Although the Nigerian economy has started recovering from a historic downturn, many Nigerians are still recessed due to the lasting imprint of the COVID-19 pandemic and trade aversive policy. The economic and social impacts of the pandemic and aversive trade policies have posed a lot of challenges in Nigeria resulting in food insecurity, high inflation, increased unemployment, and an increase in the already-high levels of poverty.
Nigeria’s real GDP has been projected to grow by 2.6 per cent in 2021 and continue in the range of 2.6-2.7 per cent per annum over the medium term. This projection is just above the population growth rate of 2.55 per cent and it implies stagnation in per capita income in the medium term. The projected growth can be threatened by oil price volatility in the global market and other shocks that may easily emerge in the ecosystem.
In comparison, the real GDP growth projection of 2.6per cent for Nigeria is far below the world growth projection of 5.9 in 2021. This indicates that the majority of Nigerians are in extreme poverty and malnourished. More investment and trade/economic friendly policies are likely to solve the poverty problem in Nigeria.
Nigeria is a good location for investment because of its large population and availability of cheap labour and natural resources. Government support and investment-friendly policies can help private businesses and individuals to embark on investment projects and resuscitate the investment negatively affected by the COVID-19 pandemic to attain or exceed the 2.7 percent growth projection.
According to the Nigerian Investment Promotion Commission (NIPC), the agricultural sector is a viable segment of the Nigerian economy for employment generation, food security, and poverty reduction. The agricultural sector contributes about 25 percent of Nigeria’s GDP and accounts for about 48 percent of the labour force. Crop production dominates the agricultural sector, accounting for about 22.6 percent of GDP. The contributions of livestock, fisheries and forestry account for about 1.7 percent, 0.5 percent and 0.3 percent respectively. The figures show that there are investment potentials in the agricultural sector.
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There are investment opportunities in the industrial sector of the Nigerian economy due to the availability of natural resources, affordable labour costs, and a large market. According to the NIPC, the industrial sector contributes an average of 23 percent of the GDP annually. The activities in the industrial sector include oil and gas (9 percent), manufacturing (7 percent), and construction (7 percent). The statistics show that there are investment opportunities in the industrial sector of the Nigerian economy to contribute to employment creation and poverty reduction.
The Nigerian services sector has investment opportunities. According to the NIPC, the Nigerian services sector has remained resilient amidst hard-hitting economic circumstances as it currently contributes 53 percent of Nigeria’s GDP. The top contributory services activities to GDP include trade (16 percent), information and communication(12 percent), real estate(6 percent), professional, scientific, and technical services(4 percent), and financial and insurance (3 percent). The statistics also show that more investment can be made in the services sector for jobs creation, poverty reduction, and enhanced growth.
Infrastructure development is a pre-condition for investment to strive in both developed and developing countries. In Nigeria, infrastructure deficiency has been a problem to the progress of business activities. Addressing infrastructural constraints through private and public participation will help investors to strive.
According to the former director-general of Infrastructure Concession Regulatory Commission (ICRC), Chidi Isuwa, Nigeria had about 195,000 km of road network. He stated further that only about 60,000km was paved and a large proportion of the paved road was in a very poor unacceptable condition due to insufficient investment and lack of adequate maintenance.
Epileptic power supply has also been a big challenge in Nigeria. The majority of businesses depend on self-generated power sources to power their operations. The high costs of running and maintaining power-generating plants have resulted in inflation, unemployment, business relocation, and the closure of some production outfits.
The economic and social impacts of the COVID-19 pandemic and aversive trade policy have resulted in food insecurity, high inflation, increased unemployment, and high poverty in Nigeria. Infrastructure development is crucial for investors to strive in any economy worldwide. The Nigerian economy needs more investment, infrastructure development, and more friendly economic policies to drive the economy toward attaining a 2.7 percent growth projection.
Felix Ashakah is economic lecturer at Western Delta University, Oghara
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