By May 29, 2024, President Bola Ahmed Tinubu-led Federal Government will be a year old in office. The Nigerian Observer team employed socio-economic metrics to rank the performance of his administration since assumption of office and found his economic scorecard to be mixed.
Nigeria’s Gross Domestic Product (GDP) grew by 2.98 percent at the end of the first quarter of 2024, making it the third quarter President Tinubu was fully in charge of Nigeria. The first quarter of his administration, which was the third quarter of 2023, Nigeria’s real GDP growth rate was 2.54 percent. The economy recorded 3.46 percent in the fourth quarter of 2023. The first three quarters of his reign, which were Q3 2023, Q4 2023 and Q1 2024, the average real GDP growth rate was 2.99 percent.
Even if there is a miraculous economic growth in the second quarter of 2024, which will be equivalent to President Tinubu’s one year in office, the resultant economic growth rate will still fall short of President Tinubu’s campaign promise of ensuring 10 percent real growth annually. He promised to grow the Nigerian economy up to $586.7 billion by the end of 2024.
President Tinubu also emphasised the role of agriculture in Nigeria, which for time immemorial, has been the backbone of the economy. For the three quarters he has been in office, productivity in the nation’s agriculture sector has been lacklustre. The sector grew by 1.30 at the end of the third quarter of 2023, and by 2.10 percent in the last quarter of 2023. In Q1 2024, agricultural real GDP growth rate was just 0.18 percent.
When disaggregated, crop production where the bulk of the sectoral activities take place, and forestry recorded 1.88 percent and 1.77 percent real growth respectively in 2023. On the other hand, livestock production and fishing ended 2023 in the red as real GDP growth rates for the two sub sectors were at -8.61 percent and -1.36 percent respectively in 2023.
Capital importation into the agriculture sector was $19.91 million in 2023 as against $95.80 million in 2022. However, domestic investment inflows into the nation’s agriculture sector continue to be very strong as more players become aware of the huge opportunities in the sector. For instance, the British International Investment (BII) signed an agreement last October with a Singapore-based agro-allied firm to invest $15 million for the development of warehouse infrastructure in Nigeria. The agreement further created the option of investing additional $35 million in the same project. Also, USAID mobilised N9.6 billion in December 2023 for fintech, agribusiness and MSMEs in the northeast part of the country.
The cost of lending has soared since President Tinubu assumed office, making it more expensive for existing businesses to expand while many bankable ideas have been abandoned because their internal rate of return is now lower than the cost of capital. As at the last Monetary Policy Meeting (MPC) of the Central Bank of Nigeria (CBN), the Monetary Policy Rate (MPR) was further hiked to 26.25 percent.
MPR was 18.75 percent in December 2023, but was raised to 22.75 percent in February 2024. It was further increased to 24.75 percent in April 2024 before hitting 26.25 percent in May 2024.
The hawkish stance of the CBN was not unconnected with the ravaging inflationary pressures in the country, as the CBN favoured price and exchange rate stability over higher cost of capital. As of April, headline inflation set a new record, reaching 33.69 percent while the food inflation was at an all time high at 40.53 percent, thus exerting more pressures on government, businesses and households through reduction of their purchasing power.
Exchange rates have deviated from the initial plan in the 2024 budget which assumed an average of N800/$. With the naira float, the national currency exchanges around N1500 at the official market, prompting the CBN to ask bureau de change to recapitalise.
On the positive side, investors continue to reap huge benefits from the capital market. From a market capitalisation of N30.37 trillion on May 30, 2023, the market capitalisation of listed equities has grown by N24.85 trillion as it now stands at N55.22 trillion as of Friday May 24, 2024. The All-share Index (ASI), which currently stands at 97,612.51 points, has added 41,843.23 points, to its 55,769.28 points as of May 30, 2023.
