The last ten years have brought several developments to Nigeria, but as many as they appear, they were overwhelmed by bigger challenges which the nation has not learnt to address, thereby threatening its economy and leadership position in the African continent.
To join #TenYearChallenge, a viral harsh word online where social media users combine their present image with another taken ten years earlier to illustrate changes that have occurred to them within this period, BusinessDay reviewed Nigeria’s economy from 2008 to 2018 using data from the Bloomberg Terminal and Nigerian authorities and presents ten (10) key economic variables to show how the nation has fared over time.
Inflation
The nation’s average inflation rate stood at 11.4 percent in 2018, lower than 15.1 percent recorded in 2008, even though the index surged significantly in 2016 when Nigeria’s economy was in recession to 18.5 percent, the second-highest in nation’s history after an average of 23.8 percent in 2003.
Meanwhile, the country recorded its lowest average inflation rate of 0.2 percent in 2003
Inflation is a macroeconomic indicator that measures the rate of general increase in price level of goods and services over a period of time.
Gross Domestic Product (GDP)
According to the National Bureau of Statistics (NBS), Nigerian economy grew 1.95 percent in the first quarter of 2018, but contracted in the following quarter by 1.50 percent. Growth in the third quarter of 2018 expanded by 1.81 percent, putting the average growth rate of the economy so far at 1.75 percent.
This and the International Monetary Fund’s (IMF) annual growth projection of 1.9 percent for 2018 are lower than 6.27 percent annual growth rate recorded in 2008.
Gross Domestic Product (GDP) measures economic growth and the market value of all final goods and services produced in a country in a given period.
Unemployment Rate
While growth is shrinking in Africa’s largest economy, unemployment rate keeps soaring, reflecting increasing labour force largely driven by high population growth rate of about 3 percent and government’s inability to create enabling environment for job creation to accommodate young school leavers.
The national unemployment rate was 14.9 percent in 2008, this rose steadily to 23.1 percent in the third quarter of 2018, according to NBS.
Unemployment rate is the percentage of unemployed – those within the working age population aged 15-64 who are unemployed and actively looking for jobs – in the total labour force.
Monetary Policy Rate
The Monetary Policy Rate (MPR) also known as the benchmark interest rate is one of the key instruments of the Central Bank of Nigeria (CBN). The apex bank primarily uses the monetary policy tool for price stability, it also determines the rate at which banks lend out money, which in most cases affect the growth of the nation’s economy.
The MPR has moved from 9.75 percent as at December 2008 to 14 percent as at December 2018, the CBN has kept the rate at record-high 14 percent since July 2016 and analysts have projected another retention in the committee’s meeting next week.
Crude Oil Prices
Nigeria’s economy is volatile as it largely depends on crude oil. The commodity is the country’s major source of foreign exchange earnings and government revenue.
International oil benchmark, Brent crude upon which Nigeria’s crude oil is priced, moved from an average of $98.50 per barrel in 2008 to an average of $71.69 per barrel in 2018.
Total External Debt Stock
One of the major worries of stakeholders over the Nigerian economy is the country’s high debt profile. Successive governments embarked on borrowings without commensurate development in the nation’s infrastructure.
Available data show that Nigeria’s total external debt stock ballooned from $3.72 billion as at December 31, 2008 to $21.59 billion as at September 30, 2018.
Stock Market
Although the year 2018 was not an impressive one for investors in the Nigeria equities market, this is largely attributable to uncertainties towards the 2019 general elections and interest rates hike by the United States Fed Reserves which triggered outflows of portfolio investment from the country to developed economies.
As a result, over 17 percent was wiped off the market value in 2018. However, this outperforms the 46 percent depreciation recorded at the Lagos bourse in 2008 during the global financial crisis.
USD/NGN Exchange Rate
The Naira has largely depreciated in the last 10 years despite increases in prices of crude oil in the global market.
The currency weakened from an average of N139.70 to a dollar in 2008 to N362.59 per dollar in 2018. The naira has been hovering around N360 to N365 since August 2017 as the CBN continues to intervene in the foreign exchange market.
Foreign Exchange Reserves
Nigeria’s foreign exchange (FX) reserves amounted to $43.12 billion in 2018 against $53 billion recorded in 2008. This is about a $10 billion difference in the last 10 years.
Nigeria external reserves reached a peak of $47.87 billion on May 10, 2018. However, foreign portfolio outflows due to election uncertainty coupled with CBN’s sustained intervention in the interbank foreign exchange market led to the significant decline in Nigeria’s gross dollar reserve.
FX reserve is money or other assets held by a central bank or other monetary authority so that it can pay its liabilities if needed, such as the currency issued by the central bank, as well as the various bank reserves deposited with the central bank by the government and other financial institutions.
Current Account
Ten years ago, the Nigeria current account recorded a surplus of N1.18 trillion as at Q3 2018. However, recent data released by the Central Bank of Nigeria showed that current account dipped into a negative zone with a deficit of N948.74 billion.
According to National bureau of statistics report, deficit was driven by a 70.5 percent q/q surge in merchandise imports, which was as the result of imports of drilling platforms for the energy sector.
Data generated from the CBN’s latest Quarterly Statistical Bulletin, show sharp increase in freight debit by 78 percent to N293.7 billion (US$960 million) in Q3 from N164.5 billion (US$540 million) the previous quarter.
A country’s current account balance (surplus or deficit) reflects balance of trade and earnings on foreign investment. A deficit in current account is due to a country spending more of its currency on importing products than it is earning through exports.
OLUWASEGUN OLAKOYENIKAN & DAVID IBIDAPO
