Nigeria's Finance Act 2020

Insights series and sector analysis

The outbreak of COVID-19 pandemic led to a contraction of the Nigerian economy by -6.1% in Q2 2020 compared to 2.1% in Q2 2019. Mining and Quarrying contracted by 6.6%, Manufacturing by 8.8%, Real Estate by 22%, Insurance by 29.5%, Construction by 31.8%, and Trade by 16.6%. However, Information and Communication grew by 16.5%, Financial Institutions by 28.4%, and the agricultural sector remained resilient as it grew by 1.6% in Q2 2020. The GDP growth trend continued in Q3 2020 and for the rest of 2020.

Many key economic indicators did not move in the right direction. Inflation rose to 15.75% by the end of 2020, the highest in almost 3 years while unemployment remained high at over 27%. 

Nigeria’s total public debt increased by 18% to over N32.2 trillion as at the end of 2020 from N27.4 trillion recorded as at 31 December 2019. Meanwhile, disruptions to international trade flows as a result of the COVID-19 pandemic weighed heavily on foreign trade in 2020, with exports posting a significant decline of 45.5% in Q2. 

Various monetary policy interventions and fiscal policy measures introduced by the government helped cushion the severity of the projected economic decline in 2020 while the Economic Sustainability Plan, the 2021 Appropriation Act and changes introduced via the Finance Act 2020, are expected to facilitate economic recovery and boost inclusive growth in 2021.