By: Nneji Godwin Amako
In the midst of global economic turbulence, Nigeria’s economy teeters on the brink, yet within the chaos lies a whisper of hope. The latest report from the National Bureau of Statistics (NBS), released on August 27, 2024, offers a glimpse of light, revealing that the country’s Gross Domestic Product (GDP) surged by 3.2% in Q2 of 2024—an encouraging leap from the 2.51% recorded in the same period last year. The report underscores that “the economy is on the right trajectory and is indeed on the path to recovery.”
As Nigeria’s President, Bola Ahmed Tinubu, stated in his August 4 national broadcast, “Our economy is recovering. Sooner than later, Nigerians will begin to feel, see, and enjoy the impact of his administration’s economic re-engineering efforts.” Indeed, the recent NBS report signals that the nation’s economic engine may be gaining momentum. Despite the pressures of inflation and the soaring cost of living, which have left many Nigerians struggling to make ends meet, there is a sense that change is on the horizon. The service sector, with its impressive 3.79% growth, has been a beacon of resilience, contributing nearly 60% to the nation’s overall output. Even agriculture, long beleaguered, has shown signs of recovery with a 1.41% growth, up from the negative figures of 2023.
Navigating Global Challenges
The ongoing global crisis, compounded by geopolitical conflicts and domestic challenges, has cast a long shadow over Nigeria’s economic landscape. Food inflation, which rose to 40.66% in May, and the overall inflation rate hitting a 28-year high, have left many questioning the nation’s ability to withstand such pressures. However, President Tinubu’s administration has taken bold steps to steer the country toward recovery, rolling out economic strategies aimed at cushioning the impact.
As President Tinubu urged in his broadcast, Nigerians should “continue their faith in the government and not allow themselves to be swayed by naysayers intent on aborting and undermining the current reforms for their selfish ends.” The president’s recent measures, including the formation of the Presidential Economic Coordination Council (PECC) and plans to inject N2 trillion into key sectors, highlight a determined effort to stabilise the economy. The focus on critical areas like health, agriculture, and energy underscores a commitment to addressing the immediate needs of Nigerians while laying the foundation for long-term growth.
The Weight of Global Crises
Meanwhile, the global situation remains precarious. Reports from the World Bank and other international bodies paint a grim picture of widespread food insecurity, exacerbated by conflicts and trade restrictions. Nigeria, like many other nations, has not been spared from these harsh realities. The International Rescue Committee’s (IRC) projection that 32 million Nigerians will face acute hunger during the lean season is a stark reminder of the challenges ahead.
However, amidst these daunting statistics, there are signs that Nigeria’s resilience is being tested and perhaps strengthened. The recent uptick in GDP growth, coupled with the government’s proactive measures, suggests that the nation may yet navigate these troubled waters successfully. The government’s swift response, including the release of food reserves and plans to regulate soaring food prices, offers some relief to those hardest hit by the crisis.
Yet, the ripple effects of global instability cannot be ignored. As the NBS report noted, inflation has been driven by “higher food and transport prices,” with major contributing items including food and non-alcoholic beverages (17.59%) and housing, water, electricity, gas, and other fuels (5.68%). The struggle to maintain stability in such an environment is real, but the government’s efforts are aimed at turning the tide.
Voices of Caution and Hope
Leaders from various sectors, including business magnates like Aliko Dangote and political figures like Peter Obi, have voiced their concerns and offered insights into the path forward. Dangote recently lamented that “nobody can create jobs with an interest rate of 30 percent. No growth will happen,” echoing the fears of many about the current economic policies. Obi, in turn, pointed out that “no jobs will be created with such a high-interest rate because there will be no growth in the economy.”
Reacting to the GDP growth rate, some financial experts said the figure is a positive sign for economic recovery. The experts, speaking to A-Z Magazine exclusively, expressed hope that this positive trend would continue in the coming quarters, ultimately leading to more diversified and sustainable economic growth for Nigeria.
The Group Managing Director of Crane Securities Limited, Mr. Mike Eze, commented on Nigeria’s recent economic performance, describing the GDP growth of 3.19% year-on-year in real terms for the second quarter of 2024 as both expected and a welcome development. In an exclusive interview, Mr. Eze emphasised Nigeria’s position as the strongest economy in Africa, attributing the GDP growth to a range of ongoing financial strategies aimed at restructuring the nation’s economic system.
“Nigeria remains the leading economy on the continent, and there are significant financial engineering efforts underway to revamp and strengthen our economic framework,” Eze stated. However, he noted that the government is currently grappling with several economic challenges, including the devaluation of the naira, a persistent foreign exchange crisis, the removal of fuel subsidies, and increases in electricity tariffs. These issues have had a substantial impact on both the economy and the populace, creating a complex economic landscape.
Investment and advisory firm, Comercio Partners, has stated that Nigerians should be cautious with the rising GDP growth rate, warning that economic expansion may not translate to an improved standard of living. According to the firm, Nigeria’s economy may be ‘immiserising’—a situation where improved GDP growth does not affect the living standards of the population. The firm noted that the benefits of the economic growth might elude Nigerians due to high inflation at over 33% and the hawkish interest rate environment at 26.75%. Applying Hanke’s Misery Index, Nigeria’s current score is 61.96%, highlighting the intense pressures endured by the population despite the reported economic gains.
For Roman Oseghale, a business and economic intelligence analyst, GDP growth has not reflected in the lives of the people because Nigeria practices what is called an assets depletion economy. In his submission, Gospel Obele, a research economist, noted that the quality of life keeps dropping globally because nations are not focusing clearly on the dynamics of productivity.
Despite these criticisms, there is also hope. Daniel Bwala, spokesperson for the Atiku Abubakar presidential campaign in 2023, affirmed that “food inflation is global,” but added optimistically, “The good news is that it is projected that global food inflation will drop by the end of this year. So cheer up my people.”
As Nigeria enters a critical phase in its economic journey, the stakes could not be higher. The challenges are formidable, but so too is the resolve of a nation that has weathered many storms before. President Tinubu’s call for unity and faith in the government’s reforms reflects an understanding that recovery will not be immediate, but it is within reach.
The Path Forward: A Cautious Optimism
In his inaugural New Year speech, President Tinubu emphasised that decisive actions are being taken to avert an impending fiscal crisis. He reassured Nigerians that the hardships of today would lead to the prosperity of tomorrow, urging the nation to hold onto hope as the government works tirelessly to deliver on its promises.
The road ahead is uncertain, but the trajectory is slowly turning upward. If the current reforms and initiatives bear fruit, Nigeria may find itself not just surviving, but thriving in the face of adversity. As the nation moves forward, cautiously optimistic eyes will be watching to see if this is the moment when Nigeria begins to rewrite its economic story for the better.