How Nigeria’s Economy Nosedived In 10 Years (Detailed Report)

The inability to manage Nigeria’s wealth over the years has been identified as the main reason for the decline of the country’s economy over the years.

Before 2015, the country had generated billions of dollars in forex. Nigeria’s economy grew 12.7% between 2012 and 2013. And in 2013, the Nigerian economy was rebased from 270 billion dollars to 510 billion dollars, making it Africa’s top economy.

The increase of about 90% was attributed to new sectors of the economy such as telecommunications, movies, and retail which were previously not captured or underreported

However, a 10-year analysis by Daily Trust on Sunday, of some economic indices from 2013 to 2023, revealed a major trend of increases in inflation and prices of essential commodities.

Inflationary trend

The hope of maintaining a single inflation figure is one of the objectives of an economic powerhouse like Nigeria.

According to data obtained from the Central Bank of Nigeria (CBN), Nigeria’s inflation figure was on an average, in the range of 8.5 percent in 2013. The country started the year with a 9 percent inflation in January, but it floundered to end the year on 8 percent.

The average figure for 2014 was 8.1 percent. The inflation figure was 8 percent in January and ended with 8 percent. While in 2015, the average inflation rate was 9.01 percent with 8.2 percent recorded in January and ended in December with 9.55 percent.

In 2016, the country could no longer maintain the single digit inflation rate with the figure jumping to 15.6 percent on average. It entered the year with 9.62 percent and ended it with 18.55 percent.

In 2017, it slowed to 16.5 percent, recording 18.72 percent in January and reduced to 15.37 in December.

In 2018, the figure went down to 12.13 percent on an average having recorded 15.1 percent in January and 11.44 percent in December.

The downward trend continued in 2019 with prices of commodities increasing on an average of 11.3 percent. The year saw an 11 percent increase throughout the calendar month starting with 11.37 percent in January while ending with 11.98 percent by December.

In 2022, the average inflation rate was 18.7 percent starting with 15.6 percent and increased to 21.34 percent by December.

For 2023, the figure averaged at 24.52 percent starting with 21.82 percent in January and peaked at 28.92 percent in December.

Devaluation of the naira

At the heart of the rising inflation over the years is the dollarization of the Nigerian economy. With the country dependent on importation to meet the needs of its people, the excessive need for dollars for importation of goods put a strain on the naira.

According to a data obtained from the CBN, worth-to-the-dollar-naira saw at the Inter-bank Foreign Exchange Market (IFEM) from 2013, at N159.3 per dollar, rose to N164.9 in 2014, then N195.5 in 2015.

It further increased to N253.5 in 2016; N305.7 in 2016; N306 in 2017; N306.9 in 2018; N358 in 2020; N435 in 2021; N461 in 2022 and N900 in 2023

With Nigerians not having access to the IFEM rate from banks, they took to the parallel market, which is sourced from Bureaux De Change (BDCs).

Food inflation rose by average of 186%

The rise in food prices across the country has further reduced what the average Nigerian could save from his/her income.

Data from the CBN showed that food inflation increased, on the average, by 9.7 percent in 2013. In 2014, it reduced to 9.4 percent, but increased to 9.8 percent in 2015. It climbed further to 14.8 percent in 2016. In 2017, it was 19.5 percent, but dropped to 14.4 percent in 2018 and 13.7 percent in 2019.

It, however, recorded a spike in 2020 to 16.1 percent which later increased to 20.4 percent in 2021; 20.8 percent in 2022 and 27.7 percent in 2023.

400% change in price of 50kg bag of rice in 10 years

The situation has led to an increase in the price of 50 kilogram of a bag of rice. The price of rice, which is a staple food in almost every home in the country, has seen its rise doubling the minimum wage of the average worker.

Starting from N12,000 in 2013, the price of 50kg bag of rice reduced to N10,000 in 2014 which it maintained in 2015 till it increased to N13,000 in 2016.

It further rose to N16,000 in 2017 and N18,500 in 2018. In 2019, it was N19,500, then N26,000 in 2020. A little decrease was recorded in 2021 as it came down to N25,000 before it skyrocketed to N40,000 in 2022; N60,000 in 2023 and currently, over N70,000 at various markets across the country.

209% increase in 2KG of golden penny wheat in 6 years

The Selected Food Price Watch compiled by the National Bureau of Statistics (NBS) also showed an increase in the price of a 2kg bag of Golden Penny wheat from N639.24 in 2017 to N662.89 in 2018; N676.2 in 2019; N749.8 in 2020; N967.46 in 2021; N1,203.88 in 2022 and 1,976.5 in 2023.

257% rise in 1kg of maize in 6 years

Maize, which is an important staple in most homes, including local dishes, has also seen an increase in price.

According to the NBS, maize price rose from the average of N161.90 in 2017 to N160.42 in 2018; N153 in 2019; N207.51 in 2020; N274.39 in 2021; N329.05 in 2022 and N589.7 in 2023.

