Economy, Employment, and other Entanglements
May 29, 2023, the newly sworn-in president, Bola Ahmed Tinubu, in his inaugural speech, promised to “remodel the Nigerian economy to bring about growth and development through job creation, food security and an end to extreme poverty.”
In the maiden edition of the Federal Executive Council meeting, the Minister of Finance and Coordinating Minister for the Economy, Mr Wale Edun, unveiled President Bola Tinubu’s three-year eight-point agenda for turning the economy around.
The agenda focuses on 8 socio-economic priorities, 5 of which are directly economic goals:
- Food security (Economic)
- Poverty alleviation (Economic)
- Economic growth and job creation (Economic)
- Access to capital, particularly consumer credit (Economic)
- Inclusivity in all its dimensions, particularly as regards youths and women (Social)
- Improving security (Social)
- improving the ease of doing business (Economic)
- Improving adherence to the rule of law, and fighting corruption (Social)
Official reports on the first one year of Tinubu’s Presidency show that his management of these 5 economic priorities only deepened the straits of the vulnerable masses just as his outlined plans for the economy have lined up the people in various financial entanglements.
According to data released by the National Bureau of Statistics (NBS), under the Tinubu administration, the inflation rate rose to unprecedented levels of price instability in the last 14 years.
This further impoverished the people rather than alleviate their poverty.
This is coupled with a depleted workforce, as the unemployment rate increased to 5%, the highest since Mr Tinubu assumed control of the economy, according to unemployment data from the NBS.
Notwithstanding, this depleted workforce, with depleted wages and depleted welfare (due to the depleted worth of the money they hold), slaved to increase the national output by 2.54% and 3.46% in Tinubu’s first full 2 quarters in power.
Meanwhile, Nigeria’s national output, measured in dollars, moved down from the largest to the fourth in Africa, following the devalued Naira under Tinubu in 2023, according to data from the IMF.
These scenarios play out in a country where “Conflict and insecurity, rising inflation and the impact of the climate crisis continue to drive hunger” among 4 in 10 Nigerians living below the poverty line, according to the World Food Programme.
This data-driven report reviewed Tinubu’s policies, reforms, and economic plans and how these have affected the Nigerian economy in the last one year.
Economy: Unrelenting Productivity
There was an increase in real GDP and real GDP growth rate in the last three quarters of President Tinubu’s first year in office.
The real GDP growth between the 3rd and 4th quarter in 2023 could be as a result of these policies: fuel subsidy removal and the unification of the exchange rate.
The NBS records show that the GDP growth rate steadily grew from 2.51% in the 2nd quarter to 3.46% in the 4th quarter of 2023.
The real GDP increased from N17.94 trillion in the 2nd Quarter to N21.77 trillion in the 4th Quarter of 2023.
The annual real GDP (year on year) growth rate at the end of 2023 stood at 2.74%, while the annual real GDP growth (year on year) rate in 2022 stood at 3.10%. This is a 0.36% decrease from the total GDP in 2022.
The Real GDP reflects increases in consumer spending, exports, Federal, state, and local government spending, non-residential fixed investment, private inventory investment, and residential fixed investment.
In the last 25 years, most of the democratically elected presidents recorded successive quarterly real GDP growth in their first half year in office, including Tinubu.
The Buhari administration is the only democratic government in Nigeria where real GDP growth rate declined in the second quarter of his first half year, before the real GDP value decreased by 4.69% in his third quarter in office.
The growth in Tinubu’s time can be largely attributed to the rebound in the price of oil and the increase in the performance and activities in the service sector such as telecommunication, transportation, etc preceding the yuletide season.
The service industry grew by 3.98% in Q4 and contributed 56.55% to the aggregate GDP within that same period.
The recorded growth in the real GDP in the last three quarters of 2023 did not match the projected real GDP growth rate by the IMF and the World Bank for Nigeria. The projected real GDP growth rate was 3.3% for 2023.
While his policies supported an increased real GDP and real GDP growth rate, the other macroeconomic factors such as inflation and unemployment have worsened within a year.
The removal of the subsidy led to an increase in the price of petroleum by over 100%, and the unification of the exchange rate led to the devaluation of the naira by over 100%.
The shock from both policies led to the increase in the prices of transportation, food, services, foreign business transactions, etc. which has put a strain on the people’s purchasing power and aggregate consumer spending.
Economy: Unstable Prices
The headline, core, and food inflation rates are the highest they have ever been in the last 14 years.
The increase in inflation has been blamed on the policies and reforms put in place by Tinubu’s administration.
The headline inflation rate rose from 22.41% in June 2023 to 33.69% in April 2024. This is an 11.28% increase within Tinubu’s one year in office.
The average month-on-month inflation in Tinubu’s first year in office is 1.6%. This implies that prices of goods and services increased by an average of 1.6% within one year of Tinubu’s administration.
The food inflation rate in March 2024 stood at 40.01% on a year-on-year basis. This is a 14.76% increase from the food inflation in June 2023 which stood at 25.25%.
The core inflation rate which excludes the food and energy prices because of their volatility has also increased. The core inflation rate rose from 20.06% in June 2023 to 25.9% in March 2024 with a month-on-month increase of 2.54% growth rate.
The urban inflation rose from 24.38% in June 2023 to 35.18% in March 2024 with a month-on-month inflation growth rate of 3.17%.
The rural inflation rate rose from 21.37% in June 2023 to 31.45% in March 2024 with a month-on-month growth rate of 2.87%.
The inflation rate under Tinubu’s government is the highest in the last 25 years.
The lowest inflation rate of any Nigerian president’s first year in office was under President Goodluck Johnathan’s government.
According to the NBS, one of the causes of the rising inflation rate is the currency devaluation.
The demand for foreign goods has increased. As the market becomes unpredictable due to the volatility in price of a Naira to a Dollar increases, the cost of the goods increases as well.
International prices
Within one year of Tinubu in office, the Naira had been devalued by about 42% between June 2023 and April 2024.