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Nigeria: Africa’s paradoxical powerhouse For all its economic might, it remains a deeply dysfunction



Hustle and bustle: a money services stall in Lagos. Nigeria has the biggest economy and largest population in Africa, yet life expectancy is only 55, among the lowest in the world © Adetona Omokanye/Bloomberg



Nigeria likes to think of itself as the powerhouse of Africa. In many ways, it is.


The west African country has the biggest economy on the continent, with an annual output of $430bn. It is the continent’s largest oil producer, despite problems meeting its Opec quota. And, with around 210mn people — almost double the level of its nearest rival, Ethiopia — it is Africa’s most populous country by far.


It is also a soft power juggernaut whose film stars, writers, musicians and designers command a global following and whose technocrats hold some of the world’s most influential jobs. Its banks are among the biggest on the continent. In Lagos, it boasts Africa’s single most successful tech hub, home to an increasing number of unicorns, companies valued at more than $1bn.


But, in other terms, Nigeria looks more like a failing state than a superpower. Life expectancy is 55, according to the World Bank: two years lower than Somalia, which hardly has a functioning state at all; 10 years below regional rival Ghana; and nearly 20 years below Mauritius.

Workers at an oil refinery under construction near Lagos. Nigeria is Africa’s biggest producer of oil © Tom Saater/Bloomberg


Even before Covid, at least 10mn children were out of school, according to the government’s own estimates, roughly two-thirds of them girls. Each day, according to Unicef, 2,350 children below the age of five die of preventable diseases. Maternal mortality rates, at more than 600 per 100,000 births, are among the highest in the world, on a par with the Democratic Republic of Congo. “That’s like crashing a plane full of pregnant women every day,” as one senior health official graphically puts it.


These dire statistics are testimony to the failure of successive administrations, both military and civilian, to translate the country’s enormous oil wealth and diverse talents into sustained economic development.


Instead of investing in comprehensive basic health and education, and the infrastructure, both physical and institutional, necessary for economic take-off, decades of oil money have been squandered on badly maintained white elephants, consumption and outright theft. In 2012, a government-commissioned task force found that $100bn had been siphoned off from Nigeria’s oil and gas industry, sometimes in collusion with foreign traders, in the decade to 2011 alone.



None of this is inevitable. No two countries are alike but, for all its problems, Indonesia — another resource-rich country with a large population and, itself, a victim of predatory colonialism — is doing much better. In purchasing power parity terms, Indonesians enjoy a living standard more than twice as high as Nigerians. And they live 16 years longer.


“We just need to get serious and this country will fly,” says Banji Fehintola, head of treasury at Africa Finance Corporation, a multilateral bank partly owned by Nigeria’s central bank. Like many, he argues that, with a few sensible policies — mainly removing distortions and waste — the great potential of Nigerians can be unleashed.



The hope was that Muhammadu Buhari, a former military leader elected as a civilian president in 2015, could help catalyse that process. Buhari, widely considered honest — which is not a given among Nigerian politicians — promised to crack down on corruption, tame jihadist violence and catalyse economic growth. But things have become worse on his watch.


In per capita terms, people are poorer today than when he was elected. That is partly because oil prices collapsed in 2015 and again at the start of the coronavirus pandemic. However, they have since come roaring back with no discernible impact on people’s welfare.



His administration has got a few things done. It has overseen the completion of infrastructure, including railway lines between cities such as Abuja and Kaduna. After 20 years of trying, it has also passed a version of the Petroleum Industry Act — a set of tax measures and other reforms designed to incentivise investment in oil and gas — although, with global sentiment now turning decisively against hydrocarbons, some say that legislation has come too late.


For the most part, though, Buhari’s administration has stuck to the failed recipes of the past. Subsidies and state intervention have continued to distort markets and shift entrepreneurial activity from production to arbitrage. There may have been some marginal success in raising domestic rice production through lending to small farmers and banning imports. In January, officials in Abuja somewhat bafflingly showed off “rice pyramids” of pharaonic proportions. But this has come at the cost of higher prices for consumers.

