Bimbola Oyesola, Adewale Sanyolu and Chinwendu Obienyi
Economic experts yesterday hailed the Federal Government over Nigerian economy’s rebound as Africa’s largest even as they warned Nigerians not to be carried away by the Bloomberg reported return to the number one spot on the continent.
Those who spoke to Daily Sun, said it was not yet for celebration as the country was still walking tight ropes on key economic indices. They argued that sustained improvement can only be achieved through the implementation of the 2020 budget and by improving the business environment.
Reacting to Tuesday’s Bloomberg report that Nigeria’s economy has overtaken South Africa’s, as the biggest in Africa, the nation’s organised private sector said it was not yet uhuru for the nation.
Speaking to Daily Sun yesterday, Managing Director of Financial Derivatives Limited, Mr Bismarck Rewane, said Nigeria’s economy has always been Africa’s biggest.
According to him, there was nothing new in the Bloomberg report which adjudged Nigeria as Africa’s biggest economy because it has always remained the leader for over 25 years.
Rewane said before and after rebasing, the country’s economy has always been the biggest in Africa, adding that there was never a time in the last 25 years that economy dropped to number two.
He howver said the Federal Government statement that some of the policies initiated by the current administration have helped to maintain the position was true because there is huge capital expenditure alongside the country being a net exporter of petroleum products.
He added that the economy is still in a very good shape because the oil market where Nigeria gets a larger chunk of its revenue is not doing badly and as such was robbing off on the country.
Nigeria’s economic growth beat forecasts in the fourth quarter, helping its economy to expand the most in four years in 2019 as oil output increased and the central bank took steps to boost credit growth. GDP in the West African country stood at $476 billion or $402 billion, depending on the rate used.
On South Africa’s economy, Rewane said it went in the opposite direction, slumping into a second recession in consecutive years, and contracting more than projected in the fourth quarter as power cuts weighed on output and business confidence. For the full year, expansion was 0.2 per cent, the least since the global financial crisis, and even less than the central bank and government estimated. Based on an average rand-dollar exchange rate of 14.43 for the year, GDP was $352 billion as projections show Nigeria’s economy will continue to grow faster. While the International Monetary Fund cut its forecast for Nigeria’s 2020 growth to 2 per cent from 2.5 per cent last month due to lower oil prices, South Africa’s GDP is forecast to expand only 0.8 per cent.
Also reacting, Mr Moses Igbrude, managing director of Decof Investments Limited, said “the report was actually different from the situation on ground as Nigerians are still groaning with the economy remaining pretty worse as it just looks like we and South Africa are even entering recession for the second time”.
He said” if the report says Nigeria has overtaken South Africa, then congratulations to the country for achieving that feat, but I still think a lot needs to be done to salvage various sectors of this economy because whether we like it or not, it is still in a state of comatose.”
For its part, the Lagos Chamber of Commerce and Industry (LCCI), said a lot more could be achieved if the OPS is given favourable climate to operate.
The LCCI Director General, Muda Yusuf, said Nigeria’ s current success was only possible through the contributions of the operators in the private sector of the economy.
He said, “This is the outcome of the very enterprising nature of Nigerians. A great deal of economic activities are taking place outside the public sector.
“This is what is driving the economic growth momentum. A lot of value creation is taking place in the informal sector, the service sector, agriculture, SME space, and many more.”
He said it was not surprising that Nigeria remains the largest economy in Africa having lost the position momentarily few years ago due to exchange rate depreciation. “The truth is that even in the midst of difficult operating conditions, Nigerians continue to create value,” he said.
In its response to the report, The Nigeria Employers Consultative Association attributed the giant leap to 2019 fourth quarter GDP growth, noting that the economy closed year 2019 at about 2.3 per cent growth.
Director General of NECA, Dr. Timothy Olawale, said the economy received a dynamic boost from the Central Bank of Nigeria (CBN) as well as oil output, which all signified the pattern of growth for the country.
He said, “In the other direction, South Africa’s economy has not recovered and even entered into recession in the last quarter.
So, truely, Nigeria’s economy has overtaken South Africa as the biggest economy in Africa.”
According to the Bloomberg report, Nigeria returned as Africa’s largest economy following a recent contraction of South Africa’s economy for two consecutive quarters.
This is South Africa’s second recession in two years.
The discussion about the continent’s largest economy was previously based on whether the N306/$ official exchange rate or the N360/$ market rate was used.
Bloomberg data pegs South Africa’s gross domestic product (GDP) at $352 billion. At the official N306/$ exchange rate, Nigeria’s GDP is $402 billion and at N360/$, it is $476 billion.
Joe de Beer, deputy director-general for economic statistics at Stats SA, told journalists on Tuesday that the 2019 third-quarter GDP figure was revised to a contraction of 0.8 percent
“The economy is in recession again. That is two consecutive quarters of contraction, after being in recession in the first two quarters of 2018,” he told journalists.
In the fourth quarter of 2019, South Africa’s economy contracted by 1.4 per cent and the overall GDP growth for the year was 0.2 percent while Nigeria’s economy recorded its biggest growth since the 2016 recession.