Nigeria’s economy risks collapse on negative non-oil growth – analyst
There are concerns that the negative growth presently being recorded by the Nigeria’s non-oil sector could drag the nation’s economy into another collapse, particularly as it contributes up to 89 percent to the Nation’s GDP.
Nigeria’s economy emerged from a difficult recession in the second quarter of 2017 and then expanded further by 1.40 percent in the third quarter, according to data from the released by the National Bureau of Statistics (NBS).
The NBS said last November that the nation’s Gross Domestic Product (GDP), in Q3 2017, grew by 1.40% in real terms, the second consecutive positive growth since the emergence of the economy from recession in Q2 2017.
The growth was 3.74% points higher than the rate recorded in the third quarter of 2016 at –2.34 percent and also higher by 0.68% points from the rate recorded in the preceding quarter, which was revised to 0.72 percent from
But while the oil sector grew by 25.89 percent helped by increased output and improved crude prices, and contributed 10.04 percent of total real GDP, the non-oil sector grew by -0.76 percent, though contributed 89.96 percent to the nation’s GDP, however, lower than the 91.91 percent recorded in the third quarter of 2016 and 90.96 p0ercent
in the second quarter of 2017.
Apart from Agriculture which grew at 3.06 percent; utilities at 7.84 percent; accommodation and food services at 0.18 percent; accommodation and support services at 0.69 percent; Arts, entertainment and recreation at 0.44 percent; as well as other services at 1.72 percent; the other eleven components of the non-oil sector are still in the negative territory.
Agbaje Opeyemi, board member of the Lagos State security trust fund worry that having overcome the 15 months recession, particularly helped by improved output and prices of crude oil, there are strong signals that the economy may be back to the negative if the oil sector relapses.
Opeyemi is however confident that some critical areas of the economy show several positive signals as indicated by macroeconomic indicators such as stable exchange rates, growing foreign reserves and inflation, the non-oil sector still remain in recession.
According to him, a further neglect of the non-oil sector could lead the nation into another collapse, stressing that the non-oil sectors requires more attention than it is being granted adding that from a number of indications, the economy should record incremental improvements in 2018 over 2017 which will mainly be powered by the oil sector.
“There are a couple of areas of the economy like non-oil economic sectors that require more passionate attention. They include the manufacturing, employment and the domestic food sectors there are also a few fuel subsidy concerns. A lot of cleaning up is going on in the financial sector while portfolios and profitability are improving”.
“From a number of indications, the economy should record incremental improvements in 2018, over 2017, though the recovery is mainly powered by the oil sector,” he said, speaking at an interactive and capacity building forum organized by FCMB for media executives and correspondents based in Abuja and the Northern Region.
“It is also imperative for our economic system to be skewed towards an investment-led growth strategy to facilitate sustainable development across all sectors,’’ Agbaje observed.
He urged the government to concentrate a little more attention at the non-oil sector as this could lead to a positive impact in the economy and welfare of the Nigeria people.
Agbaje, who noted the downward movement in the domestic food sector explained that the sector is suffering from the herdsmen attack on both farmers and agricultural produce which has led to the performance of the sector.
Explaining the sectorial contribution to Gdp, the expert said that the oil and gas sector which contributes 11.0% to Gdp ratio is given so much concentration while the non-oil sector which bags the other 89.0% still proves to be given less attention which may lead to a crash of the economy in nearest future.
He added that taking the sectors real growth, oil and gas sector records the highest with a 25.89% growth, followed by Utilities sector with 7.84% growth rate, Agricultural sector with 3.06 growth rate respectively, while others fall below 1%.
“The manufacturing sector records a -2.85% growth, with companies folding up and others leaving the country for different reasons which vary from non-conducive business environment, business policies and procedures which further results to unemployment in the country today,” he further observed.
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