The world bank specifically disclosed that Nigeria’s economic growth was at 3.1% in 2022 and will reduce to 2.9% due to restraints in growth experienced in the oil sector as well as other factors such as low oil output, insecurity, petrol subsidies, forex scarcity, which is also affecting the growth momentum in the non-oil sector.
The report says “Growth in Nigeria—the region’s largest economy—weakened to 3.1 per cent in 2022, a 0.3percentage point downgrade from the June projection. Oil output dropped to 1 million barrels per day, down by over 40 per cent compared to its 2019 level, reflecting technical problems, insecurity, rising production costs, theft, lack of payment discipline in joint ventures, and persistent underinvestment, partly because of the diversion of oil revenues to petrol subsidies, estimated at over 2 per cent of GDP in 2022 (NEITI 2022; World Bank 2022t).
A strong recovery in non-oil sectors moderated in the year’s second half as floods and surging consumer prices (annual inflation surpassed 21 per cent for the first time in 17 years) disrupted activity and depressed consumer demand. Persistent fuel and foreign exchange shortages, with the naira depreciating by over 30 per cent last year in the parallel market, further dampened economic activity.”
The report also showed that the poor economic growth of 2.9% in 2023, will scarcely rise above the population growth, which is often close to 2.5%in previous reports.
The report prepared by the World Bank’s Nigeria Development Update mentioned that Nigeria’s economy needs to grow faster to reduce poverty while noting that inflation has surged to 21.1% in October 2022 pushing five million more Nigerians into poverty in early 2022.
Despite the higher oil export revenue, Nigeria’s official reserves have fallen and the exchange market remains unstable, reducing the growth of businesses and investment.
The World Bank also warned that Nigeria’s macroeconomic policy framework is suppressing growth and making the economy vulnerable to shocks.
Shubham Chaudhuri, World Bank Country Director for Nigeria said “Nigeria has a choice to implement critical macroeconomic and structural reforms that can reduce crisis vulnerabilities and increase growth. Doing so will lift per-capita incomes, sustainably reduce poverty and deliver better life outcomes for many Nigerians.
“Urgent business-unusual choices are needed to avoid a scenario in which up to 80 million working-age Nigerians do not have a full-time job by 2030 and up to 23 million more Nigerians could be living in extreme poverty,”.