ANALYSIS OF NIGERIA CURRENT LEVEL OF DEVELOPMENT

Analysis of Nigeria Current Level of Development

Introduction

Nigeria’s economic growth has slowed on the back of declining oil output and moderating non-oil activity. Real gross domestic product (GDP) rose by 3.1 percent year-on-year (y-o-y) in the first three quarters of 2022, little more than the annual population growth of 2.6 percent. Nigeria’s growth performance, and its fiscal and external buffers, has decoupled from high oil prices, and macroeconomic vulnerabilities have increased.

It is urgent to address the key drivers of this decoupling and make reforms to strengthen Nigeria’s macro-fiscal framework. The Strategic Revenue Growth Initiative (SRGI) of the federal government is a welcome first step, reversing the previously declining trend in non-oil revenues as a share of GDP. This initial success needs to be sustained and built upon. (Bell, 1988)

According to Gbadebo, (2022) “Nigeria has a choice to implement critical macroeconomic and structural reforms that can reduce crisis vulnerabilities and increase growth. Doing so will lift per-capita incomes, sustainably reduce poverty and deliver better life outcomes for many Nigerians”, said Shubham Chaudhuri, World Bank Country Director for Nigeria. “Urgent business-unusual choices are needed to avoid a scenario in which up to 80 million working-age Nigerians do not have a full-time job by 2030 and up to 23 million more Nigerians could be living in extreme poverty.”

However, Ige, (2022)  opine that inflation has surged to 21.1 percent y-o-y in October 2022, pushing as many as five million more Nigerians into poverty since the start of 2022. Fiscal pressures have intensified, exacerbated by the soaring cost of the petrol subsidy which will likely exceed five trillion naira this year. Despite higher oil export revenues, official reserves have fallen, and the currency market is severely distorted, undermining the business environment and investment. The weaknesses in the macroeconomic policy framework are suppressing growth and making Nigeria more vulnerable to shocks.

“Previous episodes of reform progress and high growth, such as in the 2000s, show that Nigeria’s economy can turn around quickly, and its tremendous economic potential that could be unleashed is well-known. If Nigeria chooses to make reforms that stabilize its macro-fiscal policy settings and support investment, this would be transformative for 80 million poor Nigerians, for Nigeria as a whole, and for Africa.” said Alex Sienaert, World Bank Lead Economist for Nigeria and co-author of the Report.

The Report presents the reform choices Nigeria can make in three key areas: (1) Restoring macroeconomic stability through measures to reduce the domestic and external imbalances. This will require a coordinated mix of exchange rate, trade, monetary, and fiscal policies, notably including adopting a single, market-responsive exchange rate, eliminating the petrol subsidy, and increasing oil and non-oil revenues; (2) Boosting private sector development and competitiveness by eliminating structural constraints that hinder productivity; and (3) Expanding social protection to protect the poor and most vulnerable.

ANALYSIS OF NIGERIA CURRENT LEVEL OF DEVELOPMENT

• Economy of Nigeria

According to Ngwama, (2022) in 2014, Nigeria changed its economic analysis to account for fast-growing contributors to its GDP, such as telecommunications, banking, and its film industry. Human capital is underdeveloped—Nigeria ranked 161 out of 189 countries in the United Nations Development Index in 2019—and non-energy-related infrastructure is inadequate. Nigeria had advanced efforts to provide universal primary education, protect the environment.

A requirement for achieving many of objectives is reducing endemic corruption, which obstructs development and stains Nigeria’s business environment. However, while broad-based progress has been slow, these efforts have begun to become visible in international surveys of corruption. Nigeria’s ranking has mostly improved since 2001 ranking 154 out of 180 countries in Transparency International’s 2021 Corruption Perceptions Index. The Nigerian economy suffers from an ongoing supply crisis in the power sector. Despite a rapidly growing economy, some of the world’s largest deposits of coal, oil, and gas and the country’s status as Africa’s largest oil producer, power supply difficulties are frequently experienced by residents. Two-thirds of Nigerians expect living conditions to improve in the coming decades.

The Economy of Nigeria is a middle-income, mixed economy and emerging market with expanding manufacturing, financial, service, communications, technology, and entertainment sectors. It is ranked as the 31st-largest economy in the world in terms of nominal GDP, the largest in Africa and the 27th-largest in terms of purchasing power parity.

Nigeria has the largest economy in Africa. The country’s re-emergent manufacturing sector became the largest on the continent in 2013, and it produces a large proportion of goods and services for the region of West Africa] Nigeria’s debt-to-GDP ratio was 36.63% in 2021 according to the IMF.

