Analysis: Nigeria’s GDP growth rates has faltered since independence
PRESIDENT Muhammadu Buhari introduced his speech at Nigeria’s 59th Independence Anniversary saying that October, 1 avails Nigerians the opportunity to reflect on how the country has fared.
The ICIR also went down memory lane to draw parallels from the economic progress Nigeria has made since independence on October 1, 1960, comparing it with the current realities in the country.
And the data obtained from the World Bank shows that the Nigerian economy’s growth rate from 1960 has been unstable.
The country recorded the highest economic growth rate at 25.10 per cent in 1970, but today the growth rate has crashed to 1.94 per cent.
The Gross Development Product growth rate measures the economic output of a nation by comparing one-quarter of the country’s GDP, to the previous quarter.
After a 30-month civil war, the 25.10 per cent growth rate of the Nigerian economy in 1970 has been unrivalled till date.
Analysis by The ICIR shows that Nigeria had experienced seven recessions from 1960 to date. It recorded its first recession in 1967 posting a GDP growth rate of -15.74 per cent, followed by a – 5.23 per cent in 1975, -5.76 per cent in 1978, and -13.13 per cent in 1981.
In 1982, the growth rate was -10.92 per cent, -10.92 per cent in 1983, -2.04 per cent in 1993 and -1.62 per cent in 2016.
When the GDP growth rate of a country is negative, then the economy of that country slides into recession.
The country’s worst GDP growth rate was posted during the Nigerian pre-civil war era when it recorded its lowest growth rate of -15.74 per cent in 1967 before climbing to an all-time peak of 25.10 per cent growth rate in 1970.
Nigeria’s economic growth had endured turbulence since 1960 but it has also had a fair share of boom recording a positive growth rate of 25.01 per cent in 1970, 24.20 per cent in 1969, 11.16 per cent in 1974, 11.78 per cent in 1990 and 15.33 per cent in 2002.
Key indicators that drive a nation’s GDP growth include its consumer spendings on goods and services, business investments in the country, government spendings and its net trade.
A PriceWaterhouseCoopers, PWC, report affirms that Nigeria’s economy grew by 2.7 per cent in 2015, but slide to its slowest growth in the past four years, much lower than its previous GDP average growth rate of 4.8 per cent.
Saudi Arabia with a GDP of $577.6 billion was the 20th largest economy in the world in 2011, though, a PWC projection stipulates that Nigeria could attain that level of GDP growth by 2023 assuming other economies are stagnant if its GDP growth annually surpasses the 10 per cent mark.
With a paltry 1.94 per cent GDP growth rate Nigeria is not listed as the fastest growing economy in Africa as it lags behind Ethiopia at 10.3 per cent, Ghana at 8.1 per cent, Cote d’Ivoire at 7.7 per cent, Tanzania at 7.1 per cent, Senegal at 7.2 per cent and Djibouti at 7 per cent.
In 2018, Foreign Direct Investment, FDI flows to Africa increased by 6 per cent from $38 billion to $40 billion but Nigeria missed out of this slice as its FDI dropped by 36 per cent to $2.2 billion.
South Africa grew its FDI by 446 per cent, Egypt by 7 per cent and Ghana experienced a boost its FDI currently pegged at $3.3 billion.
This statistic makes Nigeria an unlikely destination for Foreign Direct Investment, FDI, as it offers limited opportunities for business growth, particularly when foreign corporate brands are considering an expansion into new regions.
Analysis by the International Monetary Fund, IMF, shows that Nigeria’s GDP growth rate would experience an incremental decline to income per capita over the next 8 years, through 2022.
The decline was based on the slow GDP growth exceeded by a population growth rate that is not expected to slow in the near future.
World Bank predicts that Nigeria’s population is expected to rise to 410 million by 2050 while 94 million people live on less than $1.90 a day while the GDP is growing at a slower and less consistent rate, averaging 1.4 per cent since 2016.
This suggests that Nigeria is exposed to global economic shocks due to its significant debt accumulation, import-dependent economy and low diversification of exports.
Assessing Nigeria’s current growth rate necessitates the occurrence of another major census to gauge the actual growth rate and enable critical strategic decisions to be made regarding population-related issues such as housing, food supply, employment, amongst others.