In other areas, government intervention has been more damaging still. Electricity prices are kept artificially low, meaning few companies can distribute power without risking bankruptcy. Petrol prices are subsidised, a gift to middlemen, smugglers and car owners — but less obviously to the poor in whose name it is maintained.


In addition, foreign currency is rationed — expanding central bank authority far beyond the setting of interest rates. In an often opaque process, the bank determines which industries and individuals get foreign exchange and at what price — a policy that causes chronic foreign exchange shortages to the frustration of investors and manufacturers alike.


The result of all this is that Nigeria’s economy has stagnated. In 2021, the federal government had a budget of similar size to that of Shehu Shagari’s administration 40 years ago, according to Donald Duke, a former governor of Cross Rivers state and a prominent member of the opposition People’s Democratic party. In the meantime, he says, the population has doubled and public debt absorbs increasingly large amounts of government revenue.


The Covid pandemic has compounded difficulties, though the economic impact has far outweighed that on health. “The problems that Nigeria is bedevilled with are worse than Covid,” says Olatunde, who works in a small printing shop in the Shomolu district of Lagos and who prefers to withhold his surname. “Our leaders are not competent; they are greedy.”


A street scene in Lagos. Despite rapid population growth, Nigeria’s economy has stagnated in recent decades © Adetona Omokanye/Bloomberg


Whatever the cause of the economic slump, lack of opportunity has sown desperation. Kidnapping has become one of Nigeria’s few growth industries. Street crime has also increased.


Though the army has had some success in pushing back Boko Haram, a terrorist group previously entrenched in the north-east, other security threats have sprung up in its place.


Islamic State West Africa Province has gained support in parts of the north by promising the social services that the state has largely failed to provide. In the middle belt and elsewhere, clashes continue between pastoral herders and sedentary farmers.


In the south-east, the state’s crackdown on perceived separatists has only boosted support for an independent Biafra. Talk of Nigeria splitting apart is not new, but it has gained in intensity.

A vendor counts naira banknotes at a Lagos market. Foreign currency restrictions have added to Nigeria’s economic woes © Adetona Omokanye/Bloomberg


Many people are already looking to the next administration for solace. Presidential elections are due to take place in February 2023 and candidates, declared or otherwise, are jockeying for position.


The fear, especially among younger Nigerians, is that the political system, dominated by big money, will simply throw up the same recycled politicians of the past. “Most of the time you’re forced to choose between a rock and a hard place because the quality of the candidates coming through is so poor,” says Kadaria Ahmed, director of Radio Now, an independent station in Lagos.


In recent years, the EndSARS protest movement against police brutality — and specifically Nigeria’s Special Anti-Robbery Squad — morphed into a wider call for greater accountability. However, it never transitioned into a political movement or a much hoped-for third party. In October 2020, many young people were shocked when the army turned its guns on EndSARS protesters at Lagos’s Lekki tollgate, killing at least 12, according to Amnesty International. It is still doubtful that those sympathetic to EndSARS will emerge as a coherent political force in 2023.


The old guard remain, though. Bola Tinubu, the so-called “godfather of Lagos”, intends to run as the candidate for Buhari’s All Progressives Congress party. The president has pointedly not endorsed him. Long a “kingmaker” in his own words, Tinubu now declared his ambition to be “king”.


The opposition PDP could field Atiku Abubakar, a former vice-president and another wealthy man who has successfully mixed business with politics. Abubakar — at 75, six years older than Tinubu — has presented himself as a pro-business candidate, though he elicits little public excitement.


Many Nigerians say a Tinubu-Abubukar run-off would be depressing, and hope for more energetic and forward-looking candidates. But election campaigns are expensive. “They don’t talk naira; they talk dollars,” is how Duke, once a presidential candidate himself, puts it. The most likely outcome is that Nigeria’s next president will come from within the political establishment that has brought the country to this point.

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