In the last two decades, Nigeria has wavered between the labels of low-income and middle-income countries. In the better part of the last two decades, Nigeria was a middle-income country. But it has recently slipped into low-income status.
The reason for the lack of economic performance or status is not far-fetched. The economy has remained over-dependent on natural resources – oil exports for revenue and subsistence farming for employment. No adequate attention is given to industrialization and advancement in technology.
Nigeria’s economy showed the prospects of a rising country in the last one and half decades, according to various reports, including the African Development Bank Group Country Report (2013), which at the time said that Nigeria’s GDP grew at an average rate of 7.01 percent. In comparison to the rest of the world, Nigeria outperformed the emerging markets and developing economies, which grew by 5.75 percent, Sub-Saharan Africa by 5.05 percent, and the global economy by 3.6 percent.
However, the country’s economic growth was and is still driven by crude oil export. Other sectors played and still play a minimal role in that regard. The growth hardly signified sustainable progress. Once the price of oil dwindled in the global market, Nigeria’s economy is affected. We all know that it is crude oil prices that took us into recession in 2016 and 2019/2020, and it was the same crude oil that took us out of it.
Although official government statistics show that we have recovered from recession, ironically, with the supposed growth, the mass of Nigerian citizens are poorer and inequality intensified. The economic growth did not trickle down and it will hardly ever do, based on the existing state of the country’s affairs and the transition in the global energy market.
More succinctly, Nigeria’s economy depicts a modest ‘growth without development. Economic growth has failed to generate or even enable the structural transformation essential for the overall development of Nigerian society.
A cursory look at Nigeria’s average economic growth trend, measured by the performance of the Gross Domestic Product (GDP), has been generally positive over the last two decades. This is good compared to growth conditions in most economies around the world. However, it remains a major worry that the economy is still structurally defective as it is too dependent on the oil and gas sector, creating serious vulnerability risks. The lack of political will to reform the oil and gas sector remains a major shortcoming of governance over the past decades.
Hence, one won’t be wrong to say that the Nigerian economy remains tied to the life-support of oil, peasant agriculture, and largely informal services sector, with income inequality, poverty, and unemployment remain major defining features of the economy.
That is not to say the country hasn’t made any significant progress since she gained independence. Nigeria has indeed experienced phenomenal transformation in the telecommunications sector, a transformation that stands out as the most successful reform story in Nigeria. Many sectors have leveraged the transformation in telecoms to make significant progress through the use of ICT, especially in the services sector.
The financial services sector has also witnessed significant transformation (and still does) by leveraging technology to enhance efficient service delivery. The sophistication of the industry can equate with its equivalents even in advanced economies. However, the financial intermediation role of the banking system is still unsatisfactory. It has weak connections with many other sectors of the economy. This has inhibited the effect of the sector on the economy from a systemic standpoint.
The quality of the business environment remains a source of concern to private sector players, especially in the real sector. Weak infrastructure, policy environment, and institutions had adverse effects on the efficiency, productivity, and competitiveness of many enterprises in the economy. These conditions pose a major risk to job creation and economic inclusion across sectors.