Navigating economic challenges and socio-economic empowerment in Nigeria

Nigeria is Africa’s most populous nation with approximately 184 million people. It harbors about 47% of West Africa’s population and ranks among the youngest countries globally demographically. It’s a multi-ethnic, multi-cultural society comprised of 36 autonomous states (BBC News, 2017). With a middle-income economy, Nigeria boasts abundant natural resources, including the largest natural gas reserves in Africa. Its economy is dynamically expanding across sectors such as finance, communication, technology, manufacturing, and entertainment. Nigeria’s economic growth is further propelled by its vibrant agricultural sector, which employs a significant portion of the population and contributes substantially to the nation’s GDP (World Bank, 2021). Additionally, Nigeria boasts a burgeoning entrepreneurial spirit, with a thriving startup ecosystem that fosters innovation and enterprise (The Guardian Nigeria, 2020).

Additionally, a substantial portion of goods and services is manufactured for the West African market. However, Nigeria faces persistent macroeconomic challenges that hinder its growth trajectory. For instance, despite its status as Africa’s largest economy, significant issues persist, such as the high unemployment rate among youth, with approximately 11 million young Nigerians unemployed in 2014. Furthermore, around 55% of Nigerian women have limited access to the country’s economic opportunities. Moreover, a significant portion of the population lacks access to modern communication technologies, thereby missing out on the social, economic, and educational benefits they offer (Opeyemi, 2015). To tackle these issues, the Nigerian government has implemented various measures, including training and development programs aimed at equipping youths with essential skills, as well as providing microfinance facilities to support women entrepreneurs, among other initiatives.

The problem of unemployment and terrorism in Nigeria

Nigeria’s recent economic challenges have exacerbated issues such as unemployment and terrorism, reflecting the interconnected nature of socio-economic and security concerns. Moreover, the lack of economic opportunities has been cited as a contributing factor to the rise of terrorism in the country. One of the major contributors to the Nigerian economy has been oil and gas. Its share of the GDP is 8.42% and it is second only to the manufacturing sector (Ettah, 2017). The oil output is expected to increase in the coming years, thus helping to contribute to public and social investment projects. At this juncture, slow economic growth shifted the focus of the administration from an oil-centric approach to diversification through promotion in the private sector so that more jobs could be created. In recent years, Nigeria has been facing the growing problem of inflation, which is expected to worsen in the coming years. The country is also witnessing an increase in terrorist attacks, which has affected youth employment opportunities.

Such situations are creating an environment of restlessness and frustration among the young population. In addition to this, the country is also facing problems related to climate stressors and the degradation of natural resources (The World Bank, 2017). The 2007 economic crisis also affected Nigeria’s growth and development because foreign exchange earnings decreased drastically, due to a reduction in oil prices. Yet, the negative impact of the global financial crisis was not that severe as the financial system of Nigeria was not fully connected with the global economy (Proshare Intelligent Investing, 2016).

Nigeria entered a recession in 2016, marking its first in over two decades (Asogva, Barungi, & Odhiambo, 2017). This downturn was catalyzed by a sharp decline in oil prices since mid-2014, leading to a significant reduction in oil revenues for the country. The economic downturn persisted throughout 2016, with consecutive quarters of negative growth. Notably, the GDP contracted by 2.2% in the third quarter, primarily due to decreased oil, fuel, and power output. This decline not only impacted the growth of oil-related sectors but also contributed to increased inflation, driven by rising electricity and fuel prices, alongside a weakening Nigerian Naira (The World Bank, 2017). Presently, there are concerted political efforts aimed at addressing unemployment, enhancing security, diversifying the economy, and improving living standards for Nigerians.

Nigeria is also a major recipient of foreign aid

Despite being rich in natural resources, Nigeria remains a poor country and is a recipient of several international aid and grants. This consists of cash, technical cooperation, mixed project aid, commodities and food. Along with that, loans, equity, global initiatives & NGO grants and aid are provided for the development and growth of Nigeria. The major donors are the African Development Fund (AIDF), the United Nations Children’s Fund (UNICEF), the European Union, the Global Alliance for Vaccines and Immunization (GAVI), the United States, the Global Fund and the United Kingdom etc.

These funds are allocated towards various critical sectors including health, infrastructure, education, industry & trade, agriculture, and food security, as highlighted by UNICEF (2002). Furthermore, governance and security, as well as banking and business, benefit from these allocations, indicating the broad scope of investment necessary for sustained national development. However, ineffective fund management poses a significant challenge, hindering equitable distribution across sectors. Consequently, funds are often either over-utilized or under-utilized, as noted by Ogbeidi (1961).

Mismanagement of public funds from oil revenues

The issue of mismanagement of public funds in Nigeria dates back to the 1960s, stemming from the corrupt practices of politicians, as observed by Ogbeidi (1961). This mismanagement and corruption resulted in an annual loss of USD$5 billion before the implementation of global anti-corruption measures. Such practices exacerbated poverty levels within the nation and escalated its debt burden, as resources were diverted towards importing goods and services due to ineffective internal utilization of funds. Consequently, this had detrimental effects on the economy, as highlighted by LaMance (2017).

