Nigeria’s gross domestic product (GDP) rose by 1.4 percent in real terms in the third quarter of this year confirming that the exit from recession is real.
The third quarter real term GDP growth rate was far better than the 0.72 percent upswing in the second quarter of this year and negative 0.91 percent growth rate in the first three months of 2017.
However, nine sub sectors posted weaker GDP growth rates during the period. These sub sectors are post and courier services, oil refining, coal mining, financial institutions as well as telecommunications and information services. Others are “other manufacturing”, insurance, road transport, and motion pictures, sound recording and music production.
The post and courier services sub sectors recorded lower economic activities to the tune of negative 44.64 percent in the third quarter of 2017 which was better than negative 66.01 percent growth rate in the second quarter of this year.
Furthermore, activities in the oil refining sub sector were lower by 41.82 percent, reminiscent of the negative 18.36 growth the sub sector posted in the first quarter of 2016. Kayode Tinuoye, head of research, United Capital Plc attributed this development to low capacity utilisation in the oil refining sub sector.
“The combined capacity utilisation of the refineries in country was abysmally low according to the NNPC report”, Kayode Tinuoye said.
“For the month of August 2017, the three Refineries produced 95,548MT of finished petroleum products and intermediate product of 53,496MT out of 178,788MT of crude processed at a combined capacity utilisation of 9.50% compared to 11.94% combined capacity utilisation achieved in the month of July 2017. The deprived operational performance is attributed to KRPC and PHRC downtime during the month under review. The ongoing revamping of the refineries will enhance capacity utilisation once completed”, NNPC Monthly Report August 2017 stated.
Coal mining activities were lower by 31.79 percent, the first time in seven quarters. In the first and second quarters of this year, the sub sectors posted 19.28 percent and 21.77 percent respectively.
Shehu Sani, president, Miners Association of Nigeria attributed the negative growth to the lack of support for miners in the country.
“A country like Nigeria should have electricity generated from different sources based on comparative advantage. That was why we welcomed the Federal Government’s coal to power initiative. However, the project should be cash backed and banks should be willing to give loans to miners in Nigeria”, Sanni said.
The financial institution was another underperforming sub sector as it posted negative 4.47 percent growth in real terms, as against 13.75 percent and 19.09 percent growth in first and second quarters of 2017 respectively, a development that was attributed to weaker loans growth by banks.
“In the third quarter of 2017, loans growth was much weaker as banks did not inject much credit into the system”, Tinuoye said.
The analysis of macroeconomic data corroborated the assertion above. During the period, credit to the private sector fell by 0.1, percent quarter on quarter from N66.26 trillion by the end of the second quarter down to N66.19 trillion in the third quarter. Net domestic credit to the economy grew marginally by 0.31 percent from N81.59 trillion in the second quarter to N81.84 trillion in third quarter following a 2.06 percent increase in credit to government.