Nigeria’s gross domestic product (GDP) has been on the path of growth for six consecutive quarters since the last negative growth rate in the third quarter of 2020. Some factors may lower Nigeria’s GDP growth rate in 2022 except urgent policy actions are taken.
Those factors include insecurity, corruption, inflation, a shift in government attention from the economy to general elections, a cut in production in the manufacturing sector, low consumption, rising unemployment, limited power supply, and weak macroeconomic management evidenced in foreign exchange shortages.
The rate of insecurity in Nigeria is alarming. The federal government and the Nigerian security personnel have not done well in securing lives and property in the country. The recent killing of Deborah Samuel in Sokoto State; Okechukwu Okoye, the lawmaker representing Aguata Constituency 2 in the Anambra State House of Assembly; and his aide have drawn global concern.
Insecurity may discourage many foreign and domestic investors from investing in Nigeria due to the fear of being killed or kidnapped. A reduction in investment because of the insecurity problem challenging the Nigerian economy may negatively impact growth in 2022.
The high rate of corruption in Nigeria is disheartening. In 2021, Nigeria was ranked 154th among the 180 countries listed in Transparency International’s Corruption Index. The rating shows the height of corruption in Nigeria.
Many Nigerians are deprived of quality education, access to good health care services, good drinking water, electricity, and many other benefits due to corruption in Nigeria. Many Nigerians are poor because of greedy government officeholders.
The poor economic management evidenced in forex shortages and the high exchange rate is posing a threat to the growth of the Nigerian economy. Many manufacturers and businessmen/women cannot access enough forex from the official market; as a result, they patronise the parallel market at a very high rate of N600 per dollar. The persistent forex shortages in Nigeria may impact growth negatively in 2022.
Pre-election violence may affect growth negatively in 2022. The majority of Nigerian politicians do not have the interest of Nigeria at heart. They are interested in accumulating wealth for their next fifth generation. As a result of selfish motives, the politicians embark on pre-election violence, which may impact growth negatively.
The Nigerian government may shift attention from core economic policy formulation and implementation to gross preparation for the 2023 general election. The shift of attention of the Nigerian government from the economy may impact the growth of the Nigerian economy.
The Manufacturers Association of Nigeria (MAN) has recently confirmed a cut in production due to high energy costs, low demand for manufactured products, forex shortage, and rising insecurity in Nigeria.
The MAN CEOs Confidence Index (MCCI) recently released by the association revealed a cut in production. The MCCI measures changes in the pulse of operators and trends. The index declined from 55.4 points in the fourth quarter of 2021 to 53.9 points in the first quarter of 2022. The cut in production has the full potential of aggravating the unemployment problem and is capable of reducing output, trade, and income in Nigeria.
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According to the National Bureau of Statistics, Nigeria’s unemployment rate was 33.3 percent in 2020. A cut in production and job loss in the manufacturing sector may worsen unemployment in Nigeria. A high unemployment rate may impact growth negatively in 2022.
Inflation has risen beyond the projected rate of 13 percent for 2022. Consumers have no other choice but to reduce consumption due to high commodities prices in the Nigerian markets. Low aggregate demand may reduce production further in the manufacturing sector and consequently impact economic growth negatively in Nigeria.
Before COVID-19, about 83 million Nigerians lived on less than the equivalent of $1.90 a day. And about 7 million other Nigerians were pushed into poverty following high commodity prices in 2021, according to the World Bank. The poor Nigerians cannot add value to GDP as expected.
The many problems challenging the survival of the Nigerian economy can be controlled by the federal and state governments. The Nigerian government must take urgent actions against insecurity, corruption, and other problems threatening the Nigerian nation.
The Nigerian government must realise that Nigeria is more valued than individual or political success. The Nigerian government must urgently concentrate on the economy through effective policy formulation and implementation. The Nigerian government must rise to face the various challenges confronting the country to sustain and improve on its growth path.
Felix Ashakah is an economics lecturer at Western Delta University, Oghara
