and described Nigeria at the time as one with “enormous challenges and problems” and a “very complex country but harbours immense opportunities.”
Years later, only one of those countries is performing better than in 2014 but it is Nigeria that has performed the worst.
Nigeria’s economic output per person, otherwise known as GDP per capita, has slumped by 32 percent between 2014 and 2020, according to the most recent World Bank data.
Turkey and Mexico have seen their GDP per capita shrink 29.79 percent and 23.78 percent respectively while Indonesia, the only country to have recorded growth in economic output in that period, recorded an increase of 10.8 percent.
O’Neill did not immediately respond to an email seeking comments particularly about Nigeria’s economic trajectory in that period.
However, nothing better captures the worsening state of Nigeria’s economy and its fading promise than these figures: The country’s GDP slumped from $546 billion in 2014 to $432 billion as at 2020 while GDP per capita, a measure of the living standard of the people, has collapsed from over $3,000 to only $2,097.
Nigeria looks unrecognisable from the country that was forecast in 2015 to be the first African country to hit a GDP of $1 trillion. Today, African peers like South Africa and Egypt are closing the GDP gap in the continent’s largest economy.
South Africa and Egypt have been able to steal a march on Nigeria because while the latter’s GDP has been shrinking since 2014, South Africa and Egypt’s GDP have gained 9.6 percent and 31.8 percent respectively.
Most of the damage to the economy was done in the seven years of President Muhammadu Buhari’s administration so far.
The economy has slipped into two recessions since the 79-year-old first came into power in 2015, and insecurity has worsened, with killings and kidnappings on the rise. Foreign investments have dried up and the naira has tumbled.
Nigerians have had to bear the brunt of an economy stuck in a rot. With businesses groaning from rising production costs, which have worsened this year amid spiralling inflation, job creation has suffered and unemployment ballooned.
While it would appear that the economy has improved in the last one year after an exit from recession and six straight quarters of growth culminating in a 3.11 percent growth in the first quarter of 2022, most of it is elusive, according to multiple interviews with businesses and individuals.
The economy’s recent recovery is eluding the vast majority of Nigeria’s 200 million people because it has not been able to reduce poverty or lead to the creation of sufficient jobs.
Foreign investment, which countries like Indonesia, a member of the MINT, have relied on to boost their economies, has dried up in Nigeria due to a complex foreign exchange management system and weak economic growth.
While the oil price downturn in 2016 and the COVID-19 pandemic in 2020 contributed to a recession in both years, Buhari’s critics blame his lacklustre approach to the economy for making a bad situation worse.
“Buhari has set a number of ugly economic records that may well define his administration,” a university professor who did not want to be named said.
“Nigerians are tired and can’t wait for his tenure to be over,” the professor said.
At no point in its 60-year history has Nigeria’s economy expanded slower than its population for a longer period than between 2015 and 2020, an indictment on Buhari’s administration.
Africa’s largest economy failed for six years to match its average population growth rate of 2.6 percent. When economic growth fails to match population growth, it means the economy is not creating new opportunities to accommodate a fast-rising population and is a sign of worsening poverty levels.
When Buhari became president in 2015, he promised to reform an economy hooked on petrodollars, reduce poverty and create jobs, yet the numbers show he achieved the exact opposite.
Nigeria’s GDP per capita declined by 0.02 percent, 4.16 percent and 1.78 percent in 2015, 2016 and 2017, respectively. In 2018, 2019 and 2020, it declined by 0.68 percent, 0.38 percent and 4.57 percent, a painful squeeze for Nigerians whose average incomes are less than half the $5,000 of South Africans.
Of the four presidents who have led Nigeria since it returned to democracy in 1999, Buhari holds the worst record in terms of economic growth.