Nigeria has weathered two recessions since 2016
Presidential candidates promise to reform economy
By MacDonald Dzirutwe
LAGOS, Nigeria, Feb 9 (Reuters) – At a fuel station in Nigeria’s commercial capital, tempers flare and harsh words are exchanged as motorists wait in line for hours to fill up their tanks at one of the few outlets with petrol left in the vicinity.
Across the road, young men drenched in sweat from the sweltering Lagos heat sell petrol in plastic containers at more than double the regulated pump price.
Recurring fuel shortages in Africa’s top oil producer are adding to voter frustration as Nigeria prepares to hold presidential and parliamentary elections on Feb. 25. They are a stark example of the economic hardships that have dogged Nigeria for years, including surging inflation, widespread unemployment and acute shortages of foreign exchange that have severely weakened the naira currency.
“People are suffering; there is no money; there is no food,” said Titus Nwafor, a 53-year-old bus driver as he waited to fill up at the Lagos station.
With elections around the corner, he expressed frustration with the candidates, who he said were “blaming this, blaming that” without offering any solutions.
President Muhammadu Buhari, who will be stepping down in May after serving his constitutionally allowed two terms, promised to revive the economy and improve livelihoods when he took office in 2015.
He has prioritised state-funded infrastructure, investing billions of dollars in new roads, bridges, airports and rail.
Nigeria’s poor transport and power networks have stymied economic growth for decades, holding back the distribution of wealth in Africa’s biggest economy where 63% of people live below the poverty line, according to the national statistics bureau.
Building infrastructure has, however, come at a cost.
Nigeria’s foreign debt has risen fourfold to $40 billion under Buhari, and the budget deficit has widened every year. The government spent 98% of the revenue it collected in 2022 on debt servicing, finance ministry data showed.
Buhari has also pushed protectionist policies, including import bans on the staple rice. This initially spurred local production, but spreading insecurity is hurting farmers’ ability to plant, while the high cost of fertiliser and diesel have pushed the price of a 50 kg bag of rice nearly 90%, to 55,000 naira ($120) last year.
In 2017, the central bank introduced a multiple exchange rate system to avoid devaluing the naira currency, but this has contributed to dollar shortages, and the local unit has weakened to record lows against the greenback on the black market.
A central bank decision to replace old banknotes with new ones – part of an initiative to curb cash in circulation and control double-digit inflation – has caused huge controversy because there are not yet enough new notes in circulation. Enterprising Nigerians are selling cash at premiums of up to 20%.
While Buhari says his government has been laying the foundations for a stronger economy, many Nigerians complain that economic conditions have worsened on his watch.
The country has weathered two recessions since 2016, driven by crude oil price slumps, hard currency shortages and the COVID-19 pandemic.
Economic fallout from the war in Ukraine and heavy flooding last year pushed inflation to its highest level in 17 years, further squeezing consumers in a country where 33% of job seekers are unemployed.
Oil is the biggest foreign exchange earner, but rampant crude theft in the Niger Delta and years of underinvestment have hurt output and strained government finances. For a few months last year, Angola overtook Nigeria as Africa’s biggest oil producer and exporter.
Nigeria relies on imports for nearly all refined fuels. Its state refineries have produced little or no fuel over the past decade due to poor maintenance, and a refinery being built by Nigerian billionaire Aliko Dangote has been beset by delays.
Fortune Alfred, who makes a living driving for the Bolt ride-sharing business, had to park his car at home after spending six hours in a fuel line in Nigeria’s southern oil-producing Rivers state. When he reached the pump, fuel had run out.
“The economic situation at the moment is worse than the early days of Buhari, the 40-year-old said. “The hardships have been created by failure of government.”
Amaka Anku, head of the Eurasia Group consulting firm’s Africa practice, said Nigeria’s economic woes had “created this very high anti-establishment sentiment”.
That is propelling a presidential candidate, the Labour Party’s Peter Obi, who is mounting a challenge to the two parties that have dominated Nigeria since the end of military rule in 1999.
“Obi will do better, and I hope he is able to resuscitate this country and not let it drown even further,” said Ruth Geku, a 21-year-old street food seller in Yenagoa city, Rivers state.
However, there are few major policy differences between Obi and his establishment rivals – Bola Tinubu of Buhari’s All Progressives Congress and Atiku Abubakar of the main opposition People’s Democratic Party.
All have promised to reform the economy, including ending the multiple exchange regime and a fuel subsidy that cost the government $10 billion last year.
But that has proven difficult in the past. Nigerians say cheap fuel – at 184 naira ($0.40) a litre – is one of the few benefits they get from their government. ($1 = 459.9200 naira)
(Additional reporting by Tife Owolabi in Yenagoa, Chijioke Ohuocha in Abuja and Libby George in London, Editing by Alexandra Zavis and Angus MacSwan)