By Bimbola Oyesola
To fix the economy and address sectors that are in recession, sectors that have slowed down and those that have contracted, there is a need to put in place reforms and intervention measures, said Muda Yusuf, chief executive director of the Centre for Promotion of Private Enterprise (CPPE).
According to Yusuf, the sectors in recession are those that posted two consecutive quarters of negative GDP growth.
“They are segments of the economy that are experiencing much deeper crisis of recovery. They include: the crude oil and gas sector, oil refining, textiles and railways.
“These sectors are plagued by challenges of insecurity, wrong policy choices, structural impediments, plunge in productivity and corruption,” he said.
Reflecting on the Nigerian quarterly real GDP, he noted that the growth dipped to 2.25% in the third quarter of 2022, from 3.54% in the second quarter.
He said that the growth decline reflects the diverse headwinds that have been bedeviling the Nigerian economy.
Yusuf said, “These headwinds include: the macroeconomic instability, heightening inflationary pressures, currency depreciation, foreign exchange illiquidity, surging energy cost, weakening purchasing power, legacy structural constraints, lingering insecurity, and crippling trade facilitation issues.”
He explained that a striking feature of the GDP Q3 report was the contraction of the manufacturing sector which shrunk by 1.91%.
The CPPE boss said this is the first quarterly contraction of the manufacturing sector since 2020 when the economy slipped into recession.
He stated, “The food and beverage sector is the flagship of the Nigerian manufacturing sector, several decades, it was the toast of investors in the stock market. The sector contributed N2.2 trillion to GDP in the third quarter of 2022.
“This development is a reflection of a major setback for the Nigerian manufacturing sector which calls for an emergency response by the government.”
He warned that the plunge in the manufacturing sector performance has profound implications for food inflation, food security and employment.
“The food processing sector has the biggest impact on jobs because of the strong backward integration content and high multiplier effect in the agriculture value chain,” he stated.
He tasked the government to fix the macroeconomic headwinds of high inflation and currency volatility as well as address the structural impediments to production and other economic activities.
He emphasised that the foreign exchange market must be reformed to inspire investors’ confidence, noting that fiscal reforms of infrastructural development and transparency in the budgetary process must be
prioritized.