For the first time in six years, activity in Nigeria’s wholesale and retail trade sector grew in 2021, according to data by the National Bureau of Statistics (NBS).
According to the GDP report released Thursday by the NBS, the trade sector grew 8.62 percent.
Before now, it had contracted by 8.49 percent, 0.38 percent, 0.63 percent, 1.05 percent, and 0.24 percent in 2020, 2019, 2018, 2017, and 2016, respectively.
Also, the growth rate in 2021 is the highest since 2012 (9.61%).
“The positive growth can be attributed to the low base effect, full reopening of the economy and the removal of the COVID-19 pandemic restrictions, which has made activities in the trade sector to be much easier leading to its recovery,” Ayorinde Akinloye, a consumer analyst at United Capital plc, says.
Commenting in the same vein, Damilola Adewale, a Lagos-based economic analyst, notes that the recovery shows that businesses and economic activities have improved in the sector
“But despite the recovery, I am still bothered because the structural challenges such as high cost of foreign exchanges, weak demand, logistics issues, etc. still linger in the sector,” Adewale states.
The report also highlights that the country’s overall GDP grew by 3.98 percent (year-on-year) in Q4 ‘2021, showing a sustained positive growth for the fifth quarter since the recession witnessed in 2020 when output contracted by -6.10 percent and -3.62 percent in Q2 and Q3 of 2020 under the pandemic.
“The fourth quarter growth indicates a steady economic recovery accounting for an annual growth of 3.40 percent in 2021,” it states.
In terms of contribution to GDP, the trade sector contributed 15.66 percent, higher than the 15.46 percent it represented in the previous year, and higher than the 14.93 percent recorded in Q3 ‘2021.
Trade, which is the second biggest sector by output production, can be likened as the barometer of consumer purchasing power. The higher the level of consumption, the better the sector performs.
And due to this, the sector has been touted by economists as an important tool in the quest for development as it contributes roughly 15-16 percent to the GDP.
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But in Africa’s biggest economy, it had been in and out of negative territory since 2016 over myriad challenges like macroeconomic volatility, rapid naira’s depreciation, weak purchasing power, and household incomes.
Recently, a report by FBNQuest shows that Nigeria’s real household consumption as a proportion of GDP rose to 76 percent in 2021, the highest level since 2010. According to the report, the surge led to a fast recovery post-pandemic for Nigeria’s consumer’s industry.
Additionally, a 2021 Global Retail Development Index (GRDI) reported that the country’s total retail sales rose to $108 billion after it had been trending south, falling to $105 billion in 2019 from $109 billion in 2017, $125 billion in 2016 and $135 billion in 2015.
Analysts at Kearney, a global management consultancy firm, said the Nigerian economy is making a steady recovery from COVID-19.
Also, Uchenna Uzo, consumer expert and faculty director at Lagos Business School, says people have started coming out more and they have been able to spend on other items beyond the discretionary ones, noting, “E-commerce has also made it possible to increase the portfolio of what people buy.”