Nigerian GDP at purchasing power parity (PPP) has almost tripled from $170 billion in 2000 to $451 billion in 2012, though estimates of the size of the informal sector (which is not included in official figures) put the actual numbers closer to $630 billion. Subsequently, the GDP per capita doubled from $1400 per person in 2000 to an estimated $2,800 per person in 2012. Again, with the inclusion of the informal sector, it is estimated that GDP per capita hovers around $3,900 per person. The country’s population increased from 120 million in 2000 to 160 million in 2010. The GDP figures were to be revised upwards by as much as 80% when metrics were to be recalculated after the rebasing of its economy in April 2014.

Although oil revenues contributed 2/3 of state revenues, oil only contributes about 9% to the GDP. Nigeria produces only about 2.7% of the world’s oil supply. Although the petroleum sector is important, as government revenues still heavily rely on this sector, it remains a small part of the country’s overall economy. The largely subsistence agricultural sector has not kept up with the country’s rapid population growth. Nigeria was once a large net exporter of food, but currently imports some of its food products.

Mechanization has led to resurgence in the manufacturing and exporting of food products, and there was consequently a move towards food sufficiency. In 2006, Nigeria came to an agreement with the Paris Club to buy back the bulk of its owed debts from them, in exchange for a cash payment of roughly US$12 billion. According to a Citigroup report published in February 2011, Nigeria would have the highest average GDP growth in the world between 2010 and 2050. Nigeria is one of two countries from Africa among the 11 Global Growth Generators countries.

ANALYSIS OF NIGERIA CURRENT LEVEL OF DEVELOPMENT

ANALYSIS OF NIGERIA CURRENT LEVEL OF DEVELOPMENT

According to Oyeneye, Aransiola, and Oyeneye, (2021) Nigeria is known as the ‘Giant of Africa.’ It is predicted to reach 400 million people by 2050, smaller only than India, China, and the US! Nigeria could well become a major global power within our lifetimes, but serious weaknesses still hold Nigeria back from development. Let’s take a look at Nigeria’s development, the country’s global importance, and what challenges the country faces.

Nigeria is geographically blessed, with access to land and sea trade routes, a large land area (almost 4x that of the UK), great agricultural potential, and vast reserves of oil and natural gas. Culturally, Nigeria is a melting pot of 250 ethnic groups and over 500 languages and is a huge innovator and exporter of popular culture, including the world’s second-largest film industry! But Nigeria is challenged by serious religious and ethnic conflicts, deep political corruption, stresses from climate change, and a population growing faster than economic growth can up keep up with and below are the current level of development n Nigeria:

• Political context

To attain this laudable and lofty goal of the state, good governance is imperative. Good governance is imperative, good governance is sin qua non in attaining sound economic and social objectives in the state. The term “good governance” is finding a comfortable place in literature of development today. Even major international donors and financial institutions are now demanding good governance as primary criteria for aids and loans. To understand good governance, we must first understand the meaning of governance.

Governance is the process of decision – making and the process by which decisions are implemented (or not implemented). Means that this process must be good, civilized, with human – face, with ultimate goal of achieving good life, happiness, common good and wellbeing of the citizens. That is to say, the process leading to decision – making in the state should not be corrupt but holistic with the diverse interest of all at the giving number.

According to the United Nations – Economic and Social Commission for Asia and the Pacific (2016), there are factors that must be taken into account in the decision – making process of government. These include participation of both men and women including civil society who must be informed of the activities. This means that there is freedom of association and expression. Another factor is rule of law, there should be good laws that are impartially enforced. Also these should be consensus in the state. The State has several actors. Their interests must be reconciled along the larger interest of the state. This required understanding of the plural cultures, religion, history and social contexts. Plural accommodation and tolerance must be promoted.

The factors also include equity and inclusiveness of citizens must have a sense of belonging of equality and of equal opportunities and of the benefits and burdens. No group should be placed under any disadvantage. Effectiveness and efficiency that is, the capacity of Institutions to produce results that meet society’s needs as they employ the resources of the state both material and human. Accountability is also crucial to good governance.

ANALYSIS OF NIGERIA CURRENT LEVEL OF DEVELOPMENT

Both government and private including civil society must be accountable to the public and must work towards achieving public good. Transparence is also crucial in good governance. This means that decisions and their enforcement must follow rules and regulations already known and agreed upon. Before this is done, however, information would have been at the reach of those concerned. Responsiveness in carrying out duties is important. Those to be affected – stakeholders – must not only be served on time, they must also be considered with all care taken to in the things that affect them.

Nigeria is a multi-ethnic and culturally diverse federation of 36 autonomous states and the Federal Capital Territory. The political landscape is partly dominated by the ruling All Progressives Congress party (APC) which controls the executive arm of government and holds majority seats at both the Senate and House of Representatives in parliament, and majority of the States.

