Nigeria’s weak economy biting harder on weary citizens
Fresh data from the National Bureau of Statistics (NBS) that one out of five Nigerians lost their jobs in 2020 due to the COVID-19 pandemic adds to the picture of the relentless misery in Africa’s largest economy.
Unemployment rate has only been recently tipped by Doyin Salami, who leads President Muhammadu Buhari’s economic advisory committee, to hit 40 percent by year-end. That would catapult Nigeria to the top of the rankings of countries with the highest unemployment rates globally.
More Nigerians have fallen into extreme poverty following the impact of two recessions within five years and a pandemic that made an already bad economy worse.
Despite reporting a GDP figure that was largely applauded by government officials in the second quarter of 2021, analysis of data by the Nigerian Economic Summit Group (NESG) shows the economy shrank between the first and second quarter.
The data suggest that real GDP reported a 0.79 percent decline in Q2 2021 to N16.7 trillion in the quarter to June from N16.8 trillion reported in the first three months of 2021.
NESG projects a lower GDP growth for Nigeria in the third and fourth quarters of 2021 as it expects the base effect to fade out.
Aside from the impact of the COVID-19 pandemic, Nigeria retains a long list of economic reforms that can boost growth and reduce poverty but they have been stuck.
According to a private sector-led think-tank and policy advocacy group, NESG, Nigeria needs to pay urgent attention to the five following action points.
The NESG notes in a recent document titled: ‘The State of the Economy’ that Nigeria needs to minimize its vulnerability to external shocks, which in turn will increase its prospects for sustained growth.
Effective fiscal management, good Governance and effective citizen engagement were the measures outlined by NESG on how Nigeria can score high in stabilizing its macroeconomy.
Policy & Regulatory Consistency
This encompasses the need to reduce policy reversal and somersault that tend to be hostile to sectoral growth.
A typical example that relates to this action point is the recent National Identification Number (NIN) policy by the Federal Government.
The complexity around government SIM registration policy pushed Nigeria’s telecommunication industry, which has the largest customer base of any industry in Nigeria, to record its fifth consecutive quarterly decline in the second quarter of 2021.
The sector reported a growth of 5.90 percent in the second quarter of 2021, 12.2 percentage points lower than the 18.10 percent reported in the corresponding quarter of 2020, and lower than the 7.69 percent growth in Q1 2021 by 1.79 percentage points, according to data by the National Bureau of Statistics (NBS).
Before the second quarter of 2020, about the same period the government commenced the policy that banned SIM registration which also required telecom users to link their NIN to their SIM, the mobile service industry was growing by double digits every quarter.
There is a need to strategically reposition sectors for growth, job creation and poverty reduction if Nigeria is going to achieve an annual GDP growth that will be above the 3 percent population growth rate, the NESG said.
Since 2017, when oil-dependent Nigeria emerged from its first economic recession in five years (exited its second in 2020), not only has the country’s economic growth been sluggish but only a few sectors triggered the expansion, further undermining the country’s capacity to create enough jobs to meet the growing number of labour market entrants.
While the sectors of the Nigerian economy that require less labour have been growing at a pace faster than their peers, the labour-intensive sectors with the potential to reduce the country’s 33.3 percent unemployment rate in the fourth quarter of 2020 have either been in recession or growing at a sluggish rate.
“The sectors with significant growth use very little labour,” the Presidential Economic Advisory Council (PEAC) said during its sixth Regular Meeting.
Human Capital Development
Massive investment in research and development, digitalization of health and education and empowering youthful population with productive skills are some of the ways Nigeria can boost its human capital development that will consequently lead to economic growth, according to NESG.
Quick intervention and resolution of the crisis to ease security challenges in the country will go a long way in deepening economic growth, the group said.
From the north to the south, the problem of insecurity has continued to threaten the future of Nigeria.
Insurgent violence and terrorism carried out by Boko Haram and Islamic State’s West Africa Province (ISWAP) remain the major drivers of insecurity across north-eastern Nigeria and the Lake Chad region.
The effects of the insurgency and the persistence of insecurity are inseparable from the region’s pre-existing socio-economic deprivation and harsh environmental conditions, according to the United Nations Development Programme (UNDP).