Nigeria, Africa’s most populous nation, is undergoing a troubling economic narrative that has taken an unexpected turn. Once celebrated as the continent’s economic powerhouse, it now teeters, with per capita income in a steep decline, productivity at historic lows, and poverty at record highs. The International Monetary Fund’s recent downgrade of Nigeria’s 2024 growth projection to 2.9% is emblematic of a broader economic unraveling. By October 2024, Nigeria’s GDP per capita fell to $877, a figure that underscores a tragic reality: the average Nigerian is poorer than they were two decades ago. This distressing trajectory demands urgent introspection and decisive action to salvage the country’s economic fortunes.
Nigeria’s economic struggles are a result of both systemic vulnerabilities and unyielding pressures. Insecurity plagues the oil-producing Niger Delta, where unrest has crippled the nation’s primary revenue stream. Flooding, exacerbated by poor infrastructure, killed 185 citizens and displaced over 200,000 across 28 states. These physical calamities, however, are symptoms of more profound structural weaknesses. The harsh reality of these figures is that Nigeria’s economy, long reliant on crude oil, has been left perilously exposed. Nigeria’s currency, the naira, has seen two severe devaluations in the past year, shedding more than 70% of its value against the dollar, which has accelerated inflation to devastating highs. This was a devaluation Nigerians could ill afford. A nation’s currency, as economic historian John Maynard Keynes once observed, reflects the “face of its economy.” The naira’s precipitous fall is a sobering reminder of an economy in freefall, one that has failed to diversify and harness the energy of its own people.
Nigeria’s economic performance appears even more dismal when held up to the progress of its neighbors. Ghana, Angola, and Côte d’Ivoire have shown resilience, focusing on boosting local consumption and investment, despite challenges. Nigeria’s drop in economic output per person to a 20-year low is a particularly bitter pill to swallow, considering its potential. During the tenure of the Peoples Democratic Party (PDP), Nigeria enjoyed consistent GDP growth, with per capita income rising from $494 in 1999 to over $3,000 in 2014. But from this peak, the figure has plummeted. The current administration has faced an unprecedented economic decline, which some critics view as a repudiation of the policies that once carried Nigeria to prosperity. Nigeria, which held the title of Africa’s largest economy in 2022, has since tumbled to fourth place, a sharp reminder of lost ground and diminishing influence.
For a clearer analogy, imagine a once-vibrant river that nourished an entire region but has now reduced to a trickle. This is the Nigerian economy today—a trickle of growth that no longer sustains its vast population, which has now outstripped the capacity of the nation’s shrinking resources. Where rivers dry up, people are left thirsty; likewise, as Nigeria’s economy shrinks, millions more fall into poverty. According to the World Bank, 25 million Nigerians have been driven into poverty within six months—a staggering increase in human suffering. The government cannot ignore this crisis. As Adam Smith famously stated, “No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable.” Smith’s words echo the gravity of Nigeria’s predicament: the prosperity of a nation depends on the prosperity of its people.
The descent of Nigeria’s economy poses serious questions about leadership. Nigeria’s government has made attempts at fiscal reforms, hoping to inject life into a moribund economy, but these reforms have yet to yield substantial benefits. Structural inefficiencies persist, with low productivity among Nigeria’s youth—a segment that should be its economic backbone. Nigeria’s productivity issue reveals an untapped potential, given the country’s youthful population, known for its entrepreneurial spirit and work ethic. Yet, this potential remains unrealized, partly due to a lack of opportunity and infrastructure. It is as though the nation’s young people are runners ready to take off but held back by ankle weights. This lack of opportunity is compounded by insecurity, which has uprooted millions from their homes, particularly those in farming communities that form the bedrock of Nigeria’s food supply.
However, addressing these challenges demands more than just economic tinkering. Nigeria needs a transformative shift in how it views and organizes its economy. The global experience shows that countries can reverse economic decline through visionary leadership and pragmatic reform. Take the example of Vietnam, which, after years of war and poverty, adopted economic reforms in the 1980s that focused on education, manufacturing, and agriculture. Today, it is a rising global exporter and boasts a steadily growing economy. Nigeria too must find its pivot point, but that requires a government willing to address systemic issues.
To realize its potential, Nigeria’s government needs to shift focus from oil revenue as a primary economic driver. Heavy reliance on oil has rendered the economy susceptible to shocks, from global price fluctuations to internal disruptions like militancy in the Niger Delta. The nation must instead prioritize sectors that can harness the productivity of its young, growing population. Agriculture, technology, and small and medium-sized enterprises hold promise, but these require significant investment, both in infrastructure and in people. Nigeria has the resources to become a breadbasket for Africa, yet its agricultural sector remains neglected. Investment in this sector could create jobs, ensure food security, and generate much-needed foreign exchange revenue.
Additionally, Nigerian policymakers must take bolder steps to build a robust financial and industrial base. It’s time to imagine an economy where foreign investors do not look solely at oil rigs but consider Nigeria’s vast agricultural fields, manufacturing hubs, and tech industry. In Japan’s post-war years, the government emphasized industrial production and foreign trade to drive its recovery. Similarly, Nigeria’s future lies in producing what the world needs, not just exporting what it extracts. This would require long-term investment in education and skill development. The average Nigerian must be equipped to be more than a bystander in the economy; they should be empowered to contribute meaningfully.
Further, transparency and accountability are essential to economic revival. Nigeria’s state institutions, tasked with overseeing everything from oil revenues to infrastructure spending, have not operated with the degree of transparency required to inspire investor confidence. A shadow of corruption lingers over many dealings, dissuading both foreign investors and the domestic private sector from making long-term commitments. Nigeria’s leaders must heed the wisdom of Paul Krugman, who reminds us that, “Productivity isn’t everything, but in the long run, it is almost everything.” Nigeria’s productivity crisis can only be solved if it strengthens institutions, improves governance, and builds confidence in the system.
Yet, despite the bleak outlook, it’s crucial to recognize that Nigeria possesses immense potential. Its people are its most valuable asset, and Nigerians are renowned for their resilience, innovation, and adaptability. Recent tech booms in Lagos have shown the world that Nigerian creativity is a force to be reckoned with. Entrepreneurs in Nigeria’s informal sector continue to find ways to create value, despite systemic barriers. If given the right support, Nigeria’s enterprising spirit can play a central role in the country’s economic renaissance. For this potential to be realized, however, the government must work in tandem with the private sector, creating policies that encourage investment, innovation, and productivity.
The recent fiscal reforms show that the government recognizes the need for change. Policies aimed at reducing subsidy dependency, broadening the tax base, and rationalizing public spending are steps in the right direction. However, these policies need follow-through and adaptation to Nigeria’s unique challenges. Insecurity must be addressed directly, with the government prioritizing both dialogue and strategic investment in affected regions. Roads, bridges, and flood defenses must be constructed to protect citizens and infrastructure from recurring disasters. Moreover, investment in digital infrastructure will be crucial to enable young Nigerians to access global markets and participate in the digital economy.
The IMF’s downgraded projections, while disheartening, serve as a call to action. Nigeria’s situation today mirrors that of a sleeping giant—a nation endowed with vast human and natural resources but stymied by governance and structural inertia. The country’s leaders must realize that economic reform is not a short-term exercise. It requires vision, commitment, and a willingness to make tough choices for the long-term benefit of the people. Nigeria’s leaders must rally the nation, reminding citizens that, while difficult times are upon them, the course of Nigeria’s economic future can still be changed with bold, strategic, and compassionate leadership.
Mr Aliyu, writes from 43 Ashiru Road, Unguwan Dosa New Extension, Kaduna.
