Nigeria’s Economic Growth Masks a Deepening Crisis in Essential Sectors

Nigeria reported a GDP growth of 3.84 percent in Q4 2024; however, many citizens remain in poverty due to underperformance in critical sectors such as water supply, electricity, transportation, and tourism. Each of these sectors contributes minimally to the economy, resulting in significant negative impacts on livelihoods and economic inequality. Urgent reforms and investment are needed in order to improve infrastructure and services to benefit the populace.

Nigeria has recently reported its highest GDP growth since the post-COVID era, at 3.84 percent for Q4 2024, according to the National Bureau of Statistics (NBS). However, this growth masks a troubling reality: millions of Nigerians remain mired in poverty as critical sub-sectors such as water supply, electricity, transportation, and tourism continue to falter. These sectors are essential for everyday life and their poor performance poses a significant threat to the economy and livelihoods.

The water supply, sewerage, and waste management sector contributed a mere 0.18 percent to GDP in Q4 2024, indicating severe deficiencies despite Nigeria’s abundant water resources. Access to clean water is critically lacking, with over sixty million Nigerians still resorting to open defecation due to inadequate sewage systems. Alarmingly, the World Bank notes that less than 1 percent of Nigeria’s annual budget is dedicated to addressing these water issues, leading to deadly waterborne diseases.

The electricity and gas sector, a potential engine for industrial growth, accounted for just 0.49 percent of GDP, highlighting ongoing power crises. Nigeria suffers an estimated annual loss of $29 billion due to its unreliable power supply. With over eighty million Nigerians lacking electricity, industries struggle to compete as they endure high operational costs associated with diesel generators, while more progressive countries advance in renewable energy strategies.

Transportation and logistics, crucial for trade and agriculture, also showed a downturn, with their GDP contribution falling to 1.10 percent. The situation is exacerbated by deteriorating road networks, inflated fuel costs, and minimal rail systems. The Federal Ministry of Works and Housing notes that an estimated 70 percent of Nigerian roads are impassable, severely complicating the movement of goods and services across the country.

Regarding tourism and hospitality, Nigeria’s potential remains unrealized, with the sector contributing only 0.79 percent to GDP. Other African nations like Kenya earn billions from tourism, while Nigeria struggles with safety concerns that inhibit foreign visitation and development in the sector. The Nigerian Tourism Development Corporation reports that Nigeria earned only $400 million from tourism in 2023, far less compared to its counterparts due to ongoing security threats and high operational costs.

Despite the reported GDP growth of 3.84 percent, the benefits are not reaching many Nigerians. The Nigerian Economic Summit Group anticipates GDP growth could reach 5.5 percent by 2025. Nonetheless, as one economist warned, robust growth figures do not equate to improvements in citizens’ lives. “Nigeria recorded growth rates above 20 percent in the early 1970s, yet poverty persisted,” emphasizing the need to focus on qualitative growth.

In conclusion, Nigeria must urgently revitalize the struggling sectors of water, electricity, transportation, and tourism. This includes implementing a Water Infrastructure Emergency Plan to secure universal access to clean water by 2030 and structural reforms in energy that promote sustainable alternatives. The transportation sector requires significant investment for infrastructure repair, while tourism must be rejuvenated through enhancements in security and simplified regulations. Without decisive action, millions will remain trapped in poverty, compromising Nigeria’s economic future.

The persistent underperformance of Nigeria’s essential sub-sectors continues to perpetuate widespread poverty. Critical improvements in water supply, electricity, transportation, and tourism are necessary to ensure GDP growth translates into tangible benefits for the population. The government must take immediate steps to address these issues, or risk deepening the humanitarian crisis that will affect the nation’s economic prospects.

Original Source: businessday.ng