Publications

Although the potential of data as a resource, and digital technologies are yet to be fully exploited in the region, some progress is underway.

There have been various conversations in recent times on the global stage, many of which I have participated actively in, around the imperative for strong efforts towards speedy economic recovery for African countries. While some immediate short-term remedies such as debt relief were necessary, trade represents a far more sustainable solution to reviving the economies of African countries; trade and investment are important.

According to the World Bank, the participation in the Nigerian labour force has declined by about 20 million workers between 2018 and 2020.¹ Even for those within the labour force, the inactive population has increased from 29 to 52 million workers between 2014 and 2020. Consequently, unemployment is at record levels as the unemployment rate is 26.3 percent while youth unemployment is 42.5 percent. Owing to the country’s socio-economic challenges as well as high unemployment levels, there has been a rise in migration as young people seek asylum and refugee status in other countries. Going forward, the decline in labour force participation is likely to continue as more young people migrate for better opportunities. Similarly, unemployment is likely to worsen considering the youth bulge and the limitedness of labour-absorbing industries such as agriculture and manufacturing in creating large numbers of high value jobs. Consequently, the private sector which is an important contributor to job creation will have to develop and generate additional opportunities by addressing existing barriers including limited productivity and competitiveness, insufficient diversification, and lack of openness to international markets.

The Federal Government (FG) have announced plans to increase oil reserves by 40 billion barrels by the year 2030 with aim of dominating the West African oil and gas market.¹ Following this, oil production capacity is intended to rise to three million barrels per day. The Director of the Department of Petroleum Resources (DPR), Mr. Sarki Auwalu, stated at the AA Holdings’ 2021 Business Dinner of The Petroleum Club that Nigeria has vast oil and gas resources that can reverse the issue of resource curse syndrome that has plagued the country for decades. He pointed out that Nigeria is in a better position to achieve these objectives than any other West African country due to natural resources. Gas reserves are also intended to increase to 220 Trillion Cubic Feet (Tcf) by the year 2030. The effects of turning Nigeria into a gas-based economy would improve government revenue. However, this could undermine economic diversification policies and the national policy on climate change in Nigeria.

Within the period of January 1 and May 31, 2021, the Nigerian Communications Commission (NCC) recorded an increase of over 400 percent in revenue budget performance in respect of spectrum fees.¹ The NCC exceeded its N36 billion projected revenue with over N150 billion within the five months. This has been as a result of effective regulatory regimes effected over the years and a major contribution to the Federal Government’s revenue drive and generation. There have also been advancements in the nation’s telecoms industry and improved operations of licenses leading to expansion in economic output. Towards the end of 2020, the NCC announced that N344.71 billion was generated and remitted by the Commission, to the government’s Consolidated Revenue Fund (CRF) in the last five years. While the NCC stands out as a profitable government agency, careful consideration should be taken in order to avert the overregulation of telecom providers. Such excessive regulation could dissuade private investors from the sector and have adverse effects on the industry’s profits.  

The Federal Government has approved the Medium-Term Fiscal Framework (MTFF) for 2022-2024. The framework is based on the following key parameters: crude oil price benchmark of $57 per barrel, crude oil production of 1.88 million barrel per day, exchange rate of N410.15/$, inflation rate of 13 percent and Gross Domestic Product (GDP) growth rate of 4.2 percent in 2022.¹ The framework further projects federal government budget to rise from N13.58 trillion in 2021 to N13.98 trillion in 2022 and revenue is to rise from N7.99 trillion to N8.36 trillion within the same period. The MTFF is important in setting benchmarks for government spending in the medium-term which breeds accountability, transparency, and organization. However, historical precedents suggest that adhering to the medium-term framework is difficult owing to the use of overly optimistic parameters. In this case, an inflation rate of 13 percent can be considered optimistic given that the current inflation rate is 18%. Consequently, revising these parameters to reflect the current trends in the economy is critical to achieving the budget targets. 

This inception report focuses on the emerging trends in Africa’s digital and data environment. The study builds a case for mobilizing action at both regional and national levels, to strengthen data governance frameworks in Africa, particularly in view of the ongoing regional economic integration initiatives under the African Continental Free Trade Area (AfCFTA). We advocate for stronger data policies in Africa as a development tool for bridging identified gaps that could put the region at a disadvantage, and as a means of building greater confidence which is a requirement for growing the digital economy. The findings suggests that while the potential of digital technologies is yet to be fully exploited in Africa, the region has witnessed a surge in the use of digital platforms and tools in recent years. This has influenced the ease and manner in which data gathering and exchange occurs, resulting in heightening concerns around potential data abuse. In response, national efforts and domestic legal frameworks on data governance are gradually increasing in Africa, although rather slowly as there are still significant policy gaps. While the magnitude of the data policy gaps vary across different member countries, African countries have so far largely been unable to match the pace of change in the new data driven global economy. There is also a lack of uniformity in policy approaches being adopted by member states.

The COVID-19 pandemic has had severe impacts on the macroeconomy and the livelihoods of households globally. The restrictions to movement alongside the associated uncertainty stimulated a sudden decline in the demand for commodities and disrupted production, leading to the underutilisation of capital and labour. More specifically, as governments sought to curb the spread of the virus by implementing workplace and school closures, and encouraging social-distancing practices, these policies led to a significant impact on all economies. A recent study on the impact of COVID-19 on gross domestic product (GDP) and trade finds that the pandemic caused a 2% decline in global GDP, a 2.5% decline in the GDP for developing countries, and a 1.8% for industrialised countries.

For Nigeria, which saw its first case in February 2020, the economic contraction was severe and sustained leading to a recession in the third quarter of 2020. The economic contraction is the result of the adoption of lockdown measures – which had an impact on nearly all sectors of the economy – along with the pandemic’s impact on partner economies engaged in international trade and those providing foreign investment. Meanwhile, the income of the majority of citizens has been affected, because a large share of informal workers has no recourse to unemployment insurance or paid leave of absence.

This article was first published on SAIIA

Crude oil price increased to the highest since 2019 while external reserve decreased in the week under review. The price of Nigeria’s bonny light increased by 3.5 percent to an average of $76.4 per barrel in the week under review.³ Despite the increase, external reserve fell by $246.9 million to an average of $33.59 billion. External reserves have been depleting since May 2021.⁴ The main source of foreign exchange earnings is from crude oil and an increase in crude oil price should be reflected in the external reserves. However, the increase in crude oil prices does not translate into increase in external reserves and revenue as Nigeria sells crude oil on contract.⁵ While crude oil prices are exogenous to the Nigerian economy, the rise in crude oil prices eventually will improve government revenue and external reserves. Furthermore, the depleting external reserves implies that the Nigerian economy is still heavily dependent on imports and reveals the importance of diversifying the Nigerian economy.