Economy
Why the Nigerian Economy Requires Immediate Reforms
Not too long ago, Bola Ahmed Tinubu won the presidential election. He will take over the presidency of Nigeria in May 2023 and will have the difficult challenge of reviving the weak Nigerian economy by implementing many crucial changes.
GDP Growth Rate
The National Bureau of Statistics’ latest data on Nigeria’s Gross Domestic Product (GDP) shows a decrease in the annual GDP growth rate to 3.10% in 2022, compared to 3.40% in 2021. However, in the 4th quarter of 2022, the economy grew by 3.52%, in contrast to the 2.25% in the previous quarter.
Non-oil sectors were responsible for most of the growth. More precisely, 95.66%, while Nigeria’s oil sector contributed 4.34%. Daily oil production increased to 1.34 million barrels per day in Q4, up from the previous quarter’s 1.20 million barrels. However, it is still lower than the 1.50 million barrels per day recorded in the same quarter of 2021.
The services sector was also one of the main reasons for growth, contributing 56.27% to the GDP in the 4th quarter of the year.
Furthermore, the information and communication sector also played a significant role. It caused a 16.22% growth in the 4th quarter, compared to 15.35% in the 3rd quarter and 15.21% in the 4th quarter of 2021.
Another sector that helped with the GDP growth was the trade sector. It added 13.20% to the GDP in Q4, higher than the 12.45% in Q3. Although the sectors mentioned above had a positive effect on the GDP, there are still some sectors that lowered it.
Agriculture’s contribution to the GDP in the 4th quarter was 24.90%, a bit lower than the previous quarter’s 27.55%. Severe flooding across the country significantly set back agriculture, causing the sector to record a 0.94% decrease.
Manufacturing’s contribution to real GDP in 2022 was 8.40%, lower than 15% in 2021. So, the new president can work on expanding labour productivity through education to improve the country’s GDP.
Socio-Economic Issues
Mrs Zainab Ahmed, the Minister of Finance, Budget, and National Planning, mainly worries about the government’s ability to fund important programs due to low tax compliance among Nigerians. In the past, citizens paid taxes, but this changed since Nigeria became an oil-based economy. But, perhaps quite surprisingly, Nigeria’s gambling industry could provide a good source of revenue as it is relatively advanced compared to other African countries.
In general, governments tax the gambling industry to generate revenue, which also applies to Nigeria. However, with the online gambling world remaining largely unregulated in Nigeria (as well as in the vast majority of African countries), Nigeria is missing out on a significant potential source of income, not to mention that Nigerian citizens gambling online remain primarily unprotected due to the lack of regulation in the country.
With no deposit bonuses and other enticing offers brought about by the rise of online gambling attracting more and more players each year, it’s crucial to address the problem of the lack of legislation in this sector – for both players’ and the country’s sake.
And although tax collection has increased significantly from N6 trillion in 2021 to N10 trillion in 2022, the government still needs to address the growing expenditure that outpaces revenue growth by almost double annually.
Improving the Transmission Infrastructure
Power transmission is a huge issue for Nigerian citizens. Despite installing almost 13 GW of grid power-producing capacity, only an average of 3.4 GW reaches customers.
According to Prof. Kingsley Moghalu, the next government must increase revenue and address waste and corruption in governance by bringing in competent professionals to manage the economy. In addition, the new president must take direct ownership and leadership of the power sector, and mandate key players, to enhance transmission infrastructure.
The CEO of Proton Energy, Mr Oti Ikomi, emphasizes the need for a single individual who is accountable and takes instructions from the president, who must take ownership and not just hold a titular position. This individual must have technical, administrative, and supervisory responsibilities and meet regularly with the president.
He cited the example of Egypt, where the President had weekly meetings, which improved the transmission infrastructure. He added that Siemens Energy, a giant global energy corporation, is willing to work with Nigeria, but the country must also be ready to expedite things.
Domestic Debts
Dr Baba Musa, the Director-General of the West African Institute for Financial and Economic Management, finds Nigeria’s large debt a major challenge. He highlights the need to remove fuel subsidies and increase revenue through innovative means, such as cancelling tax relief.
Dr Musa also emphasizes the importance of spending only on essential items until revenue improves. He calls for coordination between the fiscal and monetary authorities and suggests evaluating the quality of fiscal spending.
In contrast, Mrs Zainab Ahmed states that the main issue with the Nigerian economy is the lack of ability to generate sufficient revenue rather than the current debt situation. Therefore, domestic revenue needs to be increased to reduce reliance on borrowing.
All in all, the new Nigerian president, Bola Ahmed Tinubu, must tackle the various economic challenges by implementing critical reforms that will ensure sustainable recovery.
The president must prioritize fiscal management, establish a unified and stable market-based exchange rate, and put an end to fuel subsidies. These measures are necessary to navigate the country toward economic prosperity.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange recorded a loss of 1.13 per cent on Thursday, June 4, shrinking the market capitalisation by N30.03 billion to N2.630 trillion from N2.660 trillion on Wednesday.
Similarly, this brought down the NASD Unlisted Security Index (NSI) by 50.19 points to 4,396.08 points from the 4,446.27 points recorded a day earlier.
The loss was influenced by the overpowering of the bulls by the bears, after the bourse closed with two price gainers and three price losers, led by FrieslandCampina Wamco Nigeria Plc, which slumped by N20.03 to sell at N190.38 per unit compared with midweek’s N210.41 per unit. Food Concepts Plc declined by 25 Kobo to trade at N2.50 per share versus the previous day’s N3.00 per share, and Acorn Petroleum Plc crumbled by 2 Kobo to end at N1.32 per unit, in contrast to the preceding session’s N1.34 per unit.
