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Nigeria Economic Update: Connecting to compete


Nigeria Economic Update: Connecting to compete

Nigeria Economic Update: Connecting to compete
Photo credit: Arne Hoel | World Bank

According to the World Bank Nigeria Bi-annual Economic Update released on 2 May, Nigeria emerged from recession in 2017.

Titled Connecting to Compete, the report says that Nigeria’s GDP growth reached 0.8 percent, driven by an expansion in oil output and continued steady growth in agriculture. The decline in the non-oil, non-agriculture sector however continued, as aggregate demand remained weak and private sector credit low.

The rates of unemployment and underemployment increased in 2017 and poverty is estimated to have increased slightly. GDP growth in 2018 is expected to hover just over 2 percent, largely oil sector-driven.

Nigeria has a big home market which is constrained by limited connective infrastructure thereby reducing producers and firms’ ability to reach wider markets. This lack of connectivity dampens economic collaboration and cooperation among the country’s regions, limiting market integration and reducing producers and firms’ ability to reach wider markets. Spatial fragmentation and limited connections also hurts welfare and prospects for poverty reduction.

“Spatial integration and sub-national specialization are key for creating a nationally-integrated market for goods and services as well as attracting much-needed private investment, which in turn could enhance productivity though scale and specialization,” said Somik Lall, Global Lead, Territorial Development at the World Bank.

Nigeria would benefit from policies to promote spatial integration and sub-national specialization which would stimulate diversified, long-term growth. This can be achieved through market specialization and differentiated positioning strategies for industrial clusters across the country, according to the report.

The key challenge for policymakers at the federal and state level is to identify interventions (policy, regulatory, institutional and investment, etc.) that are best suited to realize development potential of sub national regions and integrate domestic markets.

For Nigeria to tap its spatial drivers of development, policymakers may want to focus on investments that reinforce clusters and economies of scale; optimize the connectivity between rural areas and the major urban markets; and address structural and land management issues in major urban nodes and along major growth corridors to remove or alleviate barriers that undermine the growth potential.


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