Policy Debate Series - The Agora by YouPaD: Nigeria’s Macroeconomic Crisis: Interrogating Abuja’s Policy Response and Mechanising Sustained Economic Growth & Diversification Pathways

Despite having the largest economy in Africa, Nigeria’s macroeconomic performance since its nationhood has been adjudged by experts as “simply below average”, especially when such performance is compared with that of its former economic comparators such as China, Malaysia, South Korea etc. These countries have structurally transformed with thriving manufacturing and business services’ sectors. They boast of a twenty-first century industrial hard infrastructure and efficient social services, as well as have a high per capita income and sophisticated export basket.

As of 2020, the triumvirate’s per capita income is quadruple that of Nigeria, and while unemployment rate in Nigeria hovers around 33%, it is less than 5% in each of the three countries. In addition, extreme poverty is less than 10% across the trio, on the flip, around half of Nigerians live in extreme poverty.

The factors responsible for Nigeria’s under par macroeconomic performance in comparison with the trio include primary export dependence (Dutch Disease), poor leadership, and the fact that Nigeria has not been able to industrialize, structurally transform & diversify its economy despite all the industrial strategies it has experimented with. Fall in oil prices had plunged Nigeria into 2 successive economic recessions within a 5-year period- in 2016 (recession 2.0) and 2020 (recession 3.0). As such, Nigeria continues to grapple with gross fiscal deficit which has necessitated severe budgetary cuts, burgeoning and unsustainable debt profile; reduction in government revenues and foreign exchange earnings; and depreciation of its currency which has lost 100% of its value between 2015 & 2021.

While the global COVID-19 economic implications also contributed to sharpening this macroeconomic crisis, the evolving global energy dynamics earlier suggested that recession 3.0 and other subsequent episodes (if a cogent effort is not taken) are imminent for Nigeria, as a rentier state.

It was against this backdrop, that on 19 August 2021, the Young Professionals in Policy and Development (YouPaD) with support from Friedrich-Ebert-Stiftung (FES) Nigeria, organized a session on Nigeria’s Macroeconomic Crisis, as part of its Policy Discussion Series (The Agora by YouPaD), and in line with the FES Abuja Policy Debate series. The event brought together 40 participants, mostly young professionals, drawn from the development space, the government, media and private sector who examined the country’s macroeconomic situation, the causal effects and assessed the present administration’s policy responses.

Experts also examined the policy measures with which the government has attempted to respond to the crisis including the Economic Recovery and Growth Plan (ERGP); border closure regime to address smuggling and boost local production of some commodities; the Anchor Borrowers Programme; Social investment schemes etc. There was a consensus among participants that the urgency of Nigeria’s macroeconomic moment is based on the context of the country’s existing, new and complicated realities.