World Bank, in its bi-annual economic update released on Tuesday, projects a GDP growth a little over 2 percent in 2018 for Nigeria. This growth projection would be largely driven by the country’s oil sector.
According to the report, since Nigeria emerged from recession, there has been a continuous decline in the country’s non-oil sector, agricultural sector while the aggregate demand maintained a weak status, the private sector credit remained low.
In 2017, the West African country witnessed a 0.8 percent GDP growth. The growth was driven by an expansion in oil output as well as steady agricultural growth. Meanwhile, “the unemployment and underemployment rates increased in 2017; poverty is estimated to have increased, and spatial fragmentation and limited connections also hurt welfare and prospects for poverty reduction.”
Although Nigeria is a big home market, it is constrained by limited connective infrastructure that reduces producers and firms’ ability to reach wider markets. This lack of connectivity according to the report, dampens economic collaboration and cooperation among regions in the country, as well as limiting market integration.
To boost connectivity, Nigeria needs to put in place policies that promote spatial integration and sub-national specialization, that will stimulate diversified long-term growth. A market specialization and differentiated positioning strategy for industrial clusters need to be set up across the country.
The World Bank report notes that the Nigerian government is challenged with identifying interventions that are best suited to realize development and integrate domestic markets. To solve these challenges, the report proffered that Nigeria focuses on investments that reinforce clusters and economies of scale.
“There should be connectivity between rural areas and urban markets to address structural and land management issues in urban nodes and along growth corridors to remove or alleviate barriers to growth potential,” the report states.