Nigeria’s fast-growing sectors of 2015 no longer firing
Nigeria’s fast-growing sectors in 2015 are almost unrecognisable today with some of them in a prolonged recession.
The sectors, which had been the engine of growth for the economy, catapulting the economy to grow at an average 5 percent per annum, have continued to shrink in number; a pointer to the fact that Nigerians and the economy are worse-off today than they were some five years ago.
As a percentage of the total monetary value of economic activities in the period, which economists call GDP, Nigeria’s fast-growing sectors fell to 22.7 percent in 2020 from the high of 71.1 percent in 2015, according to data compiled by Doyin Salami-led Kainos Edge Consulting Limited.
“That shows the economy is not growing fast enough anymore, because, in a fast-growing economy, most sectors will also be growing,” said Joachim MacEbong, senior analyst at SBM Intelligence. “Most Nigerians have now been reduced to just surviving,” MacEbong said.
The classification as fast-growing sectors is used for sectors growing above a 3 percent threshold, higher than Nigeria’s population growth estimated at 2.6 percent. The downward trend in the fast-growing sectors started after a 2014 collapse in oil price and restiveness in the Niger Delta region brought the economy to its knees.
Since then, the economy has not returned to 2014 levels, with falling GDP capita, double-digit inflation, higher unemployment, rising poverty and widened inequality.
From 71.1 percent in 2015, Nigeria’s fast-growing sector as a percentage of GDP collapsed to 27.9 percent in 2016. It however improved to 34.9 percent in 2017, before falling to the lowest in 2018 at 14.7 percent.
Notable sectors with growth above 3 percent in 2015 include mining and quarrying (8%), agriculture (4%), trade (4.69%), information and communication (4.21%), transportation and storage (4.39%), arts, entertainment and recreation (6.54%), finance and insurance (6.41%), administrative and support services (3.04%), professional, scientific and technical services (3.16%), education (8.13%), human health and social services (3%), other services (17.02%).
Meanwhile, in 2019, only mining and quarrying (4.43%), water supply, sewerage, waste management (5.47%), accommodation and food services (3%), transportation and storage (10.73%), information and communication (11.08%), arts, entertainment and recreation (4.12%), recorded growth above 3 percent.
The sectors could shrink further in 2020, with the pandemic-induced lockdown that halted economic activities and threw the economy into its worst recession since the 80s.
“If the sectors are not improving, per capita income is not improving as well, and this means that the average Nigerian is suffering,” said Boboye Olaolu, sub-Saharan Africa economist at securities trading firm, CSL Stockbrokers.
“With fast-growing sectors shrinking further, it shows there are little or no investible sectors for investors to put money in the economy. For these investors, they will be sceptical because the numbers are not telling positive stories to them,” he said.
Nigeria’s President Muhammadu Buhari came into power in 2015, promising to create jobs, tackle insecurity and lift an average 10 million Nigerians from poverty annually in the next 10 years.
But that promise has not made much meaning in the lives of Nigerians, after being greeted with a second recession in five years.
The economy has been on its knees for the most of five years, contracting 6 percent and 3 percent in the second and third quarters of 2020, no thanks to the pandemic and worsened by the lack of political will to create an enabling environment for businesses.
Rising food prices, unfriendly government policies, heightened insecurity among others have continued to upend businesses from performing, with overall growth collapsing at an average of 2 percent in the past five years, below the growth in the birth rate.
To get Nigeria’s sectors back to a recovery pace, the government would open up the economy and adopt market-driven policies, according to Johnson Chukwu, who is the managing director of the investment firm, Cowry Asset Management Limited.
“That would allow businesses to thrive and boost growth in the economy,” Chukwu said.
Meanwhile, as Nigeria’s fast-growing sectors shrink, it has caused the percentage of contracting, and slow-growing sectors to GDP have continued to expand.
The percentage of Nigeria’s contracting sectors moved from 19.6 percent in 2015 to 53 percent, 45.2 percent, 30.2 percent and 27.1 percent in 2016, 2017, 2018 and 2019, respectively, while slow-growing sectors came to 50.2 percent in 2019 from 9.8 percent in 2015.