Nigeria’s economy has continued to struggle to keep up to its title ‘Africa’s largest economy’ with its dwindling oil production, low standard of living, and the rising cost of goods and services.
From stabilising its oil production which is the country’s largest source of revenue to keeping its foreign reserve afloat to strengthening its weak naira, the country has a long way to go with having the strong economy it desires.
Here are seven charts that shows the Nigerian economy struggles;
Crude oil has been accelerating since November 2021 when it was an average of $67.57 and it has since then increased to an average of $95.22 for the month of February.
Petrol-dollar economies like Nigeria anticipate an increase in price as this means more money to fund their budgets. This however isn’t the case for Nigeria, Africa’s biggest economy, which has seen a decline in oil production over the past months.
Nigeria, Africa’s largest oil producer has continued to see instability with its oil production. According to the Organization of Petroleum Exporting Countries (OPEC) report, the direct sources show that Nigeria produced 1.26 million barrels per day in February 2022 compared to the 1.42 million barrels of oil produced daily in the same month last year.
The latest oil production is a decline from the 1.39 million barrels of oil produced in January 2022.
“Crude oil output increased mainly in Saudi Arabia and Libya, while production in Nigeria and Equatorial Guinea declined,” the report noted.
While the oil cartel indicated that the increasing oil price might have provided ample support for the Nigerian economy.
However, it noted that “the disruption to global trade flows and supply shortages could offset this positive impact.
Nigeria’s foreign reserve has declined to $39.86 billion as of February 28, 2022, the lowest since September 2021, when it stood at $36.78 billion. This is despite the increase in the price of crude oil, Nigeria’s main source of foreign exchange.
Taiwo Oyedele, head of tax and corporate advisory services at PwC, said Nigeria had not benefited from the oil rally because of its low crude oil production and the rising cost of petrol subsidy.
Nigeria’s headline inflation spurred in February 2022 to 15.7 percent, the highest since October 2021 when it was 15.99 percent.
The core inflationary pressures mirrored the recent surge in the cost of energy-related products, it increased to 14.01 percent year on year in February 2022 compared to 13.87 percent in the previous month.
However, food inflation declined to 17.11 percent compared to the previous month when 17.13 percent. This slight decrease is however not a great delight to many as it is not a true representation of the rising prices of food in the market due to the scarcity and surge in the price of fuel and higher cost of transportation.
The Russia-Ukraine war could also contribute to the spike in food prices which is a major contributing factor to headline inflation.
Nigeria should expect an outbreak of food scarcity in the next three months as adverse consequences of the Russian-Ukraine war begin to come home to roost, Aliko Dangote, chairman, and chief executive of Dangote Group has said.
The CBN said last month it would stop selling foreign currency to Banks by the end of the year to encourage them to source their own dollars and also support the government’s target to lure $200 billion of inflows yearly by 2025.
To this effect, Nigeria’s largest banks are reducing dollar spending limits on local currency cards to free more resources to fund imports after the central bank signalled it will stop foreign-exchange sales to banks.
This means individuals who carry out transactions above the new spending limit would now have to get a dollar card or visit the parallel market for their transactions.
Nigerian households have been facing difficulty as the average price for refilling a 5kg or 12.5kg cylinder of Liquefied Petroleum Gas (cooking gas) has continued to rise steadily over the past one year.
According to the February 2021 Cooking Gas Watch report by the National Bureau of Statistics (NBS), the average price of 12.5kg of the commodity increased to N7,413 in January 2022 from N4178 in January 2022 while the 5kg gas increased to N3658 from N1949 in January 2021.
Experts blame the price hike of cooking gas on the dearth of infrastructure, global shortfall in gas supply, inadequate local production, and shortage of Foreign Exchange, devaluation of the naira, logistic hitches and the recent introduction of VAT charges on imported gas by the Federal Government.
Damilola Adewale, a Lagos-based economic analyst said, “It is unlikely that gas prices will trend downwards in the near term considering inadequate local supply of the commodity, foreign-exchange induced pressure on importation and the fact that petroleum products will remain on the high-side for a while.”
The price of Automotive Gas Oil, popularly known as diesel, has increased by almost 160 per cent in one year to N540-570 per litre in the past few days of March this year, from N235 in March last year.
Data gleaned from the National Bureau of Statistics (NBS) showed the average price paid by consumers for diesel increased to N312 in February 2022 from N228 in the same month last year.
The surge in the price of diesel, which has been deregulated, followed the rally in global oil prices, buoyed by the Russia-Ukraine conflict.
Esu Olumba-Obu, the Group managing director of Royal Farms Ltd says the high cost of diesel is posing serious threats in sustaining the group business.
“Due to the high cost of diesel, most businesses are now faced with the option of closing down or retrenching staff to survive,” Olumba-Obu told BusinessDay.