General Elections to elect a new President, Federal and State Legislators and Governors are scheduled for February 2023. President Muhammadu Buhari will complete his second term in office on May 29th, 2023. Since 2011, the security landscape has been shaped by the war against Boko Haram and other terrorist groups in the northeast in addition to incessant cases of banditry and kidnappings in the north-west and parts of the southwest. The southeast continues to witness unrest resulting from separatist agitations.

• Economic Overview

From policy perspective, economic development can be defined as efforts a seek to improve the economic well-being and quality of life for a community by creating and/or retaining jobs and supporting or growing incomes and the base. It is a sustained community effort to improve both the local economy and the quality of life by building area’s capacity to adapt to economic change (Loveridge and Morse 2016). This definition suggests that there is difference between economic development and economic growth. Economic growth represents an increase in jobs and income in the community. It refers to the expansion in economic activity in the state. On the other hand economic development encompasses job and income growth, sustainable increase in the productivity of individuals, businesses and resources to increase the overall wellbeing of citizens and quality of life. In achieving economic development, Salmon Valley Business and Innovation Centre have given three broad areas that must be taken seriously.

They include: (a) Policies that governments undertake to meet broad economic objectives such as price stability, high employment, expanded tax base, and sustainable growth. Such efforts include monetary and fiscal policies, regulation of financial institutions, trade, and tax policies. (b) Policies and programmes to provide infrastructure and services such as highways, parks, affordable housing, crime prevention, and educational programmes and projects. (c) Policies and programmes explicitly directed at job creation and retention through specific efforts in business finance, marketing, neighborhood development, small business start-up and development, business retention and expansion, technology transfer, workforce training and real estate development.

This third category is a primary focus of economic development professionals. Economic Growth Economic growth is the increase in the inflation adjusted market value of the goods and services produced by an economy over time. It is conventionally measured as the percent rate of increase in real gross domestic product, or real GDP usually in per capita terms. It is an increase in the capacity of an economy to produce goods and services, compared from one period of time to another.

ANALYSIS OF NIGERIA CURRENT LEVEL OF DEVELOPMENT

Following the pandemic induced recession in 2020, Nigeria’s economic growth recovered but macroeconomic stability weakened. Amidst global commodity shocks, a depreciating currency, trade restrictions, and monetization of the deficit, inflation is surging and pushing millions of Nigerians into poverty. Since 2021, Nigeria is also unable to benefit from the surging global oil prices, as oil production has fallen to historic lows and petrol subsidy continues to consume a larger share of the gross oil revenues.

In 2018, 40% of Nigerians (83 million people) lived below the poverty line, while another 25% (53 million) were vulnerable. With Nigeria’s population growth continuing to outpace poverty reduction, the number of Nigerians living in extreme poverty is set to rise by 7.7 million between 2019 and 2024. While the economy is projected to grow at an average of 3.2% in 2022-2024, the growth outlook is subject to downside risks including further declines in oil production and heightened insecurity. Meanwhile, continued scarcity of foreign exchange and tighter liquidity could affect the economic activity in the non-oil sector and undermine the overall macroeconomic stability. The uncertainty is also expected to be accompanied by high inflation and continued fiscal and debt pressures.

• Agriculture

The World Bank’s support for the agricultural sector, including through the Commercial Agriculture Development Project, the Transforming Irrigation and Water Resources Management Project and West Africa Agriculture Productivity Project—has helped Nigeria strengthen agricultural production:

• Over 7 million farmers received improved agricultural technology
• Farmers cultivating tomatoes and rice contributed 26% and 14.27%, to national production respectively, in 2019
• Cassava farmers realized more than $55 million as revenue and a gross margin of over $36 million in 2019
• Rice, sorghum and tomatoes farmers realized gross margins of over $288 million, $169 million, and $53 million respectively
• A Farmers’ Microfinance Bank birthed from FADAMA gives loans at low interest rate of 3.5% for business startup and expansion, with 80% recovery rate. The amount saved from the FADAMA enterprises was over $200,000 as at 2019
• Export of over 10,000 metric tons of smoked fish and other Agric-products
• 3,102 hectares received improved irrigation services through the ongoing rehabilitation of 3 dams located in Sokoto, Zamfara and Kano states under the Transforming Irrigation Management in Nigeria project.

