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– Despite GDP Growth, Economic Potential Remain SubduedTHISDAYLIVE – THISDAY Newspapers

James Emejo writes that in spite of the positive economic performance in the third quarter of the year, critical sectors of the Nigerian economy, particularly agriculture remain largely under siege due to persistent insecurity
The gradual recovery of the Nigerian economy from recession and the impact of the COVID-19 pandemic have been a source of hope to Nigerians, indicating that the economy would soon be out of the woods.
The present administration has a key agenda to diversify the base of the economy away from the perils of oil into agriculture in particular where the potential and capacity to create jobs is huge. Besides, economic recovery and sustainability remain key to the administration’s plan to lift 100 million Nigerians out of poverty over the next 10 years.
There had been sustained positive growth over the last four quarters since the recession witnessed in 2020, which contracted by 6.10 per cent and 3.62 per cent under the pandemic.
According to the National Bureau of Statistics (NBS), Nigeria’s Gross Domestic Product (GDP) growth rate slowed to 4.03 per cent in the third quarter of the year (Q3 2021) compared to 5. 01 per cent in the preceding quarter.
The Q3 growth rate was higher than the -3.62 per cent in Q3 2020 by 7.65 per cent and lower than 5.01 per cent in Q2 2021 by 0.98 per cent which showed a continuous recovery.
Nevertheless, quarter on quarter, real GDP grew at 11.07 per cent in the period under review compared to Q2, reflecting a higher economic activity than the preceding quarter.
The GDP measures the country’s economic performance from time to time. Statistician General of the Federation (SGF)/Chief Executive, National Bureau of Dr. Simon Harry, said despite the slower growth, the Q3 performance was considered as a tremendous improvement over both Q1 and Q2 of the year, adding that there had been steady growth of the economy instead of a decline.
In nominal terms, aggregate GDP increased to N45.11 trillion in the period under review compared to N39.12 trillion in Q2 and N39.09 trillion in Q3 2020.
Real GDP which shows volume of economic activities, stood at N18.54 trillion, higher by N1.85 trillion compared to N16.69 trillion in Q2 as well as higher by N718.57 billion when compared to N17.82 trillion recorded in the corresponding quarter of last year.
Key indicators
The economy remained largely driven by the non-oil sector, which accounted for 92.51per cent of GDP while the oil sector contributed 7.49 per cent to growth in Q3.
Daily oil production averaged 1.57 million barrels per day (mbpd) compared to 1.61mbpd in Q2 and 1.67mbpd in Q3 2020. Oil growth rate stood at -10.73 per cent in real terms in the review period.
The SGF explained that the negative GDP figures recorded in 2020 as a result of the COVID-19 pandemic have had serious base effects on output figures for Q2 and Q3.
He added that the base effects continued to Q3 2021 recording a growth of 4.03 per cent.
Harry said, “I must state that the improvement being seen in the output growth over the last four quarters depicts a steady progress made in stemming the COVID-19 pandemic and the associated negative impact on livelihood, well-being, and the economy.
“Globally, many countries have witnessed an improvement in economic performances compared to 2020 when COVID-19 was endemic.”
He said economic recovery remained a gradual process that requires consistent collective efforts to improve economic activities across the institutional sectors.
He said, “However, in Nigeria the prospect of full recovery is glaring provided the current trend of improved economic performance is sustained in the rest of the year and beyond.”
“You might be looking at the 5.01 per cent as being higher than the 4.03 per cent but when you look at the base effects, you discover that the margin between the two, certainly that of the third quarter is a higher figure compared to the 5.01 per cent as released in the second quarter of the year,” he added.
He insisted the economy is growing rather than declining.
Harry also noted, “There was serious base effects affecting the figure because Q3 2020 recorded negative rate while Q2 2020 recorded negative rate. And so if you consider the margin between the two figures, you will discover that the economy certainly is growing rather than decreasing. It is the base figures that have influenced the figure for this year.”
Economy still struggling
Notwithstanding the positive growth recorded in successive quarters, analysts believed that the potential of the economy is grossly untapped, largely due to the worrisome security situation in the country, which continues to deter the required investments to propel the economy to greater heights.
Analysts particularly noted that growth in Q3 was aided by improvement in oil sales during the period as the growth rate in the non- oil sector was 1.30 points lower than the record in Q2.
They also expressed worry that priority sectors of the economy, which have greater potential for growth, appeared to be struggling due to the unfriendly investment climate as well as insecurity.
