The fourth quarter 2022 Gross Domestic Product (GDP) report by the National Bureau of Statistics (NBS) has once again brought to the fore the need for the federal government to give fillip to its diversification agenda; BENJAMIN UMUTEME writes.
On February 2023, when the National Bureau of Nigeria (NBS) released the Gross Domestic Product report, it revealed that the non-oil sector’s contribution to the economy increased significantly.
In the report, it showed that revenue accruing to the federal government from the oil sector was on the downward trend compared to what non-oil contribution to the federation purse.
Overview of report
Nigeria’s Gross Domestic Product (GDP) grew by 3.52 per cent (year-on-year) in real terms in the fourth quarter of 2022, following a growth of 2.25 per cent in the third quarter of 2022 and 3.98 per cent in the fourth quarter of 2021.
According to the report, the performance of the GDP in the fourth quarter of 2022 was driven mainly by the Services sector, which recorded a growth of 5.69 per cent and contributed 56.27 per cent to the aggregate GDP.
Although the agriculture sector grew by 2.05 per cent in the reference period, its performance was significantly hampered by severe incidences of flood experienced across the country, accounting for lesser growth relative to the fourth quarter of 2021 which was 3.58 per cent.
Moreover, the Industry sector was yet challenged recording -0.94 per cent growth and contributing less to the aggregate GDP relative to the third quarter of 2022 and the fourth quarter of 2021.
Overall, the annual GDP growth rate in 2022 stood at 3.10%, from the 3.40% reported in 2021.
The NBS said that real growth in the oil sector was –13.38 per cent (year-on-year) in Q4 2022 indicating a decrease of 5.33 percentage points relative to the rate recorded in the corresponding quarter of 2021. Growth increased by 9.29 percentage points when compared to Q3 2022 which was –22.67 per cent.
On a Quarter-on-Quarter, the oil sector recorded a growth rate of -14.93 per cent in Q4 2022. However, the annual growth rate of oil stood at -19.22 per cent compared to the -8.30 per cent recorded in 2021. The Oil sector contributed 4.34% to the total real GDP in Q4 2022, down from the figures recorded in the corresponding period of 2021 and the preceding quarter, where it contributed 5.19 per cent and 5.66 per cent respectively. The total annual contribution of oil to aggregate GDP in 2022 was 5.67 per cent.
The non-oil sector
The non-oil sector grew by 4.44 per cent in real terms in fourth quarter 2022. This rate was lower by 0.29 percentage points compared to the rate recorded same quarter of 2021 and 0.18 per cent higher than the third quarter of 2022.
This sector was driven in the fourth quarter of 2022 mainly by Information and Communication (Telecommunication); Trade; Agriculture (Crop Production); Financial and Insurance (Financial Institutions); Manufacturing (Food, Beverage & Tobacco); Real Estate and Construction, accounting for positive GDP growth.
In real terms, the non-oil sector contributed 95.66 per cent to the nation’s GDP in the fourth quarter of 2022, higher than the share recorded in the fourth quarter of 2021 which was 94.81 per cent and higher than the third quarter of 2022 recorded as 94.34 per cent. Moreover, on aggregate 94.33 per cent was contributed in 2022, higher than the 92.76 per cent reported in 2021.
Breakdowns:
Information & communication
In nominal terms, in the fourth quarter of 2022, the sector growth was recorded at 21.41 per cent (year-on-year), a 15.70 per cent increase from the rate of 5.70 per cent recorded in the same quarter of 2021, and 1.09 percentage points higher than the rate recorded in the preceding quarter.
The Quarter-on- Quarter growth rate recorded in the fourth quarter of 2022 was 18.16 per cent. Overall, the sector grew by 19.00% in 2022.
The Information and Communications sector contributed 10.42% to the total nominal GDP in the 2022 fourth quarter, higher than the rate of 9.88% recorded in the same quarter of 2021 and higher than the 9.58% it contributed in the preceding quarter.
The total contribution of the sector in nominal terms in 2022 stood at 10.61%, higher than the 10.24% reported in 2021. The sector in the fourth quarter of 2022 recorded a growth rate of 10.35% in real terms, year-on-year.
Overall, the sector grew by 9.76% in 2022. Of total real GDP, the sector contributed 16.22 per cent in the 2022 fourth quarter, higher than in the same quarter of the previous year in which it represented 15.21 per cent and higher than the preceding quarter in which it represented 15.35 per cent.
Trade
In the fourth quarter of 2022, the nominal year-on-year growth rate of Trade stood at 14.82%. This indicates an increase of 8.80% points when compared to the fourth quarter of 2021 growth rate of 6.01% and 1.64% points higher than the previous quarter’s growth rate of 13.17%. The quarter-on[1]quarter growth rate was 15.16%.
