Nigerian President Muhammadu Buhari has a noble goal to lift 100 million Nigerians out of poverty.
“To this end I have approved an increase in scope of our Social Investment Programme: Doubling of @npower_ng beneficiaries to 1 million, 1 million new @geep_ng beneficiaries and 5 million new pupils for @NHGSFP,” Buhari said in his official twitter handle today.
The problem however for Buhari and Nigeria is that the goal is largely inconsistent with his dismal economic record over the past 5 years.
The npower and other schemes Buhari mentioned in his tweet which are largely social welfare programs to assist the poor, are unlikely to lift growth near the double digit rates needed to truly reduce poverty rates in the country.
Growth in Africa’s largest economy has averaged less than 2 percent since 2015 and it will have twice slipped into negative growth in the 5-year time period (2015 – 2020), including -1.6 percent in 2016 and a forecast of -3.8 percent this year.
The sluggish growth has meant a higher level of joblessness as more Nigerians become old enough to enter the labor force.
Unemployment surged to the highest in 10 years in the second quarter (Q2) of 2020 as the coronavirus pandemic made it even tougher for Nigeria’s weak output growth to keep up with its fast-expanding population.
The jobless rate rose to 27.1 percent, according to a National Bureau of Statistics (NBS) report published in August.
That compares with 23.1 percent in the third quarter of 2018, which was the last period the agency released labor-force statistics.
Nigeria’s economy will not eclipse the highs it attained in 2015 until the year 2022, a 7-year gap that signals how good intentioned but often bad policies (like indefinite border closures) under President Buhari have often left Nigerians poorer.
The International Monetary Funds (IMF) most recent World Economic Outlook updated in October 2020 forecasts that Nigeria’s gross domestic product (GDP) will not return to its pre Buhari highs until 2022.
Total size of the Nigerian economy which was equivalent to $492.43 billion in 2015, hit a low of $375.7 billion in 2017 as the country was just coming out of recession and is forecast to hit $531 billion only by 2022.
The 3 currency devaluations that have rocked the Naira since 2015 and a low growth environment are the major culprits.
Prices of staples are also rising fast, giving a double whammy of higher prices and low growth or Stagflation.
Inflation leaped from 13.7 percent in September to 14.2 percent in October, marking the highest reading since February 2018, the NBS said last month.
A foreign exchange (FX) scarcity that has hit businesses small and large is also a source of sluggish growth and low investor confidence. Analysts say the Central Bank of Nigeria’s (CBN) decision to pursue dollar demand management and heterodox monetary policy following the collapse of oil prices in 2015, worsened the recession that followed.
“We are seeing backlogs of FX demand building up on the NAFEX window as the Banks queue up to get FX and the CBN prioritizes access,” said Samira Mensah Director, Financial Institutions at Ratings agency Standard and Poor’s (S&P) in a recent webinar monitored by MoneyCentral.
The widening gap between the official and black market rates for the Naira are a signal of the failing heterodox CBN policy with its attendant negative effects of the Nigerian economy.
The naira traded at N392.66 per dollar in the Investor and Exporters (I&E) market on Friday according to FMDQ data. This compares with a black-market rate of about N470 per dollar.
One bright spot has however emerged for Nigerians though amid the gloom of Buhari’s dismal economic record.
The country is currently undergoing a “crypto boom”, necessitating a move by the Securities and Exchange Commission (SEC) to issue new regulatory guidelines for the asset class.
According to data from Usefultulips, a Bitcoin (BTC) analytics data provider, Nigeria led Sub-Saharan Africa in terms of peer-to-peer (P2P) Bitcoin trading volumes on two major bitcoin trading platforms, Localbitcoin and Paxful.
For the 12 months up to September 2020, Nigeria accounted for a transaction value of $342 million, with the next closest SSA country, Kenya, reporting volumes five times less, at $70 million.