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Analyzing how Nigeria’s economy dip in 10yrs

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By Abdulwasiu Usman

Average inflation rate in the year 2013 hovered around 8.5 percent.

Nigeria’s economy has suffered over the years plummeting primarily due to its ineptitude management of its vast resources. The period preceding 2015 witnessed the country accumulating substantial amounts of foreign exchange, totalling billions of dollars. Astonishingly, between 2012 and 2013, Nigeria experienced a remarkable economic growth rate of 12.7%. In 2013, the country underwent a rebase from $270 billion to an impressive $510 billion, effectively positioning it as the Africa leading economy. Newly emerging industries like telecommunications, movie, and retail were responsible for a remarkable surge of roughly 90%, as they had previously been unaccounted for or underreported.

Over a span of 10 years, spanning from 2013 to 2023, a thorough analysis of various economic indicators unveiled a prominent pattern of escalating inflation and rising costs of crucial goods. One of the key ambitions for an economic giant like Nigeria is to uphold a single figure inflation rate. Data sourced from the Central Bank of Nigeria (CBN) indicates that Nigeria’s average inflation rate in 2013 hovered around 8.5 percent. In 2014, the average rate stood at 8.1 percent. However, the year 2015 witnessed a higher average inflation rate of 9.01 percent. This figure started at 8.2 percent in January and gradually escalated to reach 9.55 percent by December.

Heavy reliance on imports creates a high demand for dollars.

The average inflation rate for 2018 was 12.13 percent, with rates of 15.1 percent in January and 11.44 percent in December. In 2022, the average inflation rate was 18.7 percent, starting at 15.6 percent and rising to 21.34 percent by December. In 2023, the average inflation rate was 24.52 percent, starting at 21.82 percent in January and reaching a peak of 28.92 percent in December. The pervasive surge in inflation throughout the years can be attributed to the complete adoption of the US dollar as the major currency in the Nigerian economy.

In order to satisfy the demands of its population, the nation heavily relies on imports, creating a high demand for dollars and causing the naira to weaken. As per statistics gathered from the CBN, the value of the naira in relation to the dollar witnessed a gradual decline at the Inter-bank Foreign Exchange Market (IFEM) starting from 2013, beginning at ₦159.3/$. In 2014, it was ₦164.9/$, rising to ₦195.5 in 2015, it reached ₦253.5/$ in 2016, and ultimately peaked at ₦305/$ in 2017. In the year 2018, it was ₦306/$, ₦306.9/$ in 2019, ₦358/$ in 2020, ₦435/$ in 2021, ₦461/$ in 2022 and finally peaked at ₦900/$ in 2023.

Fuel cost in the year 2015 was ₦87 per litre.

In the absence of access to the IFEM rate from banks, Nigerians turned to the parallel market provided by Bureaux De Change (BDCs). As a result, the entire nation witnessed an escalation in food prices, which further burdened its inhabitants. According to data released by the CBN, average food inflation surged by 9.7% in 2013. Although it slightly decreased to 9.4% in 2014, it subsequently rose to 9.8% thereafter in 2015 before experiencing a further escalation to 14.8% in 2016. In the subsequent year, 2017, it reached a peak of 19.5%, only to decline to 14.4% in 2018 and eventually settle at 13.7% in 2019.

Moving forward, there was a sudden surge to 16.1% in 2020, followed by subsequent escalations to 20.4% in 2021, 20.8% in 2022, and a significant leap to 27.7% in 2023. Despite the plentiful reserves of crude oil within the nation, the cost of Premium Motor Spirit, commonly referred to as petrol, has remained consistently steep throughout the years. In 2013, the fuel cost was ₦97/ litre. Meanwhile, in 2015, there was a considerable decrease, bringing the price down to ₦87/litre. Subsequently, in 2016, a later surge in price saw it climb up to ₦145/ litre. Fast forward to 2020, when it was reduced to ₦125/ litre. Unfortunately, the product experienced yet another hike in 2021, soaring to ₦165/ litre, followed by a subsequent jump to ₦195/ litre in 2022.

Related Article: Nigeria’s economy to see 3.3% growth in 2024

Removal of fuel subsidy in May 2023 had a drastic impact on the cost, resulting in an astronomical price of ₦617/ litre. This price range has remained unchanged until present, despite the soaring expenses of everyday life. Surprisingly, amidst this challenging period, the federal government only made one adjustment to increase the minimum wage. In 2019, employees were granted a salary raise, boosting their wages from ₦18,000 to ₦30,000. However, the ongoing decline in the currency’s value relative to the dollar gradually eroded the purchasing power of individuals. While the incumbent government has revealed its plan to increase the minimum wage since last year, no changes have been made till present.


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Ask Nigeria
Member
21 days ago

Analyzing how Nigeria’s economy dip in 10yrs. Average inflation rate in the year 2013 hovered around 8.5 percent. Express your point of view.

SarahDiv
Member
20 days ago

Abdulwasiu Usman’s analysis of our country’s economic decline over the past decade is sobering. The statistics presented highlight the immense challenges faced by ordinary citizens due to inflation, currency depreciation, and skyrocketing fuel and food prices. It’s distressing to see the impact on our daily lives, especially with the removal of fuel subsidies further burdening the populace. The lack of significant wage adjustments despite promises adds to the frustration. This underscores the urgent need for effective economic policies and measures to alleviate the hardships faced by Nigerians and restore economic stability.

Adeoye Adegoke
Member
20 days ago

It’s quite concerning to see how Nigeria’s economy has dipped over the past 10 years. The average inflation rate of around 8.5 percent in 2013 was relatively low compared to recent years. Inflation can have a significant impact on the economy, affecting the purchasing power of individuals and businesses.
From my perspective, it’s important for the government to implement effective economic policies and strategies to address the root causes of this economic decline. This could involve measures to control inflation, stimulate investment, diversify the economy, and promote job creation.
Additionally, it’s crucial to prioritize fiscal discipline and transparency to ensure that public funds are utilized efficiently and effectively. By creating a conducive environment for business growth and attracting both domestic and foreign investments, Nigeria can work towards revitalizing its economy and achieving sustainable development.
Collaboration between the government, private sector, and other stakeholders is key to driving economic growth and overcoming the challenges faced. By working together, Nigeria can chart a path towards a more prosperous and resilient economy for the future.

Taiwo
Member
20 days ago

Examining how the economy of Nigeria declined over the course of ten years. 2013 saw an average inflation rate of about 8.5 percent.The figures displayed demonstrate the tremendous difficulties that regular people encounter as a result of inflation and currency depreciation.Inflation management, investment stimulation, economic diversification, and job creation could all be part of this.

Kazeem1
Member
20 days ago

Nigeria’s economy has declined throughout the years, mostly as a result of its poor resource management. Dollar demand is strong when there is a significant reliance on imports.strive toward attaining sustainable development and reviving its economy.