Nigeria’s population fast outgrowing its economy – report sounds alarm

A report by FSDH Merchant Bank has shown that Nigeria’s population is rapidly outgrowing its economy

According to the report titled ‘Final judgment on performance of the Nigerian economy: Implications,’ the situation was a clear indication of growing poverty.

“This means that the economy is not expanding in such a way that can create enough job opportunities for the unemployed population, which the National Bureau of Statistics put at 21million as at Q3 2018,” it stated.

The FSDH research emphasised that ahead of the presidential election, the NBS released its final judgment on the performance of the Nigerian economy in 2018.

“The Nigerian economy is growing slower than the growth rate in its population, an indication of growing poverty! This means that the economy is not expanding in such a way that can create enough job opportunities for the unemployed population, which the NBS put at 21million as at Q3 2018,” the report read.

It noted however, that there could be a way to reverse the dangerous trajectory and make the country’s economy grow at above six per cent, if appropriate policies are put in place.

“If you are searching sectors of the economy to start a business or to lend money to, you should be looking at the fastest growing or largest sectors of the economy,” the FSDH stated.

“These were also the sectors where policymakers could easily achieve tangible results to show the impacts of their policies on the economy. Such sectors usually commanded government’s attention and protection.

“The most influential sectors that drove performance in FY 2018 are: Information and communication; agriculture; manufacturing, transportation and storage, and mining and quarrying sectors.

“The five fastest growing sectors on average between Q1 2017 – Q4 2018 are electricity, gas, steam, and air conditioning supply; transportation and storage; water supply, sewage, waste management and remediation; information and communication and mining and quarrying.”

The report noted further that the fragile recovery in the economy meant that additional policies which would fast-track economic activities in the country were urgently required.

This, according to it, meant it would be a hard sell for the Central Bank of Nigeria to increase key interest rates in the country. Increase in the key interest rates like Monetary Policy Rate, Cash Reserve Requirement and Liquidity Rate may not be in view in the short-term.

Usually, an increase in the MPR, CRR and LR may help to reduce a high inflation rate and keep the foreign exchange rate stable.

However, such actions have the tendency to reduce economic growth, effectively it added.

The growing recovery in the economy, if sustained, would reduce the business risks inherent in the country, which usually scared away investors.

“No-one wants to set up a business in an economy that is in recession. After a free and fair election in Nigeria and tangible efforts to improve the infrastructure in the economy, we expect Nigeria to attract more domestic and foreign investment in the non-oil sector.”