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Tuesday, August 9, 2022

Major events that shaped Nigerian economy in 2021

The economic year started with the confirmation that Nigeria had exited recession amid worries about inflation.

The Nigerian economy slipped into another recession in 2020, reversing three years of recovery that followed the 2016 recession.

The 2020 recession was necessitated largely by the containment measures put in place against COVID-19, which affected aviation, tourism, hospitality, restaurants, manufacturing, and trade, thus disrupting the global economy. The economy contracted in the third quarter of the year by 3.6 per cent, having contracted 6.1 per cent in the second quarter.

By the close of the year, the nation had exited recession again. The confirmation of the end of recession, and other important developments, shaped the Nigerian economy in 2021.

GDP and Recession

In February 2021, the nation’s statistics bureau said the economy had exited recession in the fourth quarter of 2020, recording its first growth in three quarters as a coronavirus-linked lockdown was lifted across the country.

The report said the Gross Domestic Product (GDP) grew 0.11 per cent in the three months between October and December from a year earlier. The NBS said that although the growth was weak, it reflected the gradual return of economic activities following the easing of restricted movements and limited local and international commercial activities in the preceding quarters.

In November, Simon Harry, the Statistician-General of the Federation and Head of the National Bureau of Statistics, declared that the nation’s economy grew by 4.03 per cent in the third quarter of 2021.

Mr Harry said the negative GDP figures recorded in 2020 as a result of the COVID-19 pandemic had serious base effects on the GDP figures for the second and third quarters of 2021. He added that the improvement seen in the output growth over the last four quarters depicted a steady progress made in stemming the Covid-19 pandemic and the associated negative impact on the economy.


The nation began the new year amid worries over its inflation figures and its ripple effects on the standard of living of the average Nigerian.

In recent years, Nigeria has seen a persistent surge in inflation rates, reaching the highest levels in four years, amid skyrocketed food prices and poor purchasing power.

In March 2021, inflation rose to 18.17% from 17.33% recorded in February 2021. This represented 0.82% points higher than the February figures, according to the Consumer Price Index report released by the National Bureau of Statistics (NBS).

In April, however, the bureau said the inflation rate stood at 18.12 per cent.

In the last eight months, however, the inflation rate has since eased, as economic activities resumed after prolonged periods of restriction and lockdowns necessitated by the Covid-19 outbreak.

In November, Nigeria’s inflation rate fell for the eighth consecutive month to 15.40 per cent from 15.99 per cent recorded a month prior. The statistics office said the prices of goods and services, measured by the Consumer Price Index, increased by 15.40 per cent (year-on-year) in November 2021. The figure was 0.51 per cent points higher than the rate recorded in November 2020 (14.89) per cent.

“Increases were recorded in all COICOP divisions that yielded the Headline index,” the report said.

Skyrocketed prices; Food Blockade

Despite a fall in the inflation figures in recent months, the nation has continued to record increase in food prices. According to the NBS, the rise in the food index was caused by increases in prices of bread and cereals, fish, food product, potatoes, yam and other tubers, oil and fats, milk, cheese and eggs and coffee, tea and cocoa.

The food sub-index increased by 1.07 per cent in November 2021, up by 0.16 per cent points from 0.91 per cent recorded in October 2021.

In March, prices of foodstuff and beef rose exponentially in Lagos, Ibadan, Benin, Uyo, and other parts of Southern Nigeria against the backdrop of a food blockade announced by the Amalgamated Union of Foodstuff and Cattle Dealers of Nigeria (AUFCDN).

The union said it was demanding the protection of its members and payment of about N475 billion compensation for lives and property lost in the wake of the crises recorded across Nigeria earlier in the year.

PREMIUM TIMES’ investigation at foodstuff and commodity markets revealed at the time that the action of the union drove up prices of beef, foodstuff and vegetables, especially in states in the southern part of the country and the Federal Capital Territory, Abuja.


In March, the nation’s statistics bureau reported that Nigeria’s unemployment rate rose to 33.3 per cent, translating to some 23.2 million people, the highest in at least 13 years and the second-highest rate in the world.

The figure jumped from 27.1 per cent recorded in the second quarter amidst Nigeria’s lingering economic crisis made worse by the coronavirus pandemic.

