The Nigerian economy recorded some major events that shaped the outgoing year. There were few bright spots as normalcy returned to the country compared to 2020 when the pandemic struck and lockdowns were imposed. However, there were some unfavourable events that affected Nigeria’s economy during the year.
Here are 10 numbers that shaped 2021.
In February 2021, the National Bureau of Statistics (NBS) announced that Africa’s biggest economy came out of its worst recession in more than 33 years, growing by a slight increase of 0.11 percent in the fourth quarter of 2020. The pandemic-induced recession began when the economy contracted by 6 percent and 3.6 percent in the second and third quarters of 2020.
The exit came as a surprise beating analysts’ expectations as well as projections from the International Monetary Fund (IMF) and the World Bank, all of which pointed towards an exit at the end of 2021.
Nigeria’s GDP grew marginally by 0.51 percent in the first quarter of 2021 and maintained the positive trajectory by growing 5.01 percent and 4.03 percent in Q2 and Q3, respectively.
Nigeria’s inflation rate slowed for the first time in almost two years in April 2021, after rising steadily since September 2019.
Nigeria’s failed border closure policy that kicked off in August 2019 as a strategy to boost local production yielded little gains, as inflation began rising steadily from September 2019.
Inflation inched down from 11.1 percent in July 2019 to 11.02 percent in August 2019, the lowest reading since January 2016, but rose to 11.24 percent in September 2019 and continued to rise till April 2021, when it hit 18.12 percent.
Since then, inflation has declined for eight months straight to 15.40 percent in November 2021.
According to the World Bank’s latest Nigeria Development Update report, inflation has pushed 8 million Nigerians into poverty between 2020 and 2021 as of November 2021. This is an increase from 7 million reported in June 2021.
According to the report, before inflation started rising steadily, which was in September 2019, there were 83 million poor Nigerians but the number has risen to 91 million as a result of the price shock.
The unemployment rate in Nigeria in the fourth quarter of 2020 hit 33.3 percent but it has been projected by Doyin Salami, chairman, Presidential Economic Advisory Council (PEAC), to hit 40 percent by the end of 2021.
The rising unemployment is producing devastating consequences, with deepening poverty, rising crime rate and an exodus of the skilled and unskilled workforce in the country.
When President Muhammadu Buhari announced the appointment of new service chiefs on January 26, 2021, Nigerians cheered as they hoped this would help improve the insecurity, but the wave of mass abductions targeting schoolchildren that began in December 2020 only escalated in the first half of 2021.
Over 1,000 students were kidnapped and many schools were shut, according to the United Nations. Many Nigerians were also abducted and huge ransoms were demanded.
The Armed Conflict Location and Event data showed that about 1,200 Nigerians were kidnapped in the first half of the year.
However, according to data from Nigeria Security Tracker (NST), the numbers were much larger. There were 2,943 abduction cases and 5,800 death cases due to insecurity between January and June 2021.
An estimated N10 billion was demanded by kidnappers ($19.96m) in the first six months of the year, according to a report by SB Morgen (SBM) Intelligence.
Nigeria’s public debt rose to a record N38 trillion in the third quarter of 2021, according to data published by the Debt Management Office (DMO).
The data, which include the total external and domestic debts of the Federal Government, 36 states and the Federal Capital Territory (FCT), show an increase of N2.54 trillion when compared with the corresponding figure of N35.4 trillion at the end of Q2, 2021.
The DMO explained that the increase was largely accounted for by the $4 billion Eurobonds issued by the government in September 2021.
Nigeria’s rising public debt combined with its rising spending needs and the difficulty in raising extra tax revenue put the country in a difficult fiscal policy trilemma. The country’s debt-servicing ratio also grew to 87 percent in 2021.
Nigeria’s Foreign Direct Investment (FDI) plunged to the lowest in more than a decade in 2021. FDI fell to $77 million in Q2, 2021, a 49.6 decline from $154.7 million in the first quarter of the year. The high-risk business environment continues to discourage foreign inflow into the economy.
According to a recent report by Rand Merchant Bank (RMD), Nigeria ranked the second most attractive investment destination in Africa seven years ago, but it has slipped behind several other countries and now ranks 14th position.
The naira has been devalued 8.13 percent to N412 per dollar from N381/$ in January 2021.
In the seventh month of the year, the CBN ended the sales of foreign exchange to Bureau De Change operators. The apex bank explained that the parallel market has become a conduit for illicit forex flow and graft; therefore, it will no longer process the application of BDC licences in the country.
The CBN began to channel weekly dollar sales through commercial banks to meet legitimate forex demands.
A day after the move, the naira plunged from 505 to 525 per dollar at the parallel market. Today, the naira is trading at a record-high between N565 and N570 at the black market.
The exchange rate has risen from an average of N306/$ in 2018 to N412/$ in 2021. As the naira weakens against the dollar, products become more expensive for Nigerians.
Foreign investors have remained on the sidelines of the Nigerian stock market. This trend began in 2020 when the pandemic struck and the CBN decided to halt the sales of FX to protect the naira.
This created dollar scarcity and foreign investors were unable to repatriate their capital. This uncertainty kept foreign investors at bay and they remained on the sidelines even in 2021.
In January 2021, the Nigerian stock market recorded just 20 percent of foreign investors’ participation while domestic investors’ participation stood at 79.5 percent. The same trend continued with October 2021 with 19.9 percent and 80.1 percent for foreign and domestic investors, respectively. The equities market has gained 5.27 percent year till date.
The Federal Government’s attempt to keep Nigerians hooked on ‘cheap’ petrol has cost Nigeria N1.03 trillion in 2021, according to data from the Nigerian National Petroleum Corporation (NNPC).
The Nigerian government continued to subsidise petrol, paying the difference between the cost of production and the cost charged to customers in order to make them more affordable.
This amount could have been allocated for the development of the health, education, and defense sectors, which would have increased the economic growth and living standards of Nigeria’s teeming population.
An analysis by the transparency campaign group Public Private Development Centre shows that it would cost N28 million to build primary healthcare centres and N17 million for a 3-classroom block. This means that N1.03 trillion can build 36,785 primary health centres or 60,588 blocks of classrooms needed across the country.