Review of the Nigerian economy in 2021 & H1'2022 and key policy recommendations

Abstract

Nigeria is rapidly consolidating its recovery from the pandemic-induced recession, but the pre-COVID-19 narrative of poor inclusiveness  and macroeconomic instability persists. Despite a Gross Domestic Product (GDP) growth of 3.4 percent in full-year 2021, data from the National Bureau of Statistics (NBS) showed that average prices of goods and services were high; the trade balance remained in deficit in  2021 (but transited to a surplus in 2022Q1) and foreign investment inflows were constrained in the year and deteriorated further the first  quarter of 2022. The World Bank estimated that an additional 8 million Nigerians fell into poverty between 2020 and 2021 due to lower  purchasing power. Although Nigeria's potential is enormous, job creation across sectors has been lagging, resulting in an increase in  unemployed individuals. While there has been considerable improvement in some areas, such as the mobilisation of non-oil revenue in  the last few years, the challenges associated with insecurity, rising prices, unemployment, and lower investments intensify the need for reforms that will lead the country to a sustainable path of substantial economic progress and improved social inclusion. With about one  year left in office, the current administration must intensify the pace of reforms, especially given the impact of the twin challenges of  poverty and unemployment on insecurity and social cohesion of the nation. In its 2022 Macroeconomic Outlook Report, the NESG  prioritized three key reforms: oil and gas liberalisation and subsidy reforms, foreign exchange management reforms, and critical sectoral  reforms . Moreover, the Nigerian Economic Dialogue organised by the NESG in May 2022 unraveled the urgency to address key  structural challenges facing the Nigerian economy²