Unemployment has been a major concern among Nigerians, especially its teeming population of young people. Although job creation was a major element of the Buhari-Osinbajo campaign mantra in 2015, the government has been able to do little to keep the concerns at bay.

Between 2015 and 2021, Nigeria’s unemployment rate has more than tripled.

Earlier in the year, the unemployment issues reared its ugly head again when details emerged of the killing of, Iniubong Umoren, a 26-year-old graduate of University of Uyo (UNIUYO) who was lured with a fake job interview on April 29. She was killed and buried in a shallow grave.

Ms Umoren was confirmed dead on April 30 and buried at her hometown, Nung Ita, Ikot Essien in Oruk Anam Local Government Area of Akwa Ibom State, with many raising concerns over how the state of unemployment exposes young people to danger.


In July, details emerged that Nigeria’s budget deficit would rise to N5.62 trillion in 2022, up from N5.60 trillion in 2021, according to a declaration made by the Minister of Finance, Budget and National Planning, Zainab Ahmed, in Abuja.

Mrs Ahmed explained that the budget deficit represents 3.05 per cent of the estimated GDP, which is slightly above the 3 per cent threshold that is spelt out in the Fiscal Responsibility Act. She then explained how the FRA empowers the president to exceed the threshold if in his opinion, the nation faces national security threats.

“And it is our opinion, and FEC agreed that we can exceed it,” she said.

Mr Ahmed said the deficit is going to be financed by new foreign and domestic borrowing in the sum of N4.89 trillion, privatization proceeds of N90.73 billion, and drawdowns from existing project titles of N635 billion.

Nigeria’s debt and deficit financing has been a source of worry for Nigerian policy experts and international ratings agencies in recent years.

The nation’s debt profile has risen considerably since Mr Buhari took over power, as budgetary proposals have been designed considerably around debts.

According to the Debt Management Office (DMO), Nigeria’s debt as at December 31, 2020 was N32.915 Trillion. The figures include the Debt Stock of the Federal and State Governments, as well as, the Federal Capital Territory.

In November, reports said the nation’s debt may hit hit N44.5trn amid approval of sundry debt requests sent by the executive to the national assembly.


By far the most significant debate on taxation in Nigeria in 2021 revolved round the Value Added Tax.

The Federal High Court in Port Harcourt, in a landmark judgment, held that it was unconstitutional for the Federfal Inland Revenue Service (FIRS) to collect VAT and personal income tax in Rivers State.

Convinced by the court order, both Governor Wike of Rivers State and Governor Babajide Sanwo-Olu of Lagos State, later signed into law bills authorising the state governments to collect VAT.

But the FIRS filed an appeal against the Federal High Court judgement.

Subsequently, the Court of Appeal in September ordered the Rivers State Government and the Federal Inland Revenue Service (FIRS) to maintain status quo on the issue of Value Added Tax (VAT) collection.

Not deterred by the development, the Rivers State government requested the Supreme Court to set aside the order of Court of Appeal directing parties to maintain the status quo.

Poverty Alleviation

In June, President Muhammadu Buhari claimed that his government had lifted 10.5 million Nigerians out of poverty in the last two years.

In his speech delivered to mark the nation’s Democracy Day on June 12, the president said those the government lifted out of poverty include farmers, artisans, market women, and small-scale traders.

“Our overall economic target of lifting 100 million Nigerians out of poverty in 10 years is our goal notwithstanding COVID-19,” Mr Buhari said.

“In the last two years we lifted 10.5 million people out of poverty – farmers, small-scale traders, artisans, market women and the like.”

But a PREMIUM TIMES’ fact-check found that despite the Nigerian government’s claims of lifting 10.5 million out of poverty, the World Bank said in January that the macro-micro simulations showed that more than 10 million Nigerians could be pushed into poverty by the economic effects of the COVID-19 crisis alone.

The report also asserted that there aeconomyre no verifiable data from the nation’s statistics bureau to support Mr Buhari’s assertions. Rather, the report said, a World Bank report said that Nigeria’s poverty rate within the period, which would have remained “virtually unchanged” had the Covid-19 crisis not occurred, would jump upwards due to the effect of the pandemic.

Additionally, the World Poverty Clock also showed a rise in the number of Nigerians that slipped into extreme poverty within the period.

 Source: Premiumtimes.ng

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