23 January 2020
The United Nations’ World Economic Situation and Prospects [WESP] report 2020, published last week, makes very disappointing reading for those hoping that Nigeria is close to turning the corner in terms of economic growth.
The report claims that African economic “growth rates are insufficient for meaningful development progress”. It goes on to say that “Africa continues to face difficulties in achieving the more robust and sustained growth path that is needed to enhance living standards across the continent. “
The poor economic outlook is more severe in West Africa, especially in Nigeria. “Domestic demand is also underpinning GDP growth in West Africa, where the rate of economic expansion is expected to remain steady at 3.5 per cent in 2019 and 3.6 per cent in 2020. Robust growth in the member countries of the West African Economic and Monetary Union (WAEMU) is offset by sluggish economic activity in Nigeria. Growth in Nigeria is estimated to have picked up to 2.1 per cent in 2019 as oil production trended upwards and private sector sentiment improved. In 2020, growth is projected to rise slightly to 2.3 per cent, but in per capita terms the economy will continue to contract in the absence of major structural reforms. Furthermore, the medium-term outlook is limited by severe infrastructure deficiencies and a weak macroeconomic policy environment, including multiple exchange rates, high inflation and low non-oil revenues.”
The report adds: “In many countries, fiscal accounts are weak and volatile and are subject to fluctuations in commodity prices, especially oil. It is imperative for hydrocarbon exporters such as Algeria, Angola, Chad, Equatorial Guinea, Gabon, Nigeria and Sudan to diversify fiscal revenues. Recent reforms such as those in Nigeria have so far fallen short of significantly increasing non-oil revenues.”
On poverty rates, the report states: “The Democratic Republic of the Congo, Ethiopia and Nigeria are among the five countries with the largest populations living in extreme poverty and are home to about 23 per cent of the world’s poor. The poverty situation has been exacerbated by the growth slowdown since the collapse in commodity prices in 2014/15.”
Employment is a route out of poverty and this route is shut for most youths: “Youth unemployment and underemployment rates remain high in Africa, and many young people end up in vulnerable occupations, self-employed or in the informal sector. Large numbers of university graduates struggle to find jobs because of a lack of employable skills or skill mismatches with market requirements. In North Africa, youth unemployment rates exceed 25 per cent in Algeria, Egypt and Tunisia. The highest youth working poverty rates—averaging around 70 per cent—are found in sub-Saharan Africa. Youth unemployment has also risen in some large economies recently. In Nigeria, youth unemployment surged from less than 15 per cent in 2015 to above 35 per cent in 2018, with more than half of the country’s young people unemployed or underemployed.”
The World Economic Situation and Prospects 2020 is a joint product of the United Nations Department of Economic and Social Affairs (UN DESA), the United Nations Conference on Trade and Development (UNCTAD) and the five United Nations regional commissions: Economic Commission for Africa (UNECA), Economic Commission for Europe (UNECE), Economic Commission for Latin America and the Caribbean (UNECLAC), Economic and Social Commission for Asia and the Pacific (UNESCAP) and Economic and Social Commission for Western Asia (UNESCWA). The United Nations World Tourism Organization (UNWTO), UN Office of the High Representative for the Least Developed Countries, Landlocked Developing Countries and Small Island Developing States (UN-OHRLLS), and the International Labour Organization (ILO) also contributed to the report.