Nigeria’s economy showed endurance in 2021, recovering from the COVID-19 disruptions of 2020. However, the economy also faced challenges that hindered its growth.

In February 2021, Nigeria exited its worst recession in 33 years, growing by 0.11%. This recovery beat analysts’ expectations and projections from the International Monetary Fund (IMF) and the World Bank.

The economy grew by 0.51% in Q1 2021, 5.01% in Q2, and 4.03% in Q3. This positive trajectory was a welcome change from the 6% and 3.6% contractions in Q2 and Q3 of 2020.

However, the country’s inflation rate slowed in April 2021, after rising steadily since September 2019. This decline brought little relief to Nigerians, who still faced high prices. The inflation rate dropped from 11.1% in July 2019 to 11.02% in August 2019 but rose to 18.12% in April 2021. It then declined for eight months to 15.4% in November 2021.

In July 2021, the Central Bank of Nigeria (CBN) stopped selling foreign exchange to Bureau De Change operators. This move aimed to curb illicit forex flows and graft. The CBN began channeling weekly dollar sales through commercial banks to meet legitimate forex demands. However, the naira fell from N505 to N525 per dollar at the parallel market.

After a record 50% gain in 2020, the Nigerian stock market struggled to maintain momentum in 2021. Investors turned to fixed-income securities as yields rose. The equities market gained 5.08% year-to-date.

Unfortunately, Nigeria’s public debt rose to N38 trillion in Q3 2021. This increase was largely due to the $4 billion Eurobond issued in September 2021.

The country’s rising public debt, spending needs, and difficulty in raising tax revenue created a challenging fiscal policy trilemma.

Key Statistics

– Nigeria’s GDP grew by 0.11% in Q4 2020.

– Inflation rate slowed to 15.4% in November 2021.

– Public debt rose to N38 trillion in Q3 2021.

– The equities market gained 5.08% year-to-date.

A Surge in Abduction Epidemic

Despite the appointment of new service chiefs in January 2021, insecurity persisted. Over 1,000 students were kidnapped, and many schools were shut.

According to the Nigeria Security Tracker, there were 2,943 abduction cases and 5,800 death cases due to insecurity between January and June 2021.

Moving Forward

Nigeria’s economy has endured, but challenges persist. Addressing infrastructure, inflation, and insecurity will be necessary for economic growth.

By understanding the themes that shaped the economy in 2021, policymakers can make informed decisions to drive growth and development.