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Nigeria’s Economy In 2022: Winners And Losers

The Oasis Reporters

December 25, 2022






A banner is displayed to advertise diesel available at a filling station in Lagos, Nigeria.
Pius Utomi Ekpei/AFP via Getty Images

Stephen Onyeiwu, Allegheny College

At the start of 2022, Nigerians hoped that, with less than two years to the end of President Muhammadu Buhari’s administration, the government would ramp up its efforts to reduce poverty and unemployment.


In his 2022 new year message to Nigerians, Buhari was effusive about his intention to secure the country and address its socio-economic challenges.


But socio-economic conditions have since deteriorated. Budget deficits have ballooned to nearly 5% of GDP, more than the 3% recommended by the Fiscal Responsibility Act of 2007. The act was supposed to ensure prudent management of the country’s financial resources and long-term macroeconomic stability.


Given Nigeria’s abysmal revenue generation of about 9% of GDP, over 40% of Buhari’s 2023 budget is expected to be financed by debt.


Although the Nigerian economy rebounded after the difficult years of COVID-19, growing 3.5% in the first three quarters of 2022, the recovery has wrought more hardship on Nigerians.


This is because the main drivers of growth in Nigeria – oil production and services – don’t usually benefit most Nigerians in terms of jobs and business opportunities.


Nigeria’s unemployment rate is about 33%. That number reflects only those who are actively seeking employment. Many Nigerians have given up looking for jobs, after years of fruitless efforts.


The number of Nigerians living in poverty rose by 35 million in 2022.


The country’s inflation rate increased to 21% in 2022, compared with an average of 10.6% for emerging and developing economies and 8.8% for the world.


This level of economic hardship could present further risks to Nigeria’s security.


Worst hit


Young people have had it worst. Youth unemployment is 43%. It was below 10% prior to Buhari’s administration in 2015.


University students were forced to stay home for nine months during the prolonged strike by the Academic Staff Union of Nigerian Universities. This has not happened in any other country.


The year 2022 has also been unkind to poor and unemployed Nigerians. Rising inflation has raised the cost of living and pushed many into poverty. About 133 million Nigerians (63% of the population), are poor, as measured in multiple dimensions.


Because over half of Nigeria’s inflation is driven by rising food prices, many poor individuals and families face hunger. The risk of hunger has been heightened by the recent flooding in many parts of Nigeria, which saw over a million people lose their homes and means of livelihood.


With no insurance and safety nets, most of these Nigerians are left to fend for themselves.


Nigerian workers will remember 2022 as a year in which their purchasing power was badly eroded: 35% of them became extremely poor, 31% moderately poor and 23% near poor.


Only 17% of Nigerian workers hold jobs that pay enough to prevent them from falling into poverty.


Some workers in the public sector have not been paid many months of salaries and allowances, forcing them to take on side jobs that are unrelated to their skills and education. This amounts to a gross misallocation of resources, which undermines Nigeria’s economic development and structural change.




While 2022 will be remembered as a very difficult year for youths, workers and the poor, the cabal that controls the Nigerian oil industry has had it easy. Buhari promised to end the corruption-infested oil subsidy, but this cabal secured a postponement.


Nigeria spent an estimated US$9.6 billion on the fuel subsidy in 2022. This is expected to exceed $16 billion in 2023.


Much of the subsidy is likely to fraudulently end up in the bank accounts of the oil cabal. The same cabal has resorted to outright theft of oil from the pipelines, bunkering and artisanal refining.


Nigeria lost $2 billion to oil theft between January and August 2022. This is about 5% of its 2021 petroleum export of $41.4 billion.


Not to be outdone by the oil cabal, former Niger Delta militants now share in the oil largesse. The Buhari administration has awarded them over $100 million (48 billion naira) in contracts to “secure” the country’s oil infrastructure.


Never mind that the government has deployed thousands of government-paid security operatives whose job is to do exactly what the militants are being contracted for.


Political elites continue to live in opulence. Despite the country’s fiscal challenges, members of the National Assembly have continued to receive their allowances and funds for constituency projects.


Following steep depreciation in the naira, currency speculators have had a field day. The naira plunged by 4% in the official market during the year and by almost 20% in the parallel market.


This has posed significant challenges for manufacturers, as import costs soar amid an acute scarcity of foreign exchange. It’s harder for manufacturers to buy raw materials and expand production. The result is a further decline in their ability to generate well-paid jobs.


Unmet promises


The administration came to power over seven years ago, on a promise to rein in corruption, secure the country, create jobs, and alleviate poverty. It is leaving office in a few months without fulfilling those promises.


The Buhari administration has not left anyone in doubt that its priorities are elsewhere. In Buhari’s 2023 budget, for instance, only 1% of the $47.3 billion was allocated to social investment programmes (cash transfers, school lunches and empowerment programmes).


Just 4 million (out of over 200 million Nigerians) have benefited from the government’s social investment programmes since the administration’s inception.


Many of the contemporary socio-economic challenges Nigeria faces were inherited from previous administrations. But since Buhari has failed to turn things around, Nigerians continue to grapple with an era of misery, disappointment and uncertainty.The Conversation


Stephen Onyeiwu, Andrew Wells Robertson Professor of Economics, Allegheny College


This article is republished from The Conversation under a Creative Commons license. Read the original article.


Greg Abolo

Blogger at The Oasis Reporters.

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