Daily TribuneAlthough Nigeria’s economy in 2021-2022 recovered from the recession induced by the Covid-19 pandemic and lower oil prices, growing by 3.6 percent in 2021 with an expected growth of 3.2 percent in 2022
Soldiers participating in a parade marking Nigeria’s Independence Day in Abuja, Nigeria. | Emma Houston/Xinhua
As one of the promising economies in the African continent, Nigeria posted a respectable 3.6 percent growth in 2021 coming from a 1.8 percent contraction in 2020.
The World Bank issued a warning over the country's ability to attract domestic and foreign investments despite its evident recovery from recession.
The country marked its Independence Day on 1 October.
An extract from the WB report reads: "Although Nigeria's economy in 2021-2022 recovered from recession induced by the Covid-19 pandemic and lower oil prices, growing by 3.6 percent in 2021 with an expected growth of 3.2 percent in 2022, welfare has continued to deteriorate."
The downturn in its key oil imports has a lot to do with the anxieties over the sustainability of recovery although other sectors of the economy had posted a strong rebound.
"Growth is underpinned on the supply side by 4.4 percent expansion in the non-oil sector against 8.3 percent contraction in the oil sector; non-oil growth was driven by agriculture (2.1 percent) and services (5.6 percent)," a review of the African Development Bank indicated.
On the demand side, the report said consumption was a major contributor to gross domestic product growth.
Per capita income grew by one percent in 2021 while the fiscal deficit narrowed to 4.8 percent of GDP in 2021 from 5.4 percent in 2020, due to a modest uptick in revenues, and was financed by borrowing. Public debt stood at $95.8 billion in 2021 or about 22.5 percent of GDP.
Philippine global port operator International Container Terminal Services Inc. is among the multinationals that recognized Nigeria's potential.
ICTSI's arm in the country signed a lease agreement with the Nigerian Ports Authority in 2020 for the development and operation of a multi-purpose terminal at the Port of Onne in Rivers State, Nigeria.
High inflation
Annual average inflation stood at 17.0 percent in 2021 against 13.2 percent the previous year and above the central bank's six to nine percent target.
Inflation was fueled by food price rises at the start of the year and exchange rate pass-through.
AFDB expects growth to decelerate and average 3.2 percent until 2023 due to persistently low oil production.
Inflation is projected to remain elevated fueled mainly by rising food, diesel, and gas prices and persistent supply disruptions amplified by the Russia–Ukraine conflict. Capital inflows are projected to recover, while oil exports are projected to increase slightly.
"The benefit of a forecast positive oil price shock on exports may, however, be partly offset by a weak output effect due to lower oil production, stoked by infrastructure deficiencies and rising insecurity," according to AFDB.
The projected marginal current account surplus of 0.1 percent of GDP in 2022 could turn into a 0.2 percent deficit in 2023.
Improved revenue collection will help narrow the fiscal deficit to an average of 4.5 percent of GDP.
Public debt, however, is targeted to reach 40 percent of GDP by 2024 on fresh borrowing.
"The headwinds to the outlook may be exacerbated by rising insecurity and policy uncertainty underpinned by reversal of initially planned removal of subsidies on premium motor spirit a year before the 2023 elections," according to AFDB.
