Nigeria is rapidly consolidating its recovery from the pandemic-induced recession, but the pre-COVID-19 narrative of poor inclusiveness and macroeconomic instability still persists.
Despite a GDP growth of 3.2 percent in the first three quarters of 2021, data from the National Bureau of Statistics (NBS) show that average prices of goods and services were high; trade balance remained in deficit and foreign investment inflow was constrained in the year. The World Bank estimated that an additional 8 million Nigerians fell into poverty between 2020 and 2021 due to lower purchasing power. Although Nigeria’s potential is enormous, job creation across sectors has been lagging, resulting in an increase in unemployed individuals.
While there is considerable improvement in some areas, such as the mobilisation of nonoil revenue in the last few years, one thing is clear: Nigeria cannot afford to continue with its business-as-usual approach in policymaking and execution. The heightened insecurity and social vices in several parts of the country is proof that when some segments of the population are left behind, it will not only offset the few gains made prior to COVID-19 but will also deprive the country of much-needed investments that are needed to ensure sustainable growth and development.
The challenges associated with insecurity, rising prices, unemployment, and lower investments intensify the need for reforms that will lead the country to substantial economic progress and improved social inclusion. This will ensure that businesses and citizens constitute the core of government policies and actions.
Certainly, the challenges facing the country are daunting. Still, the year 2022 presents a unique opportunity for Nigeria to initiate tough economic reforms that would propel sustainable economic growth and inclusive development. Long-standing issues of deregulation of the downstream sector, foreign exchange scarcity and lower investment into key sectors must be given the utmost attention in 2022. The deregulation of the downstream oil and gas sector, for example, is needed at this critical time when massive investments are required to fix the deteriorating state of the existing refineries. This will address the predicament of huge importation of refined fuel products that deprive the country of the foreign exchange required to meet other important obligations. While the Petroleum Industry Act (PIA) stipulates the long-awaited deregulation, there is a need to muster efforts to improve the business and policy environment in order to rekindle investors’ confidence in the Nigerian economy.
Implementing these reforms will undoubtedly come at a cost to the government, businesses and citizens. However, the herculean task before the government is to ensure that these costs are minimised in order to create a win-win situation for every stakeholder and, in turn, advance the country on the path of development. Fortunately, the federal government has launched the National Development Plan (2021-2025), which sets targets, priority areas, and action steps to be implemented in the next five years. Even so, the success or failure of the plan will largely hinge on the level of implementation and coordination among government agencies, domestication of the plan by the state governments, and the private sector’s commitment to making the necessary investments in key areas of the economy. More importantly, the government is expected to be a key driving force in creating a business-friendly environment, ensuring macroeconomic stability and mobilising investments across board.
With just over a year left in office, the current administration must intensify the pace of reforms, especially given the impact of the twin challenges of poverty and unemployment on insecurity and social cohesion of the nation. In order to secure the future of Nigeria, the government must recognise the urgency of now. Economic and social reforms that will create jobs and improve the lives of Nigerians should be non-negotiable in 2022.