There’s no easy way to say this, but the Nigerian economy is struggling.
Unlike other emerging market peers like Malaysia, which grew by 8.7% in 2022, Nigeria has barely grown more than 3.5% in the last eight years. For context, Nigeria’s average growth from 2000-2010 was 7.7%.
But slow economic growth is just one symptom of a weak economy. Nigeria also suffers from low GDP per capita, rising inflation, worsening unemployment, financial instability, high debt and general loss of investor and consumer confidence.
Strengthening the economy, which means increasing output, requires growing the components of economic output—or GDP. That is, consumption, investment, government spending, and net exports (exports - Imports) must increase. Given how intertwined and interdependent these components are, a decline in one affects the others, weakening the economy. For example, when investment inflows fall, employment declines, consumption drops, and so does output.
So today’s article will examine how focusing on exports can strengthen the Nigerian economy. We’ll first explore why exports are the way to go and then close off with how Nigeria can boost its exports through foreign direct investments (FDIs).
We are focused on exports because Nigeria is still at the beginning stages of economic development, according to Rostow’s model for economic growth. Agriculture and manufacturing are largely underdeveloped in Nigeria, and fixing this requires improving local production to meet domestic demand and gainfully engage in international trade.
Focusing on exports is key to jump-starting growth in these economically significant sectors, which employ over 50% of Nigeria’s labour force. Boosting their productivity is a plus