Yearender: Despite challenges, Nigeria expects striding on path of growth in 2021
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E-mail Xinhua, December 31, 2020
by Olatunji Saliu and Bosun Awoniyi
ABUJA, Dec. 31 (Xinhua) -- The outgoing year 2020 has been a rollercoaster of bumpy rides in Nigeria, with an economic downturn largely impacted by the COVID-19 pandemic, security challenges, and a series of other events.
Nigerian president Muhammadu Buhari described 2020 as "a very challenging year", citing the outbreak of the COVID-19 pandemic and its negative impact on the economy, and almost every aspect of national life.
Buhari had pledged earlier in the year to continue laying foundations for taking 100 million Nigerians out of poverty over the next 10 years, creating new opportunities in key sectors to address the challenges of poverty among citizens of the West African country.
In 2016, the biggest oil producer in Africa fell into recession, the first time in over two decades. Since emerging in 2017, it has been seeking ways to fully recover from the slowdown.
"The economic growth rate was still not fast enough to meet our national ambition of collective prosperity," Buhari said in November.
IMPACT OF COVID-19 ON NIGERIAN ECONOMY
Official data released on Nov. 21 showed that Nigeria's economy slipped into recession for the second time in four years as oil prices plunged in the midst of the COVID-19 pandemic, although this time, with a forecast of a quick recovery by experts.
The country's gross domestic product (GDP) contracted by 3.62 percent year-on-year in real terms in the third quarter of 2020, the National Bureau of Statistics (NBS) reported, attributing the contraction to slow oil production and the COVID-19 pandemic.
"Cumulative GDP for the first 9 months of 2020, therefore, stood at -2.48 percent," the NBS said.
The economy shrank by 6.1 percent in Q2, indicating that two consecutive quarters of negative growth have been recorded in 2020.
"From an economic perspective, 2020 has been a very bad year ... the worst in recent history," said Muda Yusuf, director-general of the Lagos Chamber of Commerce and Industry (LCCI).
Yusuf said the recession was not shocking, as the country had been faced with the double jeopardy of spiraling inflation and a stumbling economy.
Nigeria's inflation rate rose to 14.23 percent in October, the highest in 10 months. "This condition in economic parlance is characterized as stagflation," he noted.
In Q3, 2020, the oil sector witnessed a sharp contraction of 20.38 percent relative to the rate recorded in the corresponding quarter of 2019, contributing 8.73 percent to total real GDP, down from 9.77 percent and 8.93 percent respectively recorded in the corresponding period of 2019 and the preceding quarter in 2020, said NBS.
The impact of the COVID-19 pandemic on the lives and livelihoods of Nigerians has continued to be a matter of great concern. Despite the hard struggle, however, citizens see a glimmer of light at the end of the tunnel.
Nigerians remain optimistic that the proactive initiatives undertaken since the outbreak of the pandemic, have been effective in containing the spread of the virus and will enable the nation to emerge gradually from the negative effects of the pandemic, just as the world contends with the "new normal" and continues to navigate through the ruinous nature of COVID-19.
NIGERIA'S SECURITY CHALLENGES AMID COVID-19 FIGHT
Predating the COVID-19 pandemic in Nigeria, the most populous African country had been inundated by a security situation that was a major issue for the government. Since the second month of the outgoing year, the wave of insecurity further increased through the threats of kidnapping, terrorism, highway robbery, banditry, militancy, and piracy, to mention but a few.
The increase and prevalence of violent attacks in the northern part of the country have also had a far-reaching negative impact.
On Dec. 11, more than 300 schoolboys were reportedly missing for nearly a week, after an attack on the Government Science Secondary School Kankara in Katsina State. The Nigerian military rescued 344 of them six days later, on Dec. 17.
Also, terror group Boko Haram carried out many deadly attacks in the outgoing year, with the killing of scores of farm workers in rice fields near the northeastern Nigerian city of Maiduguri, capital of restive Borno state on Nov. 21, further drawing global attention to the serious security situation in the country.
The group has continued to destabilize the northeast region of the country, further extending the violence to neighboring Niger, Chad, and Cameroon. A regional military coalition is still in place to fight the militants.
Since 2009, the Boko Haram group has been linked to the killing of tens of thousands of people and displaced millions more.
About 2.5 million people fled their homes and towns, and the direct consequence of the conflict was that the northeast was plunged into a severe humanitarian crisis -- as of 2018, one of the worst in the world -- which has left about 7.7 million people in need of humanitarian aid, according to the United Nations.
The northwest region of the country has further become a hotbed of criminal gangs, as killer herdsmen and bandits incessantly raid villages, stealing cattle, kidnapping for ransom, and burning homes after looting food supplies.
In the outgoing year, the gangs continued to maintain camps in the Rugu forest which overlaps the northwestern states of Katsina, Zamfara, Kaduna, and the north-central Niger State, from where they launched their attacks.
