Economic and Policy Review

State of the Nigerian Economy in H1’2023: Matters Arising & Key Policy Imperatives

NESG Research — 2023-12-21

As the world economy grapples with the aftermath of the COVID-19 pandemic and new challenges induced by the Russia-Ukraine conflict, economic growth has trended lower, and the inflation rate has heightened in advanced and emerging economies. Overall, the combination of rising commodity prices, global inflationary pressures, and slow growth in many countries weakened the performance of the global economy in the first half of 2023. In a fashion similar to global economic performance, the Nigerian economy experienced slowed growth in the period under review. The real Gross Domestic Product (GDP) growth of 2.4 percent was the lowest economic growth since Nigeria's full recovery from the COVID-19 pandemic. The country experienced a surge in inflation, leading to a significant erosion of the local currency's value. Poverty level and other socio-economic indicators also deteriorated. In addition, the implementation of new reforms in the first half of 2023 has had a considerable impact on Nigeria’s socioeconomic performance and has informed an alteration to socioeconomic projections since the beginning of the year. In light of the assessment of global and domestic economic conditions so far in 2023, this paper suggests key measures to bring inflation under control and sustain economic growth in Nigeria.

Climate Change and Food Security in Nigeria

Risikat Dauda — 2023-12-21

The alarming rate of incidences of floods, drought, ocean heat, changes in snow and rainfall patterns, heavy rainstorms, increased frequency of heavy precipitation, depleting soil nutrients, and dwindling environmental quality indicates that climate change can cause severe risks to food security and nutritional outcomes in Nigeria. With all the pieces of evidence of climate change, only one percent of total arable land is equipped for irrigation in Nigeria. This study examines the impact of climate change on food security and nutritional outcomes in Nigeria. The study showed the country’s readiness to tackle climate change and its vulnerability to climate change. The devastating impact of climate change on agricultural productivity, food insecurity, the number of people undernourished, and the average protein and dietary energy supply were revealed. The extent of climate change impact was reported alongside relevant policy directions to tackle climate change and reduce the prevalence of food insecurity in Nigeria.

How Macroeconomic Indicators Behave During the Periods of Currency Devaluation in Nigeria

Afolabi E. Olowookere — 2023-12-21

Currency devaluation in Nigeria poses significant challenges for key macroeconomic variables. This study examines the behaviour of these variables around the periods when the Naira underwent major devaluation or depreciation, defined as episodes between 1980 and August 2023 where the currency lost at least 20 percent of its value in a single year. The analysis aims to inform policy discussions in the wake of recent exchange rate unification in Nigeria, which caused a notable surge in official and parallel exchange rates. Findings indicate that the observed worsening of most macroeconomic indicators due to the current exchange rate unification policy is consistent with the outcome of major devaluation events in the past. The behaviour of most indicators one or two years after the analysis suggests that the positive effects anticipated by the government from the current devaluation may not be fully realized in the short to medium term. The study, therefore, recommends that the government adopt an expenditure-switching approach, a short-term strategy for foreign purchases of domestic products, easing pressure on foreign reserves and ensuring transparency in the foreign exchange market.

Performance Management System: The Catalyst to Boosting Public Sector Productivity in Nigeri

Chinagorom Ajike — 2023-12-21

Amidst the global economic recovery and rapid technological advancements, optimizing public sector productivity is of paramount significance. Nigeria, as Africa's most populous nation and a potential financial giant, grapples with distinct challenges and emerging opportunities. Realizing this and adhering to a committed path of robust economic revival necessitates a concentrated effort to enhance the performance of the public sector which is an indispensable catalyst for socioeconomic growth. Barber (2017) aptly underscores the complexities of measuring productivity in the public sector against the comparatively more straightforward metrics in the organized private sector. Methodological challenges compound this issue, particularly with the dearth of qualitative data essential for comprehensive analysis and consistent performance tracking over time. This article critically examines the indispensable role of a proficient Performance Management System (PMS) in propelling a public sector characterized by accountability, innovation, and citizen- centric approaches. More so, this paper sought to elucidate the tangible advantages of a functional PMS, turn a spotlight on the Imihigo system of Rwanda, and propose policy interventions for Nigeria that would facilitate seamless integration of the institutionalization of PMS within the public sector. The ultimate objective is accelerating public sector productivity for national growth and development.

Enterprising Nigeria: How “Job Seekers” can become “Job Creators” through Functional Entrepreneurship Ecosystems

Adeyinka Adewale — 2023-12-21

Africa’s future as the largest working population in the world by 2040 implies underemployment and unemployment rates will rise, causing a shortfall in the number of available jobs for the working population. To prepare for this imminent future, “job seekers” must become “job creators”. By leveraging the power of enterprise and entrepreneurship, this brief seeks to address how Nigeria’s enterprising youths can become sustainable job creators. At the core of this challenge are three key issues: (1) Translating the high volume of entrepreneurial activities in the country into investable job-creating ventures, (2) Closing the massive skills gaps among young Nigerian entrepreneurs, (3) Building better-functioning entrepreneurship and innovation ecosystems to support start-ups. This policy brief submits that fostering collaboration amongst key ecosystem players can enhance the success rate of start-ups in Nigeria. It proffers key ecosystem support activities that can help young entrepreneurs before submitting three key policy options: i) creating new Entrepreneurship Centres of Excellence across Nigeria, ii) creating a blueprint for entrepreneurship development in Nigeria, and iii) developing knowledge-sharing systems within the entrepreneurial economy.

Investing in Education and Entrepreneurship: The Next Frontier for Sustainable Economic Recovery in Nigeria

Emmanuel Lucas Nwachukwu — 2023-12-21

Despite deliberate efforts to establish a robust economy in Nigeria, the country's achievement has had little impact on broad socioeconomic statistics. Economic growth is sluggish, with double-digit inflation, a high poverty rate, a significant income disparity, rising living costs, and an ever-increasing unemployment rate, particularly among youths, and no country can ignore these economic issues if it wants to achieve sustainable economic development. This study argues that there is an undeniable need to re-strategize and broaden the federal government's and private sector's focus on education and entrepreneurship through unambiguous policy reforms and investment in the belief that these areas will contribute to the recovery and stability of the economy. This study concludes that education and entrepreneurship are essential components for achieving economic recovery and long-term prosperity in Nigeria, therefore, reforms and investment need to be emphasised and prioritised to pave the way for a potent and sustainable economic recovery.

The Student Loans Act 2023: Impact on Higher Education Funding in Nigeria

Mayowa Agbelusi — 2023-12-21

In one of his first acts as President, Bola Ahmed Tinubu signed the Students Loans (Access to Higher Education) Act of 2023, aiming to provide access to higher education for financially disadvantaged students. This paper analyzes the Act, addressing funding challenges in Nigeria's higher education system, examining past student loan initiatives, and exploring the Act's potential impact on sustainable development. The study also considers the historical context and lessons from previous efforts. Moreover, it investigates how the implementation of the Act could provide a pathway to economic development in Nigeria.