Overall, the sector grew by 14.25% in 2022, higher than the 10.34% reported in 2021. Trade’s contribution to Nominal GDP in the fourth quarter of 2022 was 13.20%, lower than the contribution in the same quarter of the previous year of 13.25%, and higher than the preceding quarter recorded at 12.45%. The total contribution of the sector in nominal terms in 2022 stood at 13.35%, lower than the 13.42% reported in 2021.
Construction
The construction sector grew by 4.54 per cent in real terms in 2022. Its contribution to total real GDP was 3.47 per cent in the fourth quarter of 2022; higher than its contribution of 3.46 per cent in the same quarter of the previous year, and higher than in the immediate past quarter where it contributed 3.32 per cent. The total contribution of the sector in real terms in 2022 stood at 3.54 per cent.
In nominal terms, the sector grew by 17.14 per cent in nominal terms (year-on-year) in the 2022 fourth quarter, a drop of 17.39 percentage points compared to the rate of 34.53 per cent recorded in the same quarter of 2021.
There was a decrease of 1.78 per cent when compared to the rate recorded in the preceding quarter. Nominal growth quarter-on-quarter was recorded at 16.10 per cent. Overall, the sector grew by 12.72 per cent in 2022.
Construction contributed 10.16% to nominal GDP in the fourth quarter of 2022, higher than the 9.99% it contributed a year earlier and higher than the 9.50% contributed to the third quarter of 2022.
Manufacturing
The manufacturing sector recorded a growth rate of 8.40 per cent in the fourth quarter of 2022. Lower than the 8.46 per cent recorded in the fourth quarter of 2021 and lower than the 8.59 per cent recorded in the third quarter of 2022.
Nominal GDP growth of the manufacturing sector in the quarter under review was 8.86 per cent (year-on-year), 16.66 per cent lower than the figure recorded in the corresponding period of 2021 (25.52%) and 6.66 per cent higher than the preceding quarter figure of 2.20 per cent.
Quarter-on- Quarter, growth of the sector was recorded at 6.55 per cent during the quarter. Overall, the growth of the sector in 2022 stood at 6.93%, lower than the 31.66% reported in 2021. The contribution of manufacturing to Nominal GDP in the fourth quarter of 2022 was 13.49 per cent, lower than the figure recorded in the corresponding period of 2021 at 14.28 per cent and lower than the third quarter of 2022 at 13.75 per cent.
However, the total contribution of the sector in 2022 in nominal terms stood at 13.80%. Real GDP growth in the manufacturing sector in the fourth quarter of 2022 was 2.83% (year-on-year), higher than the same quarter of 2021 and higher than the preceding quarter by 0.55% points and 4.74% points respectively.
Agriculture
The agriculture sector in the fourth quarter of 2022 grew by 2.05 per cent (year-on-year) in real terms, a decrease of 1.53 percentage points from the corresponding period of 2021, and an increase of 0.71 per cent points from the preceding quarter which recorded a growth rate of 1.34 per cent. It grew on a quarter-on-quarter basis at -1.01 per cent.
The sector grew by 18.67 per cent year-on-year in nominal terms in Q4 2022, showing an increase of 5.81 per cent points from the same quarter of 2021.
Looking at the preceding quarter’s growth rate of 20.07 per cent, there was a decrease of 1.40 percentage points. Crop Production remained the major driver of the sector.
This is evident as it accounts for 91.58 per cent of the overall nominal value of the sector in the fourth quarter of 2022. Quarter-on-Quarter growth stood at -1.81 per cent in the fourth quarter of 2022. Agriculture contributed 24.90 per cent to nominal GDP in the fourth quarter of 2022.
This figure was higher than the rate recorded in the fourth quarter of 2021 and lower than the third quarter of 2022 which recorded 24.17 per cent and 27.55 per cent respectively. Overall, in real terms, the sector recorded the contribution of 24.05 per cent in 2022.
Experts’ views
Form many financial analysts, the report by the NBS has further revealed that the country is no longer solely depended upon the oil sector. They say, the showing by the non-oil sector is a reflection of the fact that Nigeria has waned itself of oil dependency.
In a telephone chat with Blueprint Weekend, an economist, Friday Efih, said the 95.66 per cent contribution of the sector to the GDP in the fourth quarter of 2022 can only point to the fact that the long drive to diversify the economy is finally paying off.
According to him, the government should put in more effort to further boost the non-oil sector.
“When you look at the report, it has shown that Nigeria can actually operate without relying on revenue from oil sector. In any case, in the last couple of years, oil revenue has been on the decline due to massive oil theft and vandalism.
“And with investments in the oil sector not forthcoming, it would be a no brainer for the authorities to think it would be business as usual.
“However, we can begin to take solace in the fact that revenue from taxes has been on an upward trajectory looking at the over N10 trillion collected by the Federal Inland Revenue Service (FIRS).
“The government should further put mechanisms in place to boost earnings from non-oil sector so that the country does not always resort to borrowing to fix its critical infrastructure,” he said.
