The recent report of the National Bureau of Statistics (NBS) revealed that the economy recorded 2.4 per cent growth in the fourth quarter of 2018. The report may have emboldened the Federal Government to say that its economic policy is working and that the economy is recovering steadily. According to the NBS report, real Gross Domestic Product (GDP) grew by 2.38 per cent, indicating perhaps the strongest quarter growth since the economy slipped into recession in 2016. The 2018 real GDP which stood at 1.93 per cent is higher than the 0.82 per cent growth rate recorded in 2017.
The government celebration of the NBS 2018 Q4 report is largely premised on the fact that the growth rate was reported to have been driven by the non-oil sector, which grew by 2.70 per cent in the quarter under review, posting a yearly growth of 2.0 per cent for 2018.
This also represents the strongest growth in non-oil GDP since the Q4 of 2015, performing considerably better than 0.47 per cent in 2017. Indeed, for 2018, annual contribution of the non-oil sector was 91.40 per cent, compared to 91.33 per cent in 2017.
Government’s delight at the 2018 Q4 GDP growth may not be misplaced because a breakdown of the sectoral contribution growth shows that agriculture made a contribution of 26.15 per cent to overall GDP in real terms in the Q4 under review, compared to 29.25 per cent in the preceding quarter, but slightly higher than the 26.13 per cent recorded in Q4, 2017. In real terms, therefore, the agricultural sector grew by 2.46 per cent (year-on-year), a decrease by -1.78 per cent from the corresponding period of 2017, but a marginal increase of 0.55 per cent compared to the preceding quarter.
Considering that we are in an election season, the NBS report could be something for President Buhari’s administration to boast that the economy is improving. However, some economic experts suspect that the new growth result may be politically motivated. They also opine that the GDP growth rate of 1.93 per cent is nothing to celebrate about, especially with Nigeria’s current population growth rate of about 3 per cent and growth at below 2 per cent. The implication of this is that it leaves the greater number of the population out of productive activities. This has wider implications for welfare, unemployment and poverty conditions in the country.
While government may feel elated with the report, we think there is little to cheer. Therefore, government should do more work to put the economy on the right track of recovery and sustained growth. For instance, government’s Economic Recovery and Growth Plan (ERGP), which is due to end next year (2020), projected real GDP growth of 4.6 per cent on average over the target plan’s period (2017-2020) from an estimated contraction of 1.54 per cent recorded in 2016. What this means is that with the latest NBS data, the ERGP has failed to meet its real GDP estimate of 2.19 per cent in 2017, and lagging far behind its target of 7 per cent at the end of the plan’s period in 2020.
This could be one of the reasons the International Monetary Fund (IMF) and the World Bank Group revised their earlier growth projections for Nigeria to a margin of two per cent in 2018. In that respect, the NBS growth report may not be reflective of the actual situation in the country because the figures, as many economic experts insist, do not add up when we still have negative fiscal balance and over 20 million Nigerians are jobless. The growing unemployment is undoubtedly a reflection that the growth in the economy is still weak, fragile and not inclusive.
The nation’s dependence on oil revenue does not help matters. There is need to diversify the economy to achieve better and sustained growth. On a quarter-on-quarter basis, real GDP growth is not enough for the economy to turn around. When our GDP performance is compared with other oil exporting countries, Nigerian economy has only done better than Equatorial Guinea, Republic of Congo and Venezuela.
The government must pursue a comprehensive economic policy that will stimulate all-inclusive growth. The fiscal and monetary policies must address frontally the factors that have continued to slow down the GDP. There is no doubt that our economy is still vulnerable to both domestic and external shocks.
Therefore, it needs growth-friendly, well-thought-out economic policies. It is also imperative to sustain efforts to create the enabling environment that will attract more private capital to boost investment and growth, while expanding the diversification drive of the non-oil sector.