Nigeria’s economy is ranked the largest in the whole continent of Africa with emerging markets in different sectors including technology, communication, financial, and entertainment. However, this does not reflect in the standard of living of its citizens due to various economic problems it’s facing.
Nigeria’s economy grows at an average of 2% while the population grows at an average of 3%, showing the alarming rate of poverty, unemployment, and variation in the socio-economic status of Nigeria’s population.
Biggest economic problems In Nigeria
The economic problem facing Nigeria is numerous, but here are the 10 biggest problems with Nigeria’s economy:
1. Unstable policies and initiative
Unstable government policies and initiative has resulted in the instability of the Nigerian economy. One thing that is common each time there’s a new administration in Nigeria is that they abandon the policies set up by the previous administration. And this has subjected the country to a long trail of poorly executed policies and initiatives.
The two major criteria of any perfect economic plan and policy are sustainability and flexibility to keep on with its implementation. However, there has been an issue with the continuity of government projects, which has been a major blockage to economic growth in the country.
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2. Lack of cooperation between the government and private sector
Cooperation between the government and the private sector is required to boost the economy of a country. It is also necessary to build a lasting economy. The government will not be able to manage its economic, social, and political affairs if there is no quality relationship between them and the private sector or the state civil society.
There is a lack of implementation of the policies and mechanisms between the private sector and the government, hence, the difficulty to articulate and work together. This leads to a severe decline in the economy of Nigeria since there is no articulation of interest between the citizen and the government.
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3. Corruption
Corruption is seen as a social insect that has eaten deep into the flesh of Nigeria’s economy. Nigerians suffer hugely from the menace created by corruption to date and this causes a series of setbacks to other sectors. For many years, Nigeria has made a substantial amount of money from petroleum but has not been properly managed due to corruption.
It’s true Nigeria is one of the top countries with an abundance of crude oil, however, money profited from oil is being embezzled by top government officials.
Revenue generated ought to be channeled toward other sources of income or spent on national investment to boost the economy of the state. Rather, corrupt people in government use the fund to create a fortune for themselves.
4. Poor human development
Poor human resources have been one of the biggest problems facing economic growth in Nigeria. When talking about human resources, they are the skilled and talented people needed by the government to make a viable economy. Nigeria has poor human development and this plays a significant role in economic development.
The poor educational system, unemployment rate, and poor remunerations are evidence of poor human development in Nigeria which reflects in the poor economic growth. When people’s development is not placed as a priority, economic growth suffers.
5. Over-dependence on crude oil
Crude oil is one of the major natural resources Nigeria depends on for the bulk of its revenue. Lately, there has been a decline in the expected revenue in Nigeria owing to the fall in the price of crude oil.
About four decades ago, when crude oil was booming in Nigeria, a high number of people from the remote parts of Nigeria where major agricultural activities were carried out migrated to the cities. This migration badly affected the countries’ agricultural production.
Export produce kept decreasing and Nigeria was pushed into importing basic food commodities like rice, cassava, etc which can be grown locally. This would have worked if the revenue generated from crude oil was increasing. However, there has been a dip in oil prices, hence affecting Nigeria’s economic growth.
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6. Crime and terrorism
Crime and terrorism have a negative influence on the economy of any country. Nigeria has struggled with the problem of insecurity, especially in the northern part of the country known for massive agricultural production and natural resources reserves. Also, there have been various violent attacks in the oil-producing states.
Furthermore, the disturbing state of security also restricts people’s movement, causes a lot of uproars, and makes investors lose confidence in the country. All of these issues have done a lot of havoc on Nigeria’s economy.
7. Low export earnings
The oil sector generates less than 10% of the country’s export revenue, still, even the non-oil sector contributes 90% of the country’s gross domestic product (GDP) and records less than 10% of the country’s export earnings. This means Nigeria’s export product lacks the competitive power to thrive in the world market.
The country’s products are not globally recognized, hence, they do not cross the border to fetch the country huge foreign exchange earnings. This means Nigeria still has a long way to go by investing more in agriculture to produce standard products that can stand in the world’s competitive market.
8. High rate of unemployment
The issue of unemployment and economic growth are like the two sides of a coin. The high rate of unemployment is caused by a poor rate of economic growth likewise, unemployment causes poor economic growth since there won’t be a large workforce available with different skills.
A report from the National Bureau of Statistics (NBS) in 2019 shows that the rate of unemployment in Nigeria is 23.1% which increased to about 38% in 2021. This causes a decline in economic activities which in turn leads to crimes in society,
9. Lack of infrastructure
This seems like a minor economic problem facing Nigeria, however, Nigeria can’t move economically ahead if there is no constant power supply, good roads, and quality water supply.
Nigeria lacks the basic infrastructure and amenities that make business boom, hence, the reason why global investors and companies find it hard to start their business in Nigeria, and thus, a major reason for the economic downfall.
10. Nature of market
Market monopoly by the Government is one of the factors affecting economic growth. There is a lack of competition in the Nigerian market which affects the market forces. The self-regulating power of the market defines where one works, earns, and accommodations.
Each economy needs government interference but not a monopoly. Good market governance will produce healthy competition, however, the Nigerian government has a valid monopoly of setting prices of goods and services, they increased the prices of fuel without regard to the distributive negative effect on the economy.
Conclusion
Nigeria is facing many economic challenges some of which are highlighted above. However, these problems can be solved with good governance and by taking one step at a time.