Ten Worrying Statistics about the Nigerian Economy - STEARS BUSINESS
BY Michael Famoroti
It’s sometimes hard to tell how things are going in Nigeria, even when you live here. People’s experiences differ, with fates quickly rising and falling, sometimes with which government is in power. Amid this, Stears analysed the potential state of the economy in 2019, and the picture was not pretty. We chose to express this picture in numbers because numbers are neutral. Statistics may be open for interpretation, but once you accept their credibility, you cannot argue with the numbers presented. These numbers cut across a range of issues in the Nigerian economy, but all of them are fundamentally important to Nigeria’s future.
Here are the 10 numbers that make us worried about the Nigerian economy in 2019.
1. 8.2 million - National Bureau of Statistics
The number of youths in Nigeria that became unemployed between the third quarter of 2015 and the third quarter of 2018.
In Q3’15, Nigeria had 5.0 million unemployed youth. Three years later, Nigeria had 13.2 million unemployed youth, and they accounted for 30% of the youth labour force. Nigeria’s youth population has often been considered a selling point, but Nigeria’s long-running inability to create viable jobs for its growing labour force means the country is closer to a demographic disaster.
The rise in militancy across the country—Boko Haram in the North East, Biafran secessionists in the South East, and bandits in the South-South—has been stoked by the idleness and frustration of the Nigerian youth. Until the Nigerian economy can absorb millions of aspiring young workers, these social ills will only get worse.
Here is a full Stears take on Nigeria's youth in crisis.
2. 66% - Budget Office of the Federation
How much of its earnings the Federal Government (FG) spent on servicing in its debt (paying interest on funds borrowed) in the first half of 2018.
The FG has gradually spent more of its income repaying debt, from 22% in 2012 to 68% in 2017. Meanwhile, in 2016, the Debt Management Office set a threshold of 28% for this number, above which Nigeria’s debt can be considered unsustainable. After we breached that number, no new threshold was set.
Nigeria doesn’t actually have that much debt compared to other countries. Its Debt-GDP ratio is about 19%, compared to 53% in South Africa and 72% in Ghana. However, our inability to generate revenues means that the Government spends a lot of the little it earns in oil. We only need to look at countries like Venezuela, Greece, and Zimbabwe to see how dangerous a public debt crisis can be.
Here is a full Stears take on how Nigeria is going broke.
3. 1st - World Poverty Clock, The Brookings Institute
Nigeria’s rank in countries with the highest number of poor people.
According to findings compiled by The Brookings Institute, Nigeria overtook India to become the country with the highest number of poor people: 87 million. This rank is a function of Nigeria’s swelling population, weak economic growth, and rising inequality. Most worryingly, while rivals like India are improving—India’s economy grew by nearly 7% in 2017—Nigeria is only getting worse.
Here is a full Stears take on poverty in Nigeria.
4. 5% - Budget office, BudgIT, CBN
Nigeria’s Tax-GDP ratio, making it one of the worst 10 tax collectors in the world.
Despite being the largest economy in Africa, the Nigerian Government generates less taxes than Angola (12.5%), Kenya (16.3%), and South Africa (27.3%). The Nigerian government’s inability to collect taxes is both a cause and effect of many of the economic challenges the nation faces.
On the one hand, the availability of easy-to-collect oil revenues spoiled the government for over 40 years and discouraged it from improving its tax-collecting capacity. On the other hand, the fall in oil earnings has put a spotlight on the government’s weak fiscal position, which in turn prevents it from implementing the necessary policies for development.
Realistically, Nigeria will struggle to develop without significant public spending on infrastructure and social services, but this will remain a pipedream as long as Nigerians refuse to pay taxes to the government. Or the government decides to get really serious about taxing Nigerians, especially the rich.
Here is a full Stears take on Nigeria’s revenue potential.
5. 1987 - National Bureau of Statistics
The last year that economic growth in the agriculture sector was as low as it was in the second quarter of 2018 (1.2%).