Cement price rose by 150% in 10 years

According to media reports, a 50kg bag of cement rose from N2,000 in 2013 to N4,000. The product sold for N2,500 in 2013 before dropping to N2,000 in 2014 and it maintained the same level in 2015. It went up to N2,300 in 2016.

In 2017, however, the price of cement price rose to between N2,700 and N2,800; while in 2018, it dropped slightly to N2,570. But in 2020, it rose to N3,600. In 2021, the price shot up to N4,000; N4,200 in 2022 and N5,000 in 2023.

Petrol price increased by 570% in 10 years

The country’s abundance in crude has not translated into a lower price of Premium Motor Spirit, popularly called petrol.

The product sold for N97 per litre in 2013; was brought down to N87 in 2015, increased to N145 in 2016, and was reduced to N125 in 2020. It rose again to N165 in 2021; N195 in 2022.

Due to the removal of subsidy in May 2023, the price is astronomically, and it sold at N617 per litre before the end of last year. It is still within that price range up to today.

The price of a 12.5kg cylinder of cooking gas, which normally sold for N2,700 in 2013, rose to N3,000 in 2014; N3,300 in 2015; N4,000 in 2016 and N4,452.83 in 2017.

In 2018, the price was N4,332, but came down to N4,176.20 in December 2019 from N4,121.15 in November 2019 and N4,082 in 2020.

However, in 2021, the cooking gas price spiked to N7,332.04; N10,248.97 in 2022 and N11,155.15 in 2023.

Salary increased once as purchasing capacity reduced

Amidst the high cost of living witnessed during the period under review, the federal government only increased the minimum wage once.

The pay rise, which was done in 2019, saw the wage increased from N18,000 to N30,000. But the continuous downward spiral of the exchange rate of the currency against the dollar made purchasing power of citizens to wane.

Workers, pensioners groan

A civil servant, Abigail Daniel, said the failure of the government to stem inflation, caused her to live from hand to mouth as she could not save from her salary.

“The salary is not increasing at par with the commodities in the market. What you purchase in the market today would have changed price the next time you visit. I feel like I am into slavery because I see no progress in what I do in life. If I spend all my salary on food, how am I supposed to take care of myself or my children during emergencies? How should I support my husband when the need arises.”

Daniel stated that the economy has been battered to the point that her family relies on the goodwill of her customers to purchase foodstuff on credit till her salary is paid.

A pensioner, Abdulrasheed Oladayo, said despite retiring early from the civil service, he could not beat the current economic challenges despite having taken up a teaching job in a private school.

“The economic situation we found ourselves in the country is dire and one needs a strong will to survive the turbulence. I am thankful to God that I live in my own house. I had a car to ferry me to where I teach but with the situation now, how I am expected to get fuel to drive myself to work. My body is becoming frail, so very soon, the salary will not and I will have to depend solely on my pension. But the meagre sum is very little to cater for my needs”, he said.

On his part, Ibrahim Sadam, said: “I was doing fine with the little work I had in a factory in Kaduna before the layoff of many staff in the company. Since then, it has been hard for me to get another job. I have four children and a wife to provide for without a job and how should I scale this without”.

Poor policy implementation, bane of Nigeria’s economy–Experts

A senior economist at SPM Professionals, Paul Alaje, said Nigeria’s economy had continued to deteriorate due to weak implementation of polices.

Alaje, in a chat with Daily Trust on Sunday, said: “The approach to solving it will be the supply side approach, when you look at the food prices, there is a general shortage, which will create food crisis this year. The supply of petroleum is another major reason we have inflation in Nigeria as it has affected production cost.

“The way-out is to improve supply from agriculture and agro-allied sector through government policies on farm hubs in each local government.

“Nigeria needs Foreign Direct Investments (FDI), but we can’t attract that even if the naira is at N5,000 to a dollar. No one will come into the country when they are not safe and the currency is volatile,” he said.

Also speaking to Daily Trust on Sunday, the chief executive officer of Economic Associates, Dr Ayo Teriba, said Nigeria’s economic downward spiral was triggered by an external shock as global commodity prices collapsed in the second half of 2014.

Teriba, an economist, said: “The reason for the rising inflation is that the economy passed through devaluation. We can’t do anything about inflation but we can do something about the exchange rate.

“The solution is to get FDI as desperately as India had been getting it. They got $500bn in FDI since 2015. We are still fooling around with oil and gas.

“Since we unified the exchange market, the volatility comes down to supply shortage. Whatever you can do to get FDI large enough to raise our reserve threshold to $50bn or $100bn we should do it. This is because it will stabilise the exchange rate, if the rate is stable, inflation will come down. In 2015, when the exchange rate moved to N510 in the parallel market and people were worried that it might go to N1000, eventually it was stabilised to N360 and it stayed in that figure till the next 3 years until the pandemic.

“That is what we should be aiming for now, we should not accept defeat, but look for reserves to bring the exchange rate back to below N500 and like we saw in 2017, inflation fell for the next 18 consecutive months. So, if we are able to stabilise the exchange rate, inflation will fall by itself and allow the naira to appreciate. If the exchange appreciates, the economy will deflate”, he said.