Business & Economy - February 20, 2021

Post-recession: How Nigeria can deepen, sustain economic growth

With 2020 full year gross domestic product (GDP) report showing Nigerian economy exited recession in the fourth quarter, Centre
for Social Justice (CSJ) has proffered how the government can depeen growth in a sustainable manner.
On Thursday the Nigerian Bureau of Statistics (NBS) said the country’s aggregate value of goods and services in the fourth quarter of 2020 grew by 0.11 percent, from the -3.6% recorded in the third quarter.
By implication, the recovery in the fourth quarter after ~, two consecutive negative growths in the second and third quarters of 2020 meant the country’s economy has exited recession.
This appears to align with the government projection earlier in the year that the economy was on course to recover latest by the one first quarter of 2021.
While welcoming the development, CSJ said although this was the reality on paper, Nigeria needs to focus on policy options to deepen economic growth at a rate that outpaces the country’s population growth and ensure
sustainability.
Reviewing the GDP report
CSJ in its review of the report said focusing on these policy options was informed empirical evidence that nothing appears to have changed in the misery and poverty index of Nigerians, as the rates of poverty, inflation, unemployment, crime, insecurity have increased in the last one year.
The NBS said the latest growth was driven mainly by the non-oil sector,
especially Information and Communication (Telecommunications & Broadcasting), agriculture (crop production), real estate,
manufacturing (food, beverage and tobacco), mining and quarrying (quarrying and other
minerals), and construction.
The CSJ attributed the growth in the communication sector to the impact COVID-19, which accounted for the increase in higher volumes of subscriptions to data and other telecommunications services by customers.
With the growing impact of COVID-19, CSJ said it became necessary for most Nigerians to adopted some preventive measures to curb the spread of the disease.
Most Nigerians, CSJ said, resorted to the ‘hybrid method’ of working from home and seldom going to places of work, coupled with increased rate of online schooling for both pupils and young adults.
Also, the agricultural sector, despite the prevailing security challenges, the NBS said, was another key growth driving sector, apart from real estate, manufacturing, mining and quarrying.
On the other hand, the NBS said the oil sector contributed 5.87 percent in the fourth quarter, while averaging 8.16 percent in the whole year.
Despite the government agenda to diversify the country’s economy away from oil, the CSJ noted that the GDP Report showed diversification may not be the ultimate challenge.
Rather, CSJ said its review revealed that what actually remains was the unlocking of the potentials of key sectors like agriculture, mining and quarrying, manufacturing, to allow for meaningful contribution to revenue generation, foreign exchange earning capacity and truly become tradable themselves.
“Yes, we need manufacturing and value addition taking up a higher percentage of the GDP,” Lead Director, Eze Onyekpere, said in the review jointly signed with the Programme Manager, Public Finance Management, Fidelis Onyejegbu.
On areas for improvement, the CSJ said the agriculture sector could contribute more to the GDP if the full value chain approach was adopted.
Besides, the CSJ said the issue of insecurity needs to be addressed urgently, adding that
the number of attacks, killings and maiming of local farmers cultivating their lands were on the rise.
“The scourge of miscreant herders and bandits has made most farmers to abandon their farmlands in a bit to stay safe. This has worsened the composite food index which rose to 20.57 percent in January 2021 as against its value in the preceding month at 19.56 percent,” CSJ said.
“Inflation rate, at 16.47 percent as at January 2021, represents a 0.71percenr increase from its value in December 2020, about 15.75 percent.
“More investments in ICT could further develop the sector to position it for further growth and increase its potential
to contribute more to the economy.
“Creating further enabling environment for businesses to thrive would allow sectors such
as the services, trade and start-ups to blossom.
“This would aid in addressing the problem
of unemployment and provide a platform for citizens, particularly the youths, to apply
themselves and contribute more meaningfully to the economy,” CSJ said.
Recommendations
To achieve accelerated and sustained growth, CSJ said tackling the problem of insecurity was fundamental, saying no reasonable development can be achieved without an enabling environment for economic activities to thrive.
“Rethinking the approach to addressing the numerous security challenges bedeviling the country is of the essence as this will enhance productivity and other economic activities will pick up and thus contribute better to the GDP,” CSJ said.
Also, articulated local investments in agriculture’s full value chains, it said, is imperative.
The enabling environment to attract more investors into the sector, CSJ noted, would open up the opportunities therein so that the sector can contribute more to employment,
government revenue and foreign exchange earning.
Besides, conducting impact evaluation of the various initiatives of the federal government
such as the Anchor Borrowers Programme (ABP) by the Central Bank of Nigeria (CBN) would make for a proper feedback
mechanism to feed into the implementation of agricultural interventions to achieve better results.
Other recommendations include improving the ease of doing business in Nigeria alongside trade facilitation to ensure Nigeria becomes competitive in trade; explore the opportunities available in the Africa Free Trade Agreement (AfCFTA) to improve trade would add to improving the volume of economic activities in the country.
To sustain investments in the growth drivers of the economy, while striving to unlock the potentials of the other sectors to contribute reasonably to revenue generation efforts;
ensure public resources meant to support and strengthen local firms, disbursed through the various initiatives of the federal government get to the right firms, not political farmers, political manufacturers, etc.; the federal government must come to terms with the fact that economic growth cannot proceed in an environment of accelerated tension, disunity, ethnic conflicts, suspicions and prevaricating political positions.

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