In economic terms, 2019 was a mixed year for Nigeria. GDP growth remained stable at 2% in the first half of 2019, having averaged 1.9% throughout 2018. By year’s end this had improved to 2.3%, according to the IMF; however, inflation stood relatively high, at 11.3%.
On the political scene, 2019 saw the incumbent President Muhammadu Buhari re-elected for a second time in February, winning on a campaign that promised to tackle insecurity and corruption, diversify the economy away from hydrocarbons and raise living standards.
State budget spearheads growth
The government has been investing heavily in transport and infrastructure, allocating N258.4bn ($714.1m) to rehabilitate roads in the 2019 budget. Another N100bn ($276.4m) was set aside for the construction and upgrade of existing rail links, in line with efforts to encourage greater rail travel and help ease congestion on the roads.
These funds are part of the $20bn that will be spent on nationwide infrastructure over the next decade, an initiative announced in early 2019.
The historical shortfall in transport infrastructure spending has engendered significant costs for the country. For example, congestion due to poor port and associated transport infrastructure created losses of N3.5trn ($9.7bn) in 2018 at Nigeria’s maritime logistic hubs, according to a March 2019 report by the research group African Centre for Supply Chain.
However, supported by higher public investment in the first half of the year, import restrictions and ongoing mega-projects, construction has continued to perform positively.
See also: The Report – Nigeria 2019
Following the opening of borders
A watershed moment for Nigeria and Africa came in July 2019, when Nigeria at last signed the African Continental Free Trade Agreement (AfCFTA). AfCFTA had been signed by most African countries in March 2018 and came into effect in May 2019. The agreement, to which 54 African countries are now signatories, aims to reduce barriers to trade and commercial activity across the continent.
In a further opening of borders, as of January 2020 citizens of African countries will be eligible for visas on arrival, instead of needing pre-approved visas to visit Nigeria.
However, in August 2019 all of Nigeria’s land borders were closed to all imports and exports. The administration of President Buhari has said the move is aimed at preventing smuggling and shoring up self-sufficiency in terms of food. This has notably driven up Customs revenue at Nigeria’s ports, which remain open to trading.
The border closure has drawn accusations of protectionism, particularly coming so soon after the signing of the AfCFTA. As of January 2020 it is not clear when the borders will be reopened.
ICT and diversification efforts
In addition to expanding continental interconnection, one of the government’s main aims in 2019 was to pivot away from an over-reliance on hydrocarbons. Key to this has been an increased focus on ICT.
The development of ICT is being supported by the rollout of broadband capacity and rising demand for products and services. This expansion in internet usage has helped make the telecoms sector the fourth-largest contributor to the economy.
In May 2019 global tech giant Microsoft announced the launch of its first African Development Centre (ADC), housed between facilities in Lagos and Nairobi. The ADC represents a $100m investment in African tech innovation across the two cities. The Lagos centre will focus on financial technology, agri-tech and off-grid energy, among other areas.
This dovetails with broader plans to boost ICT. The Nigerian Communications Commission, for example, is promoting tech development with a view to both driving research and combatting the brain drain that affects the sector.
Hydrocarbons continue to underpin economic growth
These efforts notwithstanding, oil and gas remain central to the economy. Emblematic of this is the Dangote refinery. Construction on the project initially started in 2013, with the refinery to become fully operational in 2020; however, this was pushed back to 2021 at the end of last year.
Once fully up and running, the Dangote refinery will exclusively process Nigerian crude, which should significantly reduce fuel imports.
While building is still under way, the world’s largest crude distillation column was inaugurated at Dangote in December 2019. Upon completion, the company expects the refinery to be the biggest in the world.