Photograph — Quartz

Twelve months have gone in the twinkle of an eye, and so much has happened these months. At the start of the year, the main issue impacting global economic growth was the emergence of new COVID variants. Not long after, Russia invaded Ukraine, leading to economic struggles in various countries.

Nigeria was not immune to these unprecedented events and their effects. Nigeria has faced numerous challenges, including high inflation rates and rising energy costs, which contributed to increased prices for necessities such as food. 

The IMF predicted slower growth for the Nigerian economy in 2022, with a forecast of 3.0% compared to the previous prediction of 3.2%. The World Bank has also revised its forecast for Nigeria’s economic growth in 2023, down to 3.2% from 3.3%, due to global economic deceleration and the ongoing conflict between Russia and Ukraine. 

Here’s a look at how Nigeria performed in some key areas:

Naira strength

A major challenge Nigeria faces is the fluctuating value of the naira. This year, the naira has experienced significant depreciation due to the decline in exports, particularly for commodities such as oil, which is a significant source of foreign exchange for the country.

According to Hanke’s Currency Watchlist, the naira ranks the 11th worst-performing currency in the world against the US dollar. Between 2015 and 2022, the naira weakened by 53%, worsening Nigeria’s foreign debt burden by 288% within the review period. In November, the value of the naira to the US dollar reached as low as N800/$1 at the unauthorised parallel market.

The naira’s devaluation has hurt businesses and individuals, leading to financial strain, increased inflation and interest rates, and decreased purchasing power.


Inflation in Nigeria, Africa’s largest economy has continued to defy gravity. Everything has spiked this year, and they are not just rising but also at a rapid rate. 

According to the National Bureau of Statistics, Nigeria’s inflation rose to 21.47% in November from 21.09% recorded in October, representing the 10th consecutive monthly increase since the start of the year. The country’s food inflation rate also hit 24.13% caused by the increase in prices of bread and cereals, oil and fat, potatoes, yam and other tubers, food products, and fish.

This increase in the year-on-year inflation rate has been attributed to the high cost of importation due to the persistent currency depreciation.

The stock market

The financial stock market fosters higher investments and capital allocation in the country, which impacts economic growth. In 2022 the Nigerian stock market moved on smooth rail and maintained positive momentum in the first nine months of 2022, gaining N4.15 trillion to outshine global markets even in the face of economic volatility. 

The NGX’s market capitalisation had opened in 2022 at N22.297 trillion, gaining N4.15 trillion or 18.63 per cent to close at N26.451 trillion as of September 30, 2022. Also, the Nigerian All-Share Index appreciated by 14.8 per cent year-to-date (YTD) to 49,024.16 basis points from 42,716.44 basis points the stock market opened in 2022 for trading, making it one of the best-performing stock markets in the world.

Notable, in between these months, investors have had to deal with three quick successions in MPR hike and exercise extreme caution by holding back further investment in equity in reaction to Nigeria’s soaring inflation. 

Revenue generation

Every government needs a robust revenue generation model to run efficiently. Not only will the revenue be for economic growth and development, but it is also critical to advancing the welfare of the citizens. 

For the 2022 fiscal year, the government projected a revenue target of N10.7 trillion, 32% higher than the N8.1 trillion projected in 2021. However, in August, the government announced that it had generated N4.23 trillion out of the N6.65 trillion target it set for the period. This shows Nigeria has performed below its expectations. Worse still, a significant part of the revenue would cover debt servicing, which according to the 2022 bill, is N3.6 trillion. This bumpy earn-and-spend model made us question if Nigeria had a spending or revenue problem.

While the oil sector has since been a revenue have for Nigeria, times are changing, and the non-oil sector has become the new engine of revenue growth for the country. The non-oil sector recorded some growth as it exported products worth $2.593 billion in the first half of 2022.

Public debts

Amidst revenue challenges, Nigeria is neck-deep in debt, putting a strain on its economic growth. We earlier reported how Nigeria’s debt is every shade of confusing, and the situation has not changed. Nigeria’s public debt is on the rise, and this year, it reached a staggering N44.6 trillion in the third quarter of this year (Q3 in 2022). 

The total public debt stock comprises domestic debt of N26.92 trillion and external debt of N17.5 trillion. The external and domestic debt service also showed that the country spent N1.17 trillion on debt in Q3’22. Interestingly, about 96% of the nation’s revenue went into servicing debts last year. 

Unfortunately, as the cost of debt servicing increases because of the rising interest rates globally, debt service costs are following a similar trajectory. A large per cent of Nigeria’s external debts are concessional and semi-concessional loans from multilateral lenders, such as the World Bank, the International Monetary Fund (IMF), AfreximBank, and African Development Bank (AfDB), and bilateral lenders, such as Germany, China, Japan, India, and France.

Foreign reserves

Foreign exchange reserves are assets held on reserve by a monetary authority in foreign currencies used to back liabilities and influence monetary policy in a country. They include foreign banknotes, deposits, bonds, treasury bills and other foreign government securities. While they serve many purposes, they usually serve as backup funds for a country whose national currency is experiencing rapid devaluation. 

In Nigeria, the naira struggle, weak foreign investment flows, and the increased demand for forex have resulted in a huge decline in foreign reserves. Nigeria’s foreign reserves receipts declined from US$3.0 billion monthly to zero in 2022. The bulk of the money in Nigeria’s foreign reserves comes from the export of gas and oil to other nations. But increasing instances of crude oil theft have hurt Nigeria’s ability to export enough crude oil. Consequently, its foreign exchange reserves are falling.

Criminals steal an average of 437,000 barrels of oil daily in Nigeria, according to Nigerian National Petroleum Corporation (NNPCL). In January, the production stood at 1.4 million barrels per day, but as of July, production stood at 1.1 million barrels per day. Nigeria lost $2 billion to oil theft between January and August 2022. This is about 5% of its 2021 petroleum export of $41.4 billion.

For comparison, here is the Annual Economic Index for 2021.

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