• Thursday, May 23, 2024
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Consolidating exit from recession cannot be left to happenstance

Recession in Nigeria

Nigeria’s exit from recession was a subject of considerable fanfare for the Federal Government as it seized the opportunity to reiterate its policies were working. Though marginal, Nigeria’s GDP indeed grew by 0.72 per cent (revised from 0.55), after five quarters of an economic recession. However, the contribution of the non-oil sector to this growth remains below par.

The Q3 GDP released this week showed there was an increase in growth, somewhat consolidating the exit from recession in the second quarter. Data from the National Bureau of Statistics showed that the nation’s Gross Domestic Product (GDP) grew in Q3 2017 by 1.40% (year-on-year) in real terms, the second consecutive positive growth since the emergence of the economy from recession in Q2 2017. This growth is 3.74% points higher than the rate recorded in the corresponding quarter of 2016 ( -2.34%) and higher by 0.68% points from the rate recorded in the preceding quarter, which was revised to 0.72% from 0.55% (Q2 was revised following revisions by NNPC to oil output and hence led to revisions to Oil GDP).

READ ALSO: Nigeria faces another recession as growth projected to be negative in Q3 – Buhari

Quarter on quarter, real GDP growth was 8.97%, and year to date Real GDP growth stands at 0.43%.
What is instructive to note,, however, is that non-oil growth has not been commensurate with the hype surrounding the economic diversification rhetoric. In the second quarter of this year, non-oil growth was 0.45 per cent, and by the third quarter, contracted, with GDP contribution of -0.76 per cent. The real growth of the oil sector was however 1.64 percent (year-on-year) in Q2 2017, and this growth was consolidated, as the sector grew 25.89 per cent (year-on-year) in Q3 2017. Quarter-on-Quarter, the oil sector grew by 21.10 per cent in Q3 2017.

Agriculture which according to the NBS drives growth in the non-oil sector has ironically been performing poorly. The agriculture sector grew by 3.06 per cent in Q3 2017 from 3.01 per cent in Q2 2017, 3.39 per cent in Q1 2017 and 4.54 per cent in Q3 2016. A three per cent growth (with some measure of decline from two of the last three quarters) does not show that reforms are yielding enough results. Oil is still delivering more value, while agriculture appears to be delivering only more volume. Not only in agriculture, but the entirety of the non-oil sector must be subjected to more deliberate, strategic efforts to stimulate economic growth.

Even with the country pulling through a recession, and rising food inflation, Nigerians have not stopped eating; neither have agro-exporters lost their appetite for foreign exchange. With all the seeming focus on non-oil growth by the incumbent administration, the sector ought to be delivering more to economic growth. For all intent, present economic growth can be attributed to the increase in oil production and favourable prices. Not even because the government has made any extraordinary efforts to reform the oil sector for it to deliver more results. It is, mildly put, a product of happenstance.

READ ALSO: Recession looms with 47.15% of NSE 30 firms in decline

This can however not be the template for actualising growth in the non-oil sector. For economic growth to be sustained, and indeed, achieving positive growth in all sectors (and sub-sectors), particularly those still recording negative growth, government must stop talking and start taking action. All the lofty plans for economic resuscitation such as the Economic Recovery and Growth Plan (ERGP), must transcend being good on paper, but as a matter of urgency, start being good in reality.

We want the government to start making deliberate policy decisions to get other sectors to contribute towards economic growth. Nigeria needs to consolidate on the GDP growths now recorded in the last two quarters, and oil can no longer be the champion in Nigeria’s journey to economic recovery.