Economic Updates

The NBS National outcome report on Water, Sanitation and Hygiene (WASH), suggests improvements in achieving SDG 6 (clean water and sanitation) in Nigeria. Accesses to the three WASH areas is indicated to have advanced in five years, up until 2018. In 2013, 56.9% of Nigeria’s population had access to improved and safe drinking water; by 2018, those who had access increased to 73.4%¹. Similarly, although about 24.4% of Nigerian household members still practice open defecation, access to improved sanitation enhanced from 35.7% in 2013, to 57.4% in 2018. In terms of hygiene, about 91.4% of household heads were reported to have knowledge of at least two critical times for hand-washing. The remarkable advancements and progress in achieving the SDG 6 may not be unconnected to policy collaborations and structured multi-sectored partnerships between the Nigerian government and international partners like UNICEF. For instance, the Federal Ministry of Water Resources and National Open Defecation Free (ODF) road maps², and the PEWASH (Partnership for Expanded Water Supply and Sanitation) policy introduced in 2016³, have provided coordinated framework, strategies, and projects responsible for the recent progress and towards 100% achievement of goal 6 by 2030. Going forward, more exchanges with other African countries on progress, challenges, and needs in the critical areas of the use of data and technological advances is key to better implementation and monitoring.

Domestic oil production output increased to 1.82 million barrels per day (mbpd) in the month of April 2019¹. According to the global oil cartel, OPEC, Nigeria’s crude oil production rose by 5.3%, from 1.7mbpd reported in March 2019. Although the increase likely suggests less disruptions to major oil pipelines in Nigeria and is considered necessary to meet fiscal obligations, it positions Nigeria as a non-compliant OPEC member. Essentially, while Nigeria attempts to gradually step up to producing close to the 2019 budget benchmark of 2.3mbpd to allow for adequate budget funding, the country reneges on the quota of 1.69mbpd signed under the OPEC supply cut agreement. With major investments being undertaken in the oil and gas sector such as Pan Ocean Oil Corporation Limited’s infrastructure projects in gas pipeline, gas processing plant, and early production facility, crude oil production is expected to rise in the coming months. With Nigeria’s production being a negligible component of OPEC’s total production, non-compliance to the agreement should not destabilize the oil market.

The amount of financial subsidy that Nigeria absorbs to maintain pump price at the official N145/litre has remained high. According to reports, the NNPC now pays N48.68 subsidy for a litre of petrol¹, as against the N26 recorded as payments in May 2018². In total, at the daily average consumption rate of 50 million litres per day, the government currently pays N2.43 billion per day as subsidy payments. The direct and externally-influenced reason has been increasing in landing costs which rose from N171 to N193.7 – consistently above the official N145 pump price - and this has fueled the very politically-charged issue of increasing petrol pump price domestically. With the upward trend in oil price, landing costs are expected to continue rising. The complete deregulation of the downstream oil sector will allow for private investment and consequently end subsidy payments, making it available for other sectors.

Considered as a looming crisis, Nigeria’s unemployment rate has continued to deteriorate. Based on the new data released by the NBS unemployment rate stood at 23.1 percent in 2018Q3¹, up from the previous quarter’s 18.8 percent. This implies that 3.3 million people became unemployed during the quarter, increasing the total figure to 20.9 million people. About 63 percent (13.1 million) of the total unemployed Nigerians are youth who experience much higher unemployment rates (29.7 percent in 2018Q3) than the rest of the population. While many have attributed their status to the inability to find their first job, others have become unemployed due to loss of previous jobs. This implies that the gap between job creation and labour market demand is widening. Given Nigeria’s young population structure, large numbers of labour entrants are expected going forward. Going forward, the current emergence of a vibrant entrepreneurial class that cuts across agriculture, services, and tech should be supported through the provision of credit facilities and enabling infrastructure.