ANALYSIS OF NIGERIA CURRENT LEVEL OF DEVELOPMENT

• Social Safety Net

The Community and Social Development Project has;

• Led to Institutionalization of Community & Social Development Agencies across implementing states, which serves as a platform for program sustainability by state government or further interventions by other donor partners
• Recorded over 3 million direct project beneficiaries including internally displaced persons in the North East of Nigeria
• 4,662 new communities and over 1.8 million households have access to social services (of which IDPs constitute more than 10% of residents) as against 1,000 communities and 500,000 households’ baseline values respectively
• 800 new poor communities with access to natural resource management services (of which IDP’s constitute more than 10% of residents)
• Over 1,510 rehabilitated and 256 newly built health centers
• Over 2,362 rehabilitated and 300 newly built classrooms
• Increased school enrollment with records of over 18,000 Boys and 14,000 Girls enrolled in primary education schools
• An estimated 36 million people in 13,299 cluster of communities have benefitted directly and indirectly from the original and additional Financing resources.
• The National Social Safety Net Project has:
• Created a National Social Registry (NSR) for Nigeria
• Captured about 814,376 households included in the National Social Registry and recorded about 3.2 million Direct Project Beneficiaries of the program, 49% of this number are female
• By June 2019, almost a million poor and vulnerable households in the NSR had benefitted from 10,000 Naira bi-monthly Conditional Cash Transfer program; expected to reach 1 million poor and vulnerable households by end of 2019
• Benefitted 20 states from targeted cash transfers
• Helped 1,200 beneficiaries from 30 communities save more than 22 million naira in 18 months from their conditional cash transfers. This fund is being used as start-up capital for small businesses to generate income and improve their livelihood.

Analysis of Nigeria Current Level of Development

• Climatic Resilience

The Nigeria Erosion and Watershed Management enhanced Nigeria’s capacity on the preparedness to respond to natural hazards, climate risks and natural disasters, which have led to the following;

• About 2,201 hectares of the land area have been reclaimed in the immediate gully site micro-catchments as at June 2020, including reclamation and afforestation programs across northern states
• 16 States now have improved erosion risk maps, towards ensuring better-quality catchment management plans prepared for 31 sites across States.
• 75 hydromet stations providing data for integrated catchment planning have been installed across the country
• 2 stormwater master plans have been completed for Onitsha in Anambra State, Aba and Abakaliki in Ebonyi State, strengthening and streamlining the country’s Environmental Impact Assessment process
• Issuance of Nigeria’s second tranche of Sovereign Green Bond (for $42 million) after the first green bond, to finance climate change activities. Activities financed by the initial tranche of Green Bonds, such as solar plants in seven selected Federal Government Universities and a Renewable Energy Micro-Utility project in Torankawa community in Sokoto State, have been completed.

Analysis of Nigeria Current Level of Development

Conclusion

Economic challenges are not strange even in the life of a nation. At one time or the other, countries suffer it in some degree. Economic challenges have been known to be surmountable. Many countries have successful come out of it. That Nigeria is undergoing economic challenges should not be any strange. What is required is for the government to stand up to the occasion and live to her responsibility and primary objective of making the citizens happy.

This can however, be achieved better and faster if the government applies the principle of good governance. Government should be proactive and seek for advice and help from the various professions among the citizens. There is no doubt that government is placed in an advantage position to succeed. All that needs to be done is to put things in their proper position. Government is therefore called upon to reconsider her economic, social, monetary, fiscal, social, foreign and political policies and design them with the local business and the citizens in mind. With good governance approach, economic challenges will be easily addressed.

References

Bell, M. (1988) The Polity. London, Sharp, Harris a co Faborode (2013) Higher Education and the Nigeria 20-2020 Dream.

Gbadebo, Omololu Michael (2022) “Nigeria and the Perennial problem of Governance: Explaining State failure in the midst of abundant Resources. Edited by Moshe Shokeid Journal of Social Policy and National Productivity, Port Harcourt Nigeria. Vol, 2 No1, December 2022

Ige, M.T. (2022) Policy Brief: Mobilising Small Holder Farmers For Sunflower Production To Alleviate Poverty. Igbesa, November, 2011

Lucas,M.O.O. (2015) “Global Economic Downturn With Reference To Oil Price And Implications For Youth Development”. 6th Annual Lecture of the College of Management Sciences Delivered at Bells University of Technology, Ota on 21/04/2015.

Ngwama, Justice Chidi (2022) “ The Nigerian Power sector: The Imperative of Human Capacity Building” Edited by Moshe Shokeid Journal of Social Policy and National Productivity, Port Harcourt Nigeria. Vol, 6 No1, December 2022.

Oyeneye, O.K., Aransiola, S.Y., and Oyeneye, O.T. (2021) “Impact of Public Electricity Consumption On Manufacturing Industry In Nigeria: A Pre-Privatisation Analysis, Edited by Anthony Kola-Olusanyan. Annals of Social Science, vol. 1, numbers 2 &3 Osun State University, 2021.