Agriculture had previously been the silver lining in Nigeria’s cloudy economy, but the impact of heightened farmer-herdsmen conflict in the country has taken its toll on food production as the sector grew by just 1.2% year-on-year in Q2’18. Continued insecurity in the Middle Belt and consequent damage to agriculture could cripple the nation’s economy and lead to food scarcity.
Here is a full Stears take on the economics of the Herdsmen Crisis.
6. Every 4 seconds - United Nations
A baby is born in Nigeria.
With a population now estimated over 200 million and a growth rate above 2.5% (7th in the world), Nigeria is set to become the 3rd most populous country in the world by 2050. However, those 411 million people would live on just 920,000 square meters of landmass and give Nigeria a population density of 444 people per km2, compared to 60 per km2 in South Africa, 145 per km2 in China, and 225 per km2 in Ghana. The boom in Nigeria’s population is also concentrated in the poorer regions of the country, raising the possibility of a violent scuffle for increasingly scarce resources, and even more urban migration to congested cities such as Lagos.
Here is a full Stears take on Nigeria’s population.
Nigerian children were out of school in 2015, up from the last count of 10.5 million children in 2010.
This means Nigeria has the highest number of out of school children in the world. According to UNICEF data, nearly half of out-of-school children in West Africa are Nigerian. These statistics explain why during his visit to Nigeria in early-2018, Bill Gates warned the Nigerian government to invest more in its people. The Federal Government allocated ₦620 billion to the Ministry of Education and Universal Basic Education (UBE), representing 0.5% of its GDP, compared to nearly 6% in South Africa.
The growing number of uneducated people is a significant economic burden on the country but also poses a notable social risk due to the rise in uneducated voters. Worse still, the problem is unevenly distributed across genders and regions as the majority of Nigeria’s out-of-school children are female and in the Northern part of the country.
Here is a full Stears take on Nigeria’s Early Childhood Education.
8. 6% - Central Bank of Nigeria
The annual fall in the value of the naira versus the dollar between 2000 and 2017.
Data from the Central Bank of Nigeria shows that the interbank exchange rate was ₦105/$1 in 2000, ₦151/$1 in 2010, and ₦306/$1 in 2017. This has happened because Nigeria’s annual inflation rate during that period has been 12%, compared to 2% in the United States (U.S), meaning that the naira loses value significantly faster than the dollar.
Another notable aspect of the exchange rate over time is that it actually improved between 2004 and 2008, from ₦134/$1 to ₦119/$1, before crashing during the 2008 financial crisis. Finally, the most significant changes in the currency came after the 2014 oil price crash, with the exchange rate moving from ₦165/$1 to ₦307/$1. Just looking at the historical trend, it is a fair bet to expect the naira to lose even more value in the next 18 months.
Here is a full Stears take on Nigeria’s exchange rate fallacy.
9. 148th - Transparency International
Nigeria’s corruption perception ranking out of 180 countries.
Despite purported attempts to fight corruption, Nigeria’s score on the Transparency International assessment in 2017 was the same as it was in 2012 and the country’s rank has actually fallen from 121st in 2008 to 148th today. Corruption is indeed fighting back and is winning.
Here is a full Stears take on Corruption in Nigeria.
10. 99% National Bureau of Statistics
The contribution of oil and gas products to Nigeria’s export in goods.
Nigeria remains heavily reliant on oil & gas products for its dollar earnings, and despite efforts to diversify towards agriculture produce, the country basically still only exports oil & gas. This explains why Nigeria’s dollar earnings are so dependent on oil prices— because that is basically the only thing we sell to other countries. Thankfully, Nigeria has a few other industries that may one day generate even more foreign exchange earnings for Nigeria; particularly the entertainment industry, as Hollywood and entertainment are some of the largest export industries in the United States.
Here is a full Stears take on Nigeria’s export potential.