For the gainers, Central Securities Clearing System (CSCS) Plc added N2.93 to close at N78.34 per share compared with the previous price of N75.41 per share, and Afriland Properties Plc gained 80 Kobo to settle at N16.80 per unit versus N16.00 per unit.
There was a slip in the volume of transactions yesterday by 46.8 per cent to 280,714 units from 527,221 units, as the value of trades dropped 66.5 per cent to N21.8 million from the preceding session’s N64.2 million, and the number of deals fell by 8.7 per cent to 42 deals from 46 deals.
Great Nigeria Insurance (GNI) Plc ended the session as the most traded stock by value on a year-to-date basis with 3.4 billion units worth N8.4 billion, followed by Infrastructure Credit Guarantee (Infracredit) Plc with 2.3 billion units sold for N6.5 billion, and CSCS Plc with 64.7 million units traded for N4.4 billion.
GNI Plc also finished the day as the most traded stock by volume on a year-to-date basis with 3.4 billion units valued at N8.4 billion, followed by Infracredit Plc with 2.3 billion units exchanged for N6.5 billion, and Resourcery Plc with 1.1 billion units transacted for N415.7 million.
By Dipo Olowookere
The domestic stock market crashed by 0.37 per cent on Thursday as a result of the decline in the price of shares of McNichols, Eterna, Aradel Holdings, and others.
Business Post reports that investor sentiment remained weak after the Nigerian Exchange (NGX) Limited ended the session with 25 price gainers and 31 price losers, indicating a negative market breadth index.
McNichols lost 10.00 per cent to trade at N7.74, ABC Transport slipped by 9.88 per cent to N6.20, Eterna shrank by 9.85 per cent to N29.75, Aradel Holdings depreciated by 9.51 per cent to N1,749.90, and NPF Microfinance Bank contracted by 8.45 per cent to N5.20.
On the flip side, International Energy Insurance gained 10.00 per cent to close at N6.60, Omatek improved by 9.73 per cent to N2.03, Abbey Mortgage Bank surged by 9.68 per cent to N8.50, Cutix expanded by 9.66 per cent to N3.18, and John Holt grew by 7.79 per cent to N14.90.
As for the sectorial performance, the industrial goods and banking indices chalked up 0.54 per cent and 0.31 per cent, respectively. But the energy sector depleted by 4.90 per cent, the insurance counter tumbled by 0.58 per cent, and the consumer goods index slumped by 0.03 per cent.
As a result, the All-Share Index (ASI) dipped by 905.30 points to 242,227.31 points from 243,132.61 points, and the market capitalisation stumbled by N581 billion to N155.359 trillion from N155.940 trillion.
During the session, investors traded 588.5 million equities valued at N27.9 billion in 57,352 deals compared with the 923.0 million equities worth N42.3 billion transacted in 69,332 deals on Wednesday, showing a drop in the trading volume, value, and number of deals by 36.24 per cent, 34.04 per cent, and 17.28 per cent, respectively.
The most active equity yesterday was Access Holdings with 109.7 million units sold for N2.6 billion, FCMB traded 35.6 million units valued at N384.2 million, NGX Group transacted 28.1 million units worth N3.9 billion, Zenith Bank exchanged 26.9 million units for N3.3 billion, and Sterling Holdings recorded a turnover of 22.5 million units worth N176.1 million.
By Adedapo Adesanya
A 0.1 per cent or N1,49 loss was recorded by the Nigerian Naira against the United States Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Thursday, June 4, closing at N1,358.75/$1 compared with the previous day’s N1,347.26/$1.
In the same vein, the Naira depreciated against the Pound Sterling in the official FX market during the session by N5.39 to trade at N1,828.06/£1 versus Wednesday’s closing rate of N1,822.67/£1, but gained N6.75 against the Euro to sell at N1,574.83/€1 versus the preceding session’s N1,584.39/€1.
At the black market and GTBank FX desk, the local currency traded flat against the Dollar during the session at N1,375/$1 and N1,372/$1, respectively.
Data from the Central Bank of Nigeria (CBN) showed that NFEM interbank FX turnover contracted to $128.117 million in 121 deals on Thursday from $133.731 million the previous day.
On the positive side, Nigeria’s external reserves moved closer to a 2009 high of $50 billion, enhancing analysts’ confidence about the local currency outlook in the second half of 2026.
This improvement has been helped by heightened global uncertainty, which has reduced the incentive for importers and corporates to demand FX, as cautious trade weighs on import needs. Analysts estimate a $40 billion net FX position for the year, a projection anchored in oil windfall gains.
As for the cryptocurrency market, prices extended steep weekly losses as the broader artificial-intelligence trade that has driven global risk assets since 2026 faltered.
The sell-off was led by equity and currency markets, with semiconductor stocks, Asian indexes and several regional currencies sliding in a broad risk-off shift.
Persistent outflows from US spot Bitcoin ETFs and a rare BTC sale by Strategy have removed a key source of support, leaving markets focused on Friday’s US jobs report for clues on Federal Reserve policy and the fate of the AI trade. The most valued coin slipped 3.6 per cent to $61,914.58.
Cardano (ADA) plunged by 17.6 per cent to $0.1630, Solana (SOL) declined by 7.0 per cent to $65.69, Ethereum (ETH) slipped by 6.9 per cent to $1,666.13, Dogecoin (DOGE) went down by 6.5 per cent to $0.8445, and Ripple (XRP) crashed by 6.5 per cent to $1.11.
Further, Binance Coin (BNB) slumped by 4.3 per cent to $581.45, and TRON (TRX) dropped 1.9 per cent to sell at $0.3261, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) gained 0.01 per cent each to sell at $0.9990 and $0.9998, respectively.
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