Key events that shaped the Nigerian economy in 2021


The Nigerian economy entered another recession in 2020, reversing three years of recovery that followed the 2016 recession.

The 2020 recession was necessitated in large part by the containment measures put in place against COVID-19, which affected aviation, tourism, hospitality, restaurants, manufacturing and commerce, disrupting l ‘Mondial economy. The economy contracted in the third quarter of the year by 3.6 percent, after contracting 6.1 percent in the second quarter.

By the end of the year, the country was once again out of recession. Confirmation of the end of the recession and other important developments shaped the Nigerian economy in 2021.

GDP and recession

In February 2021, the national statistics office declared that the economy was out of the recession in the fourth quarter of 2020, recording its first growth in three quarters as a coronavirus-related lockdown was lifted across the country.

The report says gross domestic product (GDP) grew 0.11 percent in the three months between October and December compared to the previous year. The SNB said that although growth was weak, it reflected the gradual return to economic activity following the easing of restricted movements and limited local and international business activity in previous quarters.

In November, Simon Harry, the Federation’s general statistician and head of the National Bureau of Statistics, said the country’s economy grew 4.03% in the third quarter of 2021.

Mr Harry said the negative GDP figures recorded in 2020 following the COVID-19 pandemic had serious base effects on the GDP figures for the second and third quarters of 2021. He added that the The improvement observed in production growth over the past four quarters has shown steady progress in containing the Covid-19 pandemic and the associated negative impact on the economy.

Inflation

The nation has started the new year amid concerns over its inflation numbers and its ripple effects on the standard of living of the average Nigerian.

In recent years, Nigeria has experienced a persistent surge in inflation rates, reaching the highest levels in four years, amid soaring food prices and low purchasing power.

In March 2021, inflation reached 18.17% against 17.33% recorded in February 2021. This represents 0.82% more than the figures for February, according to the report on the consumer price index published. by the National Bureau of Statistics (NBS).

In April, however, the bureau said the inflation rate stood at 18.12 percent.

Over the past eight months, however, the rate of inflation has since slowed, as economic activities have resumed after prolonged periods of restrictions and lockdowns made necessary by the Covid-19 outbreak.

In November, Nigeria’s inflation rate fell for the eighth consecutive month to 15.40 percent from 15.99 percent recorded the previous month. The statistics office said the prices of goods and services, as measured by the Consumer Price Index, rose 15.40% (year-on-year) in November 2021. This figure was 0.51% higher. at the rate recorded in November 2020 (14.89) percent.

“Increases were recorded in all of the COICOP divisions that produced the Headline Index,” the report said.

Prices have skyrocketed; Food blockade

Despite declining inflation figures in recent months, the country has continued to experience rising food prices. According to the BNS, the rise in the food index was caused by rising prices for bread and cereals, fish, food products, potatoes, yams and other tubers, oils and fats, milk, cheese and eggs and coffee, tea and cocoa.

The food sub-index rose 1.07% in November 2021, up 0.16% from the 0.91% recorded in October 2021.

In March, food and beef prices rose exponentially in Lagos, Ibadan, Benin, Uyo and other parts of southern Nigeria amid a food blockade announced by the Amalgamated Union of Merchants of Nigeria Food and Livestock (AUFCDN).

The union said it was demanding the protection of its members and the payment of around 475 billion naira in compensation for lives and property lost as a result of the crises recorded across Nigeria earlier in the year.

PREMIUM TIMES ‘investigation of the food and commodity markets at the time found that union action had pushed up the prices of beef, food and vegetables, particularly in the states of the United States. south of the country and in the territory of the federal capital, Abuja.

Unemployment

In March, the country’s statistics office reported that Nigeria’s unemployment rate had reached 33.3 percent, translating to some 23.2 million people, the highest in at least 13 years and the second-highest rate. brought up to the world.

The figure fell from 27.1% recorded in the second quarter amid a persistent economic crisis in Nigeria, made worse by the coronavirus pandemic.

