• Friday, June 21, 2024
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BusinessDay

These 8 numbers capture Nigeria’s worsening socio-economic crisis

Nigeria’s economy

Rising inflation, a contracting economy, increasing poverty levels, plunging currency value and an ongoing pandemic amid a faulty health system can summarise the pains of people in Africa’s most populous nation.

But these numbers go further and reveal cracks that must be mended as socio-economic indices worsen in Nigeria.

1.87%

Given that Nigeria’s GDP averaged 2% from 2017-2019 with economic growth for Q1 2020 at 1.87% compared to 2.28% of Q3 2019, the social status of Nigerians seems to be dwindling substantially.

According to Jesmin Rahman, IMF Mission chief and senior representative in Nigeria, “Nigeria entered this crisis in a weak position.” This prior weak position of Nigeria when entering into the Covid-19 pandemic has contributed to higher economic risks that might be worse than the 2008/2009 global financial crisis.

To put in context, Nigeria’s real GDP is currently about half of emerging markets and developing economies (EMDEs). To make matters worse, the International Monetary Fund (IMF) staff and Nigerian authorities estimate that Nigeria is expected to contract by 5.5% this 2020.

3.8% & 38%

As noted by Rahman, total revenues and grants that were 8.5% of GDP in the pre-COVID era had now declined to 4.7% of GDP as at July 2020. This yields 3.8% decline in the country’s revenue during this Covid-19 era. Nigeria’s revenue of 8% of GDP with almost 5% attributed to the non-oil sector signals just a little bit of diversification.

Nonetheless, this is rather low compared to the minimum threshold that is required for accelerated growth, for which other regions of sub-Saharan Africa (SSA) nations, oil exporters, Angola and Saudi Arabia surpass. Likewise, the gross international reserve has dropped from $36 billion to $22.3 billion, amounting to about 38% decline within the same period. What is worse is Nigeria’s rising debt levels.

Nigeria’s public debt rose to an all-time high of N28.6 trillion as at March 2020, and external debt skyrocketed to 35% of aggregate from 15% in December 2014.

2.6%

At the current population growth rate of 2.6% Nigeria’s population is projected at 400 million by 2050. Currently, Nigeria’s population has been rising steadily to slightly above 206 million people. Of this, most Nigerians are either in the informal sector, underemployed or unemployed with low wages.

Moreover, the Northern region is the most populated region in Nigeria, which has been highly tormented by the terror group called Boko Haram. World Bank even estimates that by 2030, about a 5th (20%) of the world population will reside in Nigeria.

12.6%

An increase from 12.4% in May to 12.56% in June 2020 was recorded by the National Bureau of Statistics (NBS). This represents a 1.21% increase in June from May’s 1.17% increase, which is the greatest hike since June 2018 and was mostly triggered by rising food prices asides other sectoral increases.

The rising cost of goods and services not only reflects erosion of purchasing power to consumers but also poses a problem for savers in the country where banks offer very low single-digit interest rate for savings accounts.

40%

Four out of 10 Nigerians spend less than $1 on daily feeding. NBS reported that Nigerians consume 2,251 average calories per day, amounting to the food poverty line of N81,767 per year for each individual. To put this in context, this means that Nigerians spend about N6,814 per month and N227 daily on feeding. This is clearly less than a dollar per day.

When the cost of non-food needs is included, the lower and upper national poverty line rises to N124,948 and N137,430 per individual in a year. So, 4 out of 10 (that is, over 82.9 million) Nigerians, have real per capita expenditures that are below N137,430 ($359.76 based on the current exchange rate of N382) yearly excluding Borno state due to extreme Boko Haram insurgencies.

World Bank further estimates that the poverty rate will increase to 42.5% in 2020, thereby pushing 5 more million Nigerians into poverty this year.

47 million

Nigeria Employers’ Consultative Association (NECA) fears that the unemployment rate might hike from 23.1% in 2019 to 33.5% in 2020. This represents over 47 million unemployed Nigerians.

Experts strongly advocate that investing in human capital is the way forward to national recovery and inclusive growth.

25%

Deteriorating Health Conditions means 25% of Nigerians lack access to safe water. Moreover, health risks appear to be the worst since the Spanish flu of 1918. Rahman noted that the proportion of additional health expenditure to GDP stands at 0.3% (N186bn extra allocation) in Nigeria.

This is rather low in contrast with 0.47% for low-income countries (LICs) and Sub-Saharan Africa (SSA), 0.46% for emerging markets (EM) and 0.49% for G-20 economies. Furthermore, two-thirds of Nigerian population lack adequate sanitation and a quarter of Nigerians are lacking access to safe water.

Due to falling out of both the health and economic impact of the pandemic, the Nigerian economy is expected to contract by as much as 5 per cent in 2020, and not until 2023 would the economy begin to see a rebound, Rahman added.

9.5 million

There are about 9.5 million Nigerian school drop-out children as at January 2020 according to a report by the National Social Safety Nets Coordinating Office (NASSCO) gotten from 2.25 million poor and vulnerable households in the agency’s National Social Register.

Net attendance amounts to just 53% in Northern Nigeria.

Lagging Education Standards means 1 in 6 global out-of-school children is Nigerian, according to United Nations Children’s Fund (UNICEF). Furthermore, according to NBS, in terms of education levels, an average of 50.5% of Nigerians either have no formal education or less than primary education with males dominating at 66.17% compared to 34.72% females. Primary education averages 34.1% comprising 41.3% males and 26.9% females, while secondary and post-secondary education is much lower at 19.5% and 11.9%, respectively.

Quite dismal is the low illiteracy rate in the country with barely 50% of literate females.

What is the likely way forward?

It is projected that for Nigeria to fully recover from this crisis in line with Sustainable Development Goals (SDGs), some degree of additional spending is necessary by 2030. Education, health, electricity, roads, water & sanitation need to increase by about 8%, 4%, 1%, 2% and 3% respectively, approximately a total rise of 18% in GDP for Nigeria’s expenditure.

While these are very hopeful predictions, there are still a plethora of uncertainties about the economic and social environment of Nigeria. This is because of the high risks involved, not just nationally but globally. Also, these recovery projections are contingent on the anticipation that all things go well in Nigeria’s smooth completion of the eased lockdown phase and there is no occurrence of the second wave of coronavirus.