By Harrison Edeh & Arinze Nwafor
…Experts say Nigeria needs long-term growth, plans to reduce poverty
NIGERIA’S Gross Domestic Product (GDP) grew by 5.01 per cent in the second quarter of 2021, according to data released by the National Bureau of Statistics (NBS) on Thursday.
The economy appears to be showing up as the growth marks three consecutive quarters of growth since the negative growth rates recorded in the second and third quarters of 2020.
Due to COVID-19-related restrictions in the country, there was a slow run of business activities in the year 2020, but that has since been reversed.
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This reversal is evidenced in the report which shows that “Q2 2021 growth rate was higher than the -6.10 per cent growth rate recorded in Q2 2020 and the 0.51 per cent recorded in Q1 2021 year on year.”
According to the NBS, “the steady recovery observed since the end of 2020, with the gradual return of commercial activity as well as local and international travel, accounted for the significant increase in growth performance.”
Since the Nigerian government removed all restrictions on markets and states in 2020, and businesses resumed, the growth in GDP has picked up.
This momentum has slowed down, as data reveal that “quarter on quarter, real GDP grew at -0.79 per cent in Q2 2021 compared to Q1 2021.”
This means that the first quarter (Q1) of 2021 saw more economic activities and growth than Q2 and according to the NBS, it is ‘due largely to seasonality.’
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The oil sector is also not performing at its best, as the average daily oil production stood at 1.61 million barrels per day (mbpd).
This represented -0.19mbpd lower than the average daily production of 1.81mbpd recorded in the same quarter of 2020 and -0.10mbpd lower than the 1.72mbpd recorded in the first quarter of 2021.
The non-oil sector, however, grew by 6.74 per cent in the second quarter and the growth rate was 5.95 per cent points higher than the first quarter of 2021.
Former Director-General of Lagos Chamber of Commerce and Industry Muda Yusuf said that the data indicated that the economy had eased from COVID-19 lockdowns.
“It is mainly a base effect, looking at where we were in the second quarter of 2020 and where we are now. It is just an indication that the economy is just normalising after COVID-19, but it is still not telling any story about the level of poverty in the country,” he said.
In the newly-released GDP numbers, road transportation grew by 92 per cent while rail rose by 53 per cent.
On the other hand, electricity, gas and steam and air conditioning saw 78 per cent growth whereas trade had 22 per cent growth.
Telecommunications grew by 6 per cent while music and motion pictures saw 5 per cent growth.
Health and social services saw 5 per cent growth, with manufacturing seeing 3.5 per cent jump.
Yusuf said the GDP numbers suggested the need to reset, rejjig and reform key sectors of the economy.
“We need to fix issues around regulatory environment, tax environment and the multitude of levies imposed on businesses by all levels of government; foreign exchange policies, ports environment, and other structural bottlenecks to productivity in the economy.
“There are still worries about the macroeconomic challenges reflecting in spiralling inflation, weakening of the currency, forex market illiquidity, spiking debt profile, among others. The security situation remains a major source of risk inhibiting investment s whether domestic or foreign. “
He noted that while it was good to celebrate the GDP growth numbers, it should be done cautiously.
He explained that the impact of the GDP growth on citizens welfare and the productivity in the investment environment were crucial, stating that the GDP figures were not ends in themselves, but means to an end.
Senior Economist at the Nigerian Economic Summit Group Wilson Erumebor said for Nigeria to make sustainable progress in its economic growth, it needed a long-term development plan that would feed into respective agenda of any president irrespective of political party in power.
He explained that, like Indonesia, Nigeria must have a specific law on development planning that should transcend respective administrations.
“What this does is that it brings in some measure of stability in terms of government’s procedures. We saw this happen in Indonesia and Singapore,” he said.
“These countries have been able to institutionalise government’s policies, irrespective of the political party in power.
“Indonesia he said has specific law on development planning, law on national planning and development system.”
An Associate Consultant to the British Department of International Development Celestine Okeke also noted that without a national development plan, the country would keep revolving in a vicious cycle.
“We merely returned to something close to where we were in Jonathan’s time, instead of advancing higher. We have concerns of high debt ratio and double digit inflation. What does this tell you? We are not progressing, but our population is growing.”
He noted that an urgent work must be done on this economy to ensure that economic growth matched population growth in every quarter.