The Nigerian Economic Summit Group (NESG), a private policy advocacy group has warned that “any procrastination in implementing effective and efficient reforms could send Nigeria’s economy into depression.”
According to its latest 2023 Macroeconomic Outlook report titled “Nigeria in Transition: Recipes for Shared Prosperity”, the group said a further delay could amplify people’s economic woes and threaten the country’s sovereign existence.
“The urgency of these reforms cannot be overemphasised as the headwinds accompanying growth and the attendant impacts on the social setting are now complementing and amplifying each other,” it said.
The reforms mentioned in its previous outlook report are oil & gas sector deregulation and fuel subsidy reforms, foreign exchange reforms and sectoral reforms.
Laoye Jaiyeola, chief executive officer of NESG said, in 2022 their macroeconomic outlook emphasised the importance of implementing reforms to sustain economic recovery in Nigeria.
“These reforms were meant to address macroeconomic and sector-specific challenges in the country. Despite these efforts, the growth experienced by Nigeria has not had a significant impact on the standard of living or socioeconomic indicators for most of the population.
“This lack of shared prosperity highlights the urgent need for comprehensive reforms that can address the underlying issues limiting the economy’s ability to generate sufficient growth and improve the wellbeing of the Nigerian people,” he added.
The 2023 outlook report also revealed that unemployment in Africa’s most populous nation will increase to 37 percent in this year.
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This means that the projected unemployment rate is about four percentage points higher from the National Bureau of Statistics’ (NBS) data of 33.3 percent as of 2020.
“This is due to weak performance in the job-elastic sectors, low labour absorption of sectors that will drive growth, and population growth estimated at 3.2 percent will lead to a decline in real per capita income,” it said.
It added that the inflation rate will average 20.5 percent and that the country’s Gross Domestic Growth (GDP) rate will moderate to 2.98 percent.
“Inflationary pressure is expected to remain elevated, driven by structural, cost and monetary factors. Food inflation will remain the fundamental driver of inflation due to the enduring impact of flooding, increased production costs due to increased cost of credit, insecurity and displacement.
“Existing fuel shortages and the removal of fuel subsidies will continue to increase the core components, especially transportation,” it said.
The think-tank group further said that economic growth will be subdued in 2023 due to strains on investment and low productivity in critical sectors.
“The services sector will drive economic growth, but this growth will not be strong enough to generate significant jobs.
“As a result, unemployment will remain unabated. Economic growth will be supported by election-related spending and improvement in the oil sector,” it said.
Last year, the Russia-Ukraine war impeded productive activities in Nigeria as its economy grew at its slowest pace in 15 months in the third quarter.
The country’s GDP grew by 2.25 percent (year-on-year) in real terms in the third quarter of 2022, down from 3.54 percent in Q2 and 4.03 percent in the same period last year, according to the NBS.
“Overall, the year 2022 presented a complex and challenging economic landscape for Nigeria,” Jaiyeola said.
The report highlighted six key themes that contributed to the country’ weak performance, such as a relapse in economic growth, a combination of cost-push and demand-pull inflationary pressure and a decline in fiscal performance.
Others are tight monetary policy, amplified external vulnerability, and a decline in investor confidence.