Nigeria’s oil sector boasts an extensive network of depots and pipelines, supported by four state-owned refineries: PHRC (2 in Port Harcourt), KRPC (Kaduna), and WRPC (Warri), with a combined installed capacity of 445,000 barrels per day (Nigerian National Petroleum Corporation, 2017). However, rampant corruption and mismanagement within these refineries have compelled the country to import nearly 85% of its domestic fuel. This challenge stems from low capacity utilization attributed to insufficient maintenance, outdated equipment, and inadequate funding.

Additionally, the refineries became prime targets for terrorist attacks carried out by militants in the Niger Delta region. The International Energy Agency (IEA) reported that the Federal government allocated $3–$4 billion annually for importing products and subsidizing consumption (Okereocha, 2016). One of the detrimental consequences of fund mismanagement is the country’s inability to enhance its manufacturing sector and refining processes, leading to compromised production efficiency in terms of both output and cost (Okereocha, 2016).

Fund mismanagement and economic challenges

The primary cause of fund mismanagement stems from a lack of transparency and accountable leadership, with some financial data remaining undisclosed (Aremu, 2015). This issue permeates administrations at the state, federal, and local government levels, resulting in fund misappropriation, lack of accountability, and corruption. Consequently, mismanagement of funds has exacerbated widespread poverty and lowered living standards among Nigerians. Furthermore, Nigeria’s weak institutional framework has impeded the optimal utilization of its natural resources, hindering equitable distribution among citizens (Eyre & Agba, 2007). This disparity is also a key contributing factor to Nigeria’s poor economic performance.

In conclusion, Nigeria faces multifaceted challenges stemming from the mismanagement of funds, corruption, and weak institutional frameworks. The lack of transparency and accountable leadership exacerbates these issues, leading to widespread poverty, low living standards, and hindered economic growth. Moreover, the vulnerability of key sectors such as oil production to terrorist attacks further compounds the nation’s economic woes. Despite efforts to address these challenges through anti-corruption measures and reforms, progress remains slow.

Moving forward, Nigeria must prioritize strengthening governance structures, enhancing transparency, and promoting accountability at all levels of government to effectively address fund mismanagement and foster sustainable economic development. Additionally, investing in human capital development, diversifying the economy, and promoting inclusive growth are crucial steps towards mitigating the adverse effects of fund mismanagement and achieving long-term prosperity for all Nigerians.

References

• Asogva, R., Barungi, B., & Odhiambo,  ojijo. (2017). Nigeria | African Economic Outlook.
• BBC News. (2017). Nigeria country profile – BBC News.
• Ettah, L. (2017, March 27). The Nigerian Economy and Policy Environment. Pressreader. Retrieved from https://www.pressreader.com/nigeria/thisday/20170327/281818578663256
• Eyre, J. M., & Agba, A. V. (2007). Nigeria – An Economic Analysis of Natural Resources Sustainability for the Mining Sector Component.
• LaMance, K. (2017). Mismanagement of Funds. Retrieved from Legal Match website: https://www.legalmatch.com/law-library/article/mismanagement-of-funds.html
• Nigerian National Petroleum Corporation. (2017). Refineries & Petrochemicals.
• Ogbeidi, M. M. (1961). Political Leadership and Corruption in Nigeria Since 1960: A Socio-economic Analysis. Journal of Nigeria Studies, 1(2).
• Okereocha, C. (2016). Oil price crash: Mismanagement, corruption backlash hunt economy – The Nation Nigeria.
• Opeyemi, D. (2015). The unemployment rate in Nigeria has increased from 8.2 percent to 9.9 under President Buhari’s watch – Ventures Africa.
• Proshare intellgent investing. (2016). Impact of the Global Financial Crisis on the Nigerian Economy.
• The World Bank. (2017). Nigeria Overview.
• UNICEF. (2002). State of the world’s vaccines and Immunization. New York. Retrieved from https://www.unicef.org/eca/pub_sowvi_en.pdf
• Yusuff Aremu, A. (2015). MISMANAGEMENT IN GOVERNANCE IN NIGERIA: A CASE OF PUBLIC SECTOR IN NIGERIA. NOVATEUR PUBLICATIONS INTERNATIONAL JOURNAL OF INNOVATIONS IN ENGINEERING RESEARCH AND TECHNOLOGY, 2(8).
• World Bank. (2021). Nigeria – Agriculture. Retrieved from https://www.worldbank.org/en/country/nigeria/overview#2
• The Guardian Nigeria. (2020). Nigeria’s Start-up Ecosystem and COVID-19. Retrieved from https://guardian.ng/opinion/nigerias-start-up-ecosystem-and-covid-19/