EGRP 7% GDP growth target by 2020 seen unrealistic

Nigeria is targeting a GDP growth rate of 7 per cent by the year 2020 according to its Economic Growth and Recovery Plan (EGRP) but an analysis of the country’s economic growth within the last three years suggests the forecast may be overly optimistic.
Analysts say that while the forecast may be ambitious it can be achieved with broad-based macro-economic growth polices like privatisation, foreign investments, serious commitment to developing the non-oil sectors and hoping that oil prices do not go south.
Nigeria’s peers Ethiopia, Kenya, Senegal, Tanzania have recorded GDP growth rates of 8 percent, 6.0 percent, 6.6 percent and 6.6 percent respectively in 2016 according to the international monetary fund (IMF) but Africa’s biggest economy has struggled with negative growth rate of -1.6 percent in the period on the back of a bruising militancy that cut a third of crude oil production and slump in crude oil prices.
The Federal Government’s ERGP document forecasts a 2.19 per cent growth rate in 2017 rising to 7 percent in 2020 driven by the non-oil sector.
Based on the EGRP plan, Agriculture, Industry and Services are projected to grow from 5.03, 7.74 and -1.26 per cent in 2017 to 8.37, 8.02 and 5.82 per cent in 2020 respectively.
“Currently our GDP in the third quarter of 2017 was 1.4 per cent which was entirely due to oil and we are not even close to achieving the 2.2 per cent and 4.8 per cent in 2018, also the non-oil sectors in same quarter was in recession and so it is clear that we are not on track to the 7 per cent GDP,” said Opeyemi Agbaje CEO, RTC Advisory Services Limited.
Agbaje said that Nigeria needed broad-based macro-economic growth polices like privatisation, foreign investments in non-oil sectors, a stop to the conflict in the middle belt of the country affecting production and a re-examination of polices towards trade to boost economic activities.
This seems to be the path other African countries with high growth rates are following. Ethiopia is the fastest growing economy in the world and the second largest in Africa and its major driver for GDP growth is Agriculture.
Kenya’s economy is largely driven by agriculture, tourism, manufacturing, transport, infrastructures, telecommunications, building and construction sectors. The country has also embarked on privatization of some state owned enterprises.
Senegal’s economy is driven by mining due to large gold minerals, Construction, Tourism, Fisheries and Agriculture which is the main source of employment. But it depends more on donor assistance and foreign direct investments. The favourable weather conditions also help to boost their agricultural production.

Ibrahim Tajudeem, head of research at Chapel Hill Denham said it is important Nigeria should leverage the strong rally in oil prices to sustain crude oil production.
“Investment in infrastructural projects to bring in revenue or minimize cost and good collaboration between the fiscal and monetary policies would help Nigeria achieve growth,” Ibrahim said.
Nigeria’s GDP reached 7.9 per cent with non-oil sector contributing 8.5 per cent in 2010 according to the National Bureau of Statistics (NBS) data with agriculture, building and construction, trade and services recording 5.7, 12.2, 11.2 and 11.9 per cent respectively in the period.
Analysts say this feat was achieved due to the favourable weather conditions, supply of farm inputs and government intervention programs in agriculture, building and construction activities in the country, huge investment in infrastructures by the government and growth of small and medium scale businesses.
Growth began to plateau in 2015, when GDP fell to 2.8 per cent and non-oil sector contribution declined to 3.8 per cent. Services, agriculture, trade and construction contributed more to GDP at 4.5, 3.7, 5.1 and 4.4 per cent respectively.
The economy fell into recession in the second quarter of 2016, and GDP fell to -1.6 per cent and non-oil was 0.22 per cent. In 2017, for the three quarters that GDP data has been released (Q1 – Q3) growth crawled to 0.43 per cent and non-oil sector struggled to rise to 0.64 per cent driven by agriculture, mining, electricity and water supply.

 

 BUNMI BAILEY