High-profile security operations had previously made little success in reducing violence in the northwest region.
The Nigerian army regularly raided the forests where the armed groups hide while collaborating with the government-backed Civilian Joint Task Force.
The bandits killed around 8,000 people since 2011 and forced more than 200,000 to flee their homes, according to data by the Nigerian police authority.
Armed robbery has recently become one of the most serious security menaces in Nigeria, and this has turned more violent and widespread across the country.
On Thursday, the Nigerian military said a total of 2,403 criminal elements were killed across the country from March 18 to Dec. 30. This is in addition to hundreds of other terrorists and armed bandits killed during airstrikes throughout the outgoing year.
Troops also rescued a total of 864 kidnapped victims across the country in 2020, said John Enenche, the military's spokesman, at a weekly press conference.
Enenche hinted that the military will not continue with the current operational tactics against the Boko Haram terrorists and bandits in 2021, saying troops engaged in a series of land, maritime, and air operations, involving both kinetic and non-kinetic activities across the country to end the security challenges.
PROSPECTS FOR RECOVERY
Despite all the economic and security challenges in Nigeria, however, there are prospects for a brighter, rewarding future beginning from 2021.
Local experts told Xinhua that there is hope for Nigeria to recover from its current economic recession which is widely seen as the worst recorded in almost four decades.
The current slowdown is an indication that "the worst is over" and the economy would resume growth in Q1 or Q2 of 2021, barring any new disruptions, said Yusuf, head of the LCCI.
Local experts also said the recent decision by the Nigerian government to reopen its borders will facilitate the implementation of the African Continental Free Trade Area (AfCFTA) agreement, as well as stem the tide of growing prices of goods and services.
The effective date for the AfCFTA agreement to come into force is Jan. 1, 2021. It ought to have been July 2020, however, it was postponed as a result of the COVID-19 pandemic.
Nigeria's decision to reopen its borders was in consonance with the country's ratification of its membership of the AfCFTA, and a step forward for the most populous African country to prove its economic leadership in Africa.
The Nigerian authorities shut the borders with West African neighbors in August 2019, citing the lack of adherence to the business ideals by various stakeholders, which was detrimental to Nigeria and its people.
With the reopening, Nigeria can now leverage on intra-Africa trade, as the country's large domestic market makes it an ideal gateway economy.
To leverage the AfCFTA, Nigeria should improve on infrastructural development that will lead to economic growth, said Bola Ogunsanwo, an economic expert.
Infrastructure, such as road construction and the ongoing railway projects in parts of the country, is key to monumental economic development, said Ogunsanwo.
One of such projects is the Lagos-Ibadan railway, expected to launch in January. The 1.5 billion U.S. dollar project is a double-track standard gauge rail, and the first of its kind in West Africa, running from Nigeria's economic hub and the most populous city to Ibadan, capital of the southwestern state of Oyo.
It was financed by China and the Nigerian government providing counterpart funding.
Despite the government's interventions over the years, Nigeria still faces a huge infrastructural deficit which is constraining its rapid economic growth.
Nigeria is toeing the line of development with China, said Garba Shehu, a spokesman for the Nigerian president, pointing to the fact that the Chinese have achieved important goals, such as national transformation and national development over a short period of time, as well as achieving the eradication of poverty, which are also important to Nigerians.
"We have copied several ideas from China. You can see that we are setting up special economic zones around certain products of agriculture and so on, that are produced locally and about six of them are being planned to take off," he said.
Nigeria is improving the quality, efficiency, and competitiveness of agriculture, carrying out rural development initiatives, and giving rural construction an important position in socialist modernization. Efforts are also being made to deepen rural reforms, through which the country is expected to improve the integrated urban-rural development mechanism.
"We are counting a lot on China because, by the bilateral agreement that we have signed, China is actually interested in promoting industrialization in Nigeria, using the special economic zones. They have used them to achieve their development and it is a model we like. We wish that the bilateral agreements will be actualized in no distant future," Shehu said.
The Nigerian government has also been considering the public-private partnership, as well as other approaches, to complement and boost financing for the development and maintenance of infrastructure in Nigeria.
Vice President Yemi Osinbajo told a webinar organized by the country's Bureau of Public Enterprises that a realistic solution to Nigeria's infrastructural gap would be a strong synergy between the public sector and the private sector of the country.
Therefore, deepening infrastructure would require adopting new models of investment, among others, as reliance on public expenditure alone is no longer sufficient to meet the need, Osinbajo said.
He said the country might need up to 3 trillion U.S. dollars to bridge the infrastructural gap over the next 30 years.
The country, Osinbajo added, will benefit immensely from huge local and foreign private sector resources as it has become glaring that the traditional method of building infrastructure through budgetary allocations is inadequate and set to become harder because of increasingly limited fiscal space. Enditem
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