Nigeria has witnessed a mixture of stability and a declining economy that affected all facets of life over the last one and a half decades, StatiSense data has revealed.
The data, which originated from the National Bureau of Statistics (NBS), shows that Nigeria’s economy has faced fluctuations over the period, marked by two recessions, periods of slow recovery, and modest growth.
The data imply that governance, policy implementation, and economic management influenced the country’s economic trajectory.
A comparison of the economic performance over the past 15 years reveals a striking decline in growth rates. Between 2010 and 2014, Nigeria enjoyed relatively strong economic growth, with GDP expansion averaging over 6% annually.
However, from 2015 onward, the country’s economic fortunes took a downward turn, and it struggled to regain the momentum of earlier years.
This has raised concerns about whether economic policies and governance strategies over the past decade were effective in stabilizing and growing the economy.
Recessions and the Struggle for Recovery
The economic decline became evident in 2015 when GDP growth fell to 2.79%, a sharp contrast to the robust figures of previous years. In 2016, Nigeria entered its first economic recession in over two decades, with GDP contracting by -1.58%.
While the recession was primarily driven by plummeting global oil prices, the government’s failure to diversify the economy and build buffers against external shocks played a significant role in deepening the crisis.
Following the recession, Nigeria struggled with a slow recovery. Economic activities improved slightly, recording 1.91% growth in 2018 and 2.27% in 2019.
However, the figures remained far below pre-2015 levels when GDP growth consistently exceeded 5%.
The 2020 COVID-19 Pandemic Shock
The data showed that just as the economy was regaining stability, Nigeria was hit by another recession in 2020, which was attributed to the COVID-19 pandemic.
Lockdowns, reduced business activity, and the collapse in global oil demand led to a GDP contraction of -1.92%.
While COVID-19 was a global crisis, Nigeria’s economic vulnerability was fueled by pre-existing weaknesses, including over-reliance on oil and lack of adequate economic reserves.
The government implemented stimulus measures, including intervention funds for businesses, expansionary monetary policies, and fiscal incentives.
While these efforts contributed to a rebound in 2021 with GDP growth reaching 3.40%, concerns about how efficiently these stimulus funds were managed increased.
The lack of transparency in fund allocation and the limited impact on small businesses raise concerns about the effectiveness of those measures.
Fuel Subsidy Removal and Economic Recovery
A key factor influencing Nigeria’s recent economic performance is the removal of the petroleum subsidy, a long-standing policy that had kept fuel prices artificially low but placed a decades-long burden on government finances.
The subsidy removal, implemented in mid-2023, was aimed at reducing fiscal pressure, redirecting funds to infrastructure and social programs, and attracting foreign investment.
While the move has contributed to economic stabilization by improving government revenue and reducing budget deficits, it has also led to immediate hardships, including higher transportation and living costs for Nigerians.
The report acknowledged that inflation surged in the months following the removal, eroding household purchasing power and increasing the cost of doing business.
However, government officials argue that the subsidy removal has created a more sustainable fiscal environment, allowing for more targeted economic interventions.
A Promising 2025?
In 2024, it noted, Nigeria’s economy appears to be on an upward trajectory, with GDP growth at 3.48%, the highest in three years.
The improved performance is attributed to increased oil production, reforms in the foreign exchange market, and efforts to diversify the economy.
Despite these gains, critical challenges persist, including inflationary pressures, high debt servicing costs, and insecurity.
The country has increasingly relied on borrowing to fund its budget, leading to high debt servicing costs that consume a significant portion of national revenue.
Despite a modest recovery, Nigeria’s economy still lags behind its pre-2015 performance. There is a heavy dependence on oil revenue, making it vulnerable to global price fluctuations.
Structural issues such as poor infrastructure, policy inconsistencies, and insecurity hinder economic expansion.
The Central Bank of Nigeria (CBN) projected a stable economy with declining inflation in 2025.
