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Recession over as Nigerian economy surprisingly records positive growth of 0.11% in Q4’20

Contrary to market expectations, the Nigerian economy recorded its first positive growth of 0.11% (year-on-year) in Q4’20 after two consecutive quarters of negative growth. Full year growth for 2020 is -1.92% and implies that the recession is over. This came in against the trend and means that the EndSARS effect was exaggerated and had only a muted impact. Of the 46 activities, 29 expanded as against 21 in Q3. This has positive implications for the policy trajectory in 2021, as we expect the policy thrust to become more focused on ensuring price and exchange rate stability. Compared to 2016/17, this recession lasted only for six months. Also, the expanding sectors are job elastic and are likely to have a positive impact on the unemployment level in the economy.

Rapid urbanization and urban development in Lagos state

Urbanization has been a key force of economic development in Nigeria. Lagos, the most urbanized state in Nigeria has an urbanization rate of 5.8% pa, and is ranked the 18th largest city in the world. However being the most urbanized state in the country comes with its share of problems, some of which are affordable housing deficit (over 17mn) and increased pressure on social amenities. To bridge this gap, a robust policy, involving both the public and private sectors that will attract investment, is required. This will also fit into the federal government’s infrastructure drive, which will provide the necessary impetus for growth.

Nigeria infrastructure splurge to boost economy

There has been an increase in the infrastructure projects been carried out by the federal government in the last one year and a half. It is a known fact that investment in infrastructure is a sure way to fast track the development of a country. Nigeria has an estimated infrastructure deficit of $100mn annually. In order to bridge this gap, the government will require significant funding, especially at a time when fiscal revenues have been eroded and spending plans increased sharply as a result of the covid pandemic. The government’s infrastructure development agenda will create more jobs and boost the development of the economy.

In this edition of the FDC Monthly publication, the FDC Think Tank provides in-depth analysis to these and other issues and what to expect in the next one month.

Do enjoy your read…