Nigeria stands as Africa’s largest economy by nominal GDP, yet its citizens contend with stagnant living standards driven by uneven growth. On average, GDP has expanded at just 2% annually, while the population rises by about 3%, eroding per-capita output and intensifying pressures on jobs and services.
1. High Poverty and Growing Inequality
- An estimated 13 million more Nigerians are projected to fall below the poverty line in 2025.
- Income and wealth remain heavily concentrated: urban elites in finance and telecoms see real gains, while rural and informal communities grapple with subsistence living.
2. Inflation and Soaring Cost of Living
Persistent double-digit inflation—34.8% as of December 2024—eats into real incomes, driving up prices of food, fuel, and utilities. Households divert more of their limited earnings to basics, deepening hardship among low-income groups.
3. Currency Volatility and Foreign-Exchange Shortages
Sharp swings in the naira—₦1,516.6 per US$ officially and around ₦1,660 on the parallel market—have fueled imported-goods inflation and disrupted supply chains. Foreign reserves hover near $33 billion, leaving little buffer against external shocks.
4. Rising Public Debt and Fiscal Strain
Nigeria’s debt-to-GDP ratio climbed to 50.7% by October 2024, far above the 40% ceiling in the Debt Management Framework. A budget deficit projected at 3.87% of GDP risks crowding out social spending and amplifying future borrowing costs.
5. Pervasive Corruption and Policy Instability
Corruption permeates public procurement, oil revenues, and local-government allocations, siphoning resources away from essential services. Frequent policy reversals—from fuel-subsidy removals to tariff regimes—further undermine investor confidence and disrupt long-term planning.
6. Infrastructure Gaps and Energy Shortages
Decades of underinvestment have left roads, rail lines, ports, and power grids in disrepair. Frequent blackouts and high transport costs stifle manufacturing, commerce, and farm-to-market linkages, limiting job creation and regional integration.
7. Unemployment and Underemployment
With a youth population surge, formal job creation lags. Many graduates and rural workers resort to informal trading, gig-driving, or subsistence farming, yielding low and erratic incomes. Chronic underemployment fuels migration, social discontent, and security risks.
8. Weak Social Services: Health and Education
Public spending on healthcare and schooling remains insufficient. Clinics often lack medicines and equipment, while schools face overcrowded classrooms and staff shortages. This undermines human-capital formation and perpetuates skill deficits.
Beyond these core challenges, Nigeria also grapples with climate-driven agricultural risks, a widening digital divide, regional economic disparities, and the urgent need for robust social-protection programs to shield vulnerable communities.
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