GDP report and reality of Nigeria’s economic growth




In its GDP report, the National Bureau of Statistics (NBS) stated that Nigeria’s GDP recorded a 3.11 per cent growth in the first quarter of 2022. But Nigerians have raised concerns over the report considering their present economic realities; BENJAMIN UMUTEME writes.

With the economy under stress due to declining oil revenue occasioned by inability to meet production quota on one hand and oil theft and pipeline vandalism on the other, the release of the Gross Domestic Product (GDP) report by the National Bureau of Statistics (NBS) was, therefore, a breath of fresh air.

According to the statistics bureau in its Q1 2022 GDP report, Nigeria’s Gross Domestic Product grew by 3.11 per cent (year-on-year) in real terms in the first quarter of 2022, showing a sustained positive growth for six consecutive quarters since the recession witnessed in 2020 when negative growth rates were recorded in quarter two and three of 2020.

The report stated that the first quarter 2022 growth rate further represents an improvement in economic performance. The observed trend since Q4 2020 is an indication of a gradual economic stability.

Oil sector

The NBS noted that the oil sector which is the goose that lays the golden egg recorded a real growth of –26.04% (year-on-year) in Q1 2022 indicating a decrease of 23.83% points relative to the rate recorded in the corresponding quarter of 2021. Growth decreased by 17.99% points when compared to Q4 2021 which was –8.06%. Quarter-on-quarter, the oil sector recorded a growth rate of 9.11% in Q1 2022.

The oil sector contributed 6.63% to the total real GDP in Q1 2022, down from the figures recorded in the corresponding period of 2021 and up compared to the preceding quarter, where it contributed 9.25% and 5.19%, respectively.

Non-oil sector

The report indicated that the non-oil sector grew by 6.08% in real terms during the reference quarter (Q1 2022). The rate was higher by 5.28% points compared to the rate recorded same quarter of 2021 and 1.34% points higher than the fourth quarter of 2021.

A breakdown showed that the agricultural sector in the first quarter of 2022 grew by 3.16% (year-on-year) in real terms, an increase of 0.88% points from the corresponding period of 2021, and a decrease of 0.42% points from the preceding quarter which recorded a growth rate of 3.58%. It grew on a quarter-on – quarter basis at -28.90%. However, the sector contributed 22.36% to overall GDP in real terms in Q1 2022, higher than the contribution in the first quarter of 2021 which stood at 22.35% and 26.84%, respectively.

Manufacturing

Real GDP growth in the manufacturing sector in the first quarter of 2022 was 5.89% (year-on-year), higher than the same quarter of 2021 and higher than the preceding quarter by 2.49% points and 3.61% points respectively. Growth rate of the sector on a quarter-on-quarter basis stood at 2.85%. Real contribution to GDP in 2022 first quarter was 10.20%, higher than the 9.93% recorded in the first quarter of 2021 and higher than the 8.46% recorded in the fourth quarter of 2021.

Construction

The real growth rate of the construction sector in the first quarter of 2022 was recorded at 4.83% (year-on-year), higher by 3.41% points from the rate recorded in the previous year. Relative to the preceding quarter, there was an increase of 1.38% points. Quarter-on-quarter, the sector grew by 3.31% in real terms. Its contribution to total real GDP was 4.18% in the first quarter of 2022; higher than its contribution of 4.12% in the same quarter of the previous year, and higher than in the immediate past quarter where it contributed 3.46%.

Information, communication

In nominal terms, in the first quarter of 2022 the sector growth was recorded at 20.54% (year-on-year), 12.68% points increase from the rate of 7.86% recorded in the same quarter of 2021, and 14.84% points higher than the rate recorded in the preceding quarter. The Quarter-on- Quarter growth rate recorded in the first quarter of 2022 was -1.87%.

The Information and Communications sector contributed 10.55% to the total Nominal GDP in the 2022 first quarter, higher than the rate of 9.91% recorded in the same quarter of 2021 and higher than the 9.88% it contributed in the preceding quarter. The sector in the first quarter of 2022 recorded a growth rate of 12.07% in real terms, year-on-year.

From the rate recorded in the corresponding period of 2021, there was an increase of 5.60% points. Quarter-on-Quarter, the sector exhibited a growth of -9.09% in real terms. Of total real GDP, the sector contributed 16.20% in 2022 first quarter of 2022, higher than in the same quarter of the previous year in which it represented 14.91% and higher than the preceding quarter in which it represented 15.21%.

Real estate services

Real GDP growth recorded in the sector for the first quarter of 2022 stood at 4.44%, higher than the growth recorded in the first quarter of 2021 by 2.67% points, and higher by 2.96% points relative to Q4 2021. Quarter-on-quarter, the sector grew by -26.75% in the first quarter of 2022. It contributed 5.34% to real GDP in Q1 2022, higher than the 5.28% it recorded in the corresponding quarter of 2021.

Finance, insurance

Growth in this sector in real terms totaled 23.24%, higher by 23.70% points from the rate recorded in the 2021 first quarter and down by 0.90% points from the rate recorded in the preceding quarter. Quarter-on-Quarter growth in real terms stood at 5.01%. The contribution of Finance and Insurance to real GDP totaled 4.51%, higher than the contribution of 3.77% recorded in the first quarter of 2021 by 0.74% points, and higher than 3.66% recorded in Q4 2021 by 0.84% points.

Experts’ views

Speaking exclusively with Weekend Blueprint on the issue, the managing director at SD&D Management Limited, Gabriel Idakolo, said the NBS Q1 2022 GDP report did not capture the reality of the country’s economy.

According to him, various economic indices point to the contrary of what the report says.

“The report is definitely not in tune with reality because inflation is on the rise, unemployment is on the increase, the country’s revenue is dwindling and there is continuous reduction in the capacity of our manufacturers due to constant rise in the exchange rate of foreign currencies as a result of scarcity and many other factors,” Idakolo said.

For Adefolarin Olamilekan, a political economist, the first quarter GDP report by the NBS does not reflect the reality on ground.

He told this reporter that a trip round the country would open Nigerians to the stark reality of its economic challenges. He opined that what the report has simply done is to open the eyes of fiscal authorities to the task confronting them.

He said, “It is unfortunate that statistical data result reports published in our own clime contradict the very reality of what is evidence in every nook and corner of the country.

“Although the report in my estimation is too close to be accepted as a situation of economic manifestation today, we must, however, appreciate that there is a report that is pointing to the fact that we have more work to do in order to have real term growth.

“Whatever may be the case, the report should open our minds more to the task confronting us as a nation.

“The report in totality raises thought provoking questions on the state of the economy vis-a-vis the latest GDP growth because if the GDP is growing, how come unemployment is not reducing, why are we still importing a large chunk of goods and services into the country?

“Regrettably, we are challenged by both the structural deficit and visionless leadership that continues to dilly dally on taking appropriate decisions to tackle our numerous economic challenges.”

Moving ahead

Olamilekan noted that from the report, the continuous neglect of the non-oil sector that is supposed to drive growth. He said in the long run, it is the sector that can really create the jobs and sustainable income that is needed presently in the country.

“The non-oil sector of the Nigerian economy is an interesting sector. However, the government keeps playing ping pong with it.

“Successive governments before now never saw the benefit of the sector. However, the Buhari administration tried through farming especially with rice production taking the centre stage.

“Interestingly, this latest GDP report has proved to us that ICT, Financial and Insurance, trade, real estate, construction, and agriculture sectors recorded an appreciable impact, beside the oil and gas, and accounted for the positive output of the economy.

“Significantly, this non oil sector on the long run keeps absorbing the employable individuals in the society as well and providing sustainable income.”

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