AfDB, others list risks to Nigeria’s economic growth

Risks to Nigeria’s economic growth are the sluggish recovery of the global economy, security challenges in the North Eastern part of the country, continued agitation for resource control in the Niger Delta and possible distraction from ongoing reforms as a result of the upcoming 2015 general elections, said a new report by African Development Bank (AfDB), the United Nations and the Organisation for Economic Cooperation and Development.

The report, African Economic Outlook 2014, stated that negative growth of the oil sector may also continue to drag down overall growth until a lasting solution is found to the challenge of oil theft and weak investment in exploration due to the uncertain state of the sector as a result of non-passage of the Petroleum Industry Bill (PIB).

Nigeria rebased its Gross Domestic Product (GDP), emerging as the largest economy in Africa with an estimated nominal GDP of $510 billion, surpassing South Africa’s $352 billion, the report noted.

The country has maintained its impressive growth over the past decade with a record estimated 7.4 percent growth of real GDP in 2013, up from 6.7 percent in 2012, the report said, adding that the performance of the economy continues to be underpinned by favourable improvements in the non-oil sector, with real GDP growth of 5.4 percent, 8.3 percent and 7.8 percent in 2011, 2012 and 2013, respectively.

Noting that agriculture, trade and services continue to be the main drivers of non-oil sector growth, the report said the oil sector growth performance was not as impressive with 3.4 percent, -2.3 percent and 5.3 percent estimated growth rates in 2011, 2012 and 2013, correspondingly.

“Growth of the oil sector was hampered throughout 2013 by supply disruptions arising from oil theft and pipeline vandalism, and by weak investment in upstream activities with no new oil finds,” said the authors.

They further said that going forward there are prospects of strong economic growth although downside risks remain entrenched. “Such prospects are expected to hinge on continued recovery of the global economy, favourable agricultural harvests and a possible boost in energy supply arising from the power-sector reform, as well as on expected positive outcomes from the agricultural transformation agenda.”
Nigeria faces an ongoing challenge of making its decade-long sustained growth more inclusive, according to the report. “Poverty and unemployment remain prominent among the major challenges facing the economy. One reason for this is that the benefits of economic growth have not sufficiently trickled down to the poor. The national authorities are not oblivious of this reality,” it said.
The report noted that poverty reduction, mass job creation and protection of the most vulnerable and those in the large informal sector are the focus of current policy dialogue and initiatives, adding that the 2014 national budget that has just been passed into law by the National Assembly and assented to by President Goodluck Jonathan focuses mainly on creating more jobs and making growth more inclusive.

Femi ASu