Although agriculture contributed 29.94 per cent to real GDP, higher than the 23.78 per cent recorded in Q2, its growth rate decreased by 0.08 per cent to 1.22 per cent from 1.30 per cent in the preceding quarter.
The sector continued to show weaknesses despite the increased funding largely because of the security challenges, which had limited farmers’ access to their farmlands. While manufacturing accounted 8.96 per cent higher than the 8.69 per cent recorded in the preceding quarter.
Also, trade’s contributed 14.93 per cent to GDP, lower than the 16.66 per cent recorded in Q2.
However, Harry said the Q3 performance was considered as a tremendous improvement over both Q1 and Q2 of the year.
Way forward
Following the inherent weaknesses in economic performance however, analysts said the federal government must deepen its poverty alleviation programmes and ensure that impact on vulnerable Nigerians.
They also tasked the government to initiate policies that could enhance real growth and “not paper growth” as well as curb the rising insecurity across the country.
Economy Still in Difficulty
The analysts who spoke in separate interviews with THISDAY, said the economy is still not out of danger.
Chairman, Chartered Institute of Bankers of Nigeria (CIBN), Abuja Branch, Prof. Uche Uwaleke, said the growth was indicative of the fact that the economy is gradually recovering from the negative economic impact of COVID-19.
He said about same time last year, the negative growth rate of -3.62 per cent confirmed the country’s economic recession status.
He said, “Unlike in Q2 of 2021 during which the economy contracted on Quarter on Quarter basis despite a 5.01 real GDP growth rate, year on year, this time around both in terms of YoY and QoQ, the GDP growth rate is positive.
“It is cheering to note that the non oil sector which grew at over 5 per cent has continued to power real GDP growth rate. This is especially visible in sectors like Manufacturing, Construction, ICT, Trade and Financial services.”
According to him, the Q3 report also showed relative improvements in education sector which grew by 1.37 per cent compared to a negative growth of -20.74 per cent about same time last year.
However, he said, “All is still not well as growth may not impact food inflation significantly given that agriculture recorded a decline from previous quarter, year on year.
“There is hope though since its Quarter on Quarter performance was positive at 39.83 per cent which partly explains the disinflation recorded during the third quarter of 2021.”
On his part, Managing Director/Chief Executive, Dignity Finance and Investment Limited, Dr. Chijioke Ekechukwu, said the economic performance showed that the country is still growing, adding that the government should continue to maintain the growth trajectory.
He said, “Recall that year on year measurement was involved in determining the GDP growth.
“About this time 2020, the COVID-9 restrictions eased off and businesses peaked again.
“So whereas Q3 performance of 2021 grew year to date in real terms, the year on year comparism with Q2 of 2021 is expected to decline because of the base year effect.”
Also, Managing Director/Chief Executive, SD&D Capital Management Limited, Mr. Idakolo Gbolade, said the performance was as a result of the policies of the federal government currently being implemented by the Central Bank of Nigeria (CBN).
He said the federal government needed to look inwards to create a conducive environment for the economy to thrive by curbing the rising cases of insecurity and ensure that the CBN maintains its interventions in foreign exchange to reduce cost of production.
He said the government should also deepen the poverty alleviation programmes to reach the original beneficiaries in order to make real impact.
Gbolade said, “The maintenance of the MPR at 11.5 basis point caused the economy to witness a higher economic performance.
“However, the headwinds of continuous hike in cost of commodities coupled with the rising cost of cooking gas and impending hike in petrol prices are a major concerns.”
Further commenting on the GDP performance, Managing Director/Chief Executive, Credent Investment Managers Limited, Mr. Ibrahim Shelleng
said the government should look at further encouraging real sector growth noting that the CBN had tried its best to directly fund the real sector through direct developmental funding “but its ability to permeate to all corners of the country tends to be the problem”.
He said, “Government may consider expansionary monetary policy to further boost economic growth.
Ge said, “The positive GDP figures shows that economic activities remain on the rise and the economy is continually rebounding from the Covid-19 induced recession.
“The slight dip in the GDP rate in Q3 is not significant and in fact the NBS report shows that real GDP grew at 11.07 per cent in Q3 2021 compared to Q2 2021, which indicates a higher economic activity than Q2. This certainly bodes well for growth.
“It should be noted that IMF and World Bank predictions at the beginning of the year had placed our GDP growth predictions around 2-3 per cent so it is positive that we are outperforming those predictions.”
However, Nigerians are yet to make a meaning out of the GDP figures until it translates to better economic well-being, more jobs and opportunities.

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