Unemployment has been a major concern among Nigerians, especially its teeming population of young people. Although job creation was a major part of the Buhari-Osinbajo campaign mantra in 2015, there was little the government could do to contain concerns.

Between 2015 and 2021, Nigeria’s unemployment rate more than tripled.

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Earlier this year, unemployment concerns surfaced again when details emerged about the murder of 26-year-old graduate Iniubong Umoren Uyo University (UNIUYO) who was lured into a bogus job interview on April 29. She was killed and buried in a shallow grave.

Ms Umoren was confirmed dead on April 30 and buried in her hometown, Nung Ita, Ikot Essien in Oruk Anam Local Government Area in Akwa Ibom State, many people worrying about how the state of unemployment puts young people at risk.

Debt

In July, details revealed that Nigeria’s budget deficit would reach 5.6 trillion naira in 2022, up from 5.6 trillion naira in 2021, according to a statement by the Minister of Finance, Budget and National Planning, Zainab Ahmed, in Abuja.

Ms. Ahmed explained that the budget deficit represents 3.05 percent of estimated GDP, which is slightly above the 3 percent threshold set in the Fiscal Responsibility Law. She went on to explain how the FRA empowers the president to cross the threshold if, in her opinion, the nation faces threats to national security.

“And that’s our opinion, and the FEC has agreed that we can go beyond it,” she said.

Ahmed said the deficit would be financed by new foreign and domestic borrowing amounting to N 4.89 billion, privatization proceeds of N90.73 billion and debt levies on existing projects. of 635 billion naira.

Nigeria’s debt and deficit financing has been a source of concern to Nigerian policy experts and international rating agencies in recent years.

The country’s debt profile has risen dramatically since Mr Buhari took office, with budget proposals heavily framed around debt.

According to the Debt Management Bureau (DMO), Nigeria’s debt as of December 31, 2020 was N32.915 billion. The figures include the outstanding debt of the federal and state governments, as well as the Federal Capital Territory.

In November, reports said the country’s debt could reach N44.5 billion amid the approval of various debt demands sent by the executive to the National Assembly.

Tax

By far the most important tax debate in Nigeria in 2021 has revolved around value added tax.

The Federal High Court of Port Harcourt, in a landmark judgment, ruled that it was unconstitutional for the Federfal Inland Revenue Service (FIRS) to collect VAT and personal income tax in Rivers State.

Convinced by the court order, Rivers State Governor Wike and Lagos State Governor Babajide Sanwo-Olu subsequently signed bills allowing state governments to collect VAT.

But FIRS has filed an appeal against the Federal High Court judgment.

Subsequently, the Court of Appeal in September ordered the Rivers State government and the Federal Tax Service (FIRS) maintain the status quo on the issue of the collection of value added tax (VAT).

Undeterred by the development, the Rivers State government has asked the Supreme Court to overturn the appeals court order ordering the parties to maintain the status quo.

Poverty reduction

In June, President Muhammadu Buhari said his government had lifted 10.5 million Nigerians out of poverty in the past two years.

In his speech on National Democracy Day on June 12, the president said those the government lifted out of poverty were farmers, artisans, women traders and petty traders.

“Our overall economic goal of lifting 100 million Nigerians out of poverty within 10 years is our goal despite COVID-19,” said Buhari.

“In the past two years, we have lifted 10.5 million people out of poverty – farmers, small traders, artisans, traders and so on.

But a PREMIUM TIMES fact check found that despite the Nigerian government’s claims to lift 10.5 million people out of poverty, the World Bank said in January that macro-micro simulations showed that more than 10 millions of Nigerians could be pushed into poverty by the economic crisis. effects of the COVID-19 crisis alone.

the report also claimed that there waseconomyThere is no verifiable data from the national statistics office to support Mr Buhari’s claims. On the contrary, according to the report, a World Bank report said Nigeria’s poverty rate during the period, which would have remained “virtually unchanged” had the Covid-19 crisis not taken place, would increase. due to the effect of the pandemic.

Moreover, the World Poverty Clock also showed an increase in the number of Nigerians who fell into extreme poverty during the period.

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