…Advocates national development plan
Last week, the Nigerian economy officially exited recession with a marginal growth rate of 0.11 percent in real terms in the fourth quarter of 2020.
This represents the first positive quarterly growth in the last three quarters.
To sustain this growth, a financial analyst, Ayodeji Ebo has advised the government to pay closer attention to developing the sectors that recorded a slow growth rate.
In an exclusive interview with Nigeria Today, Ebo, who is a Senior Economist/Head, Research & Strategy at Greenwich Merchant Bank, advised the government to come up with policies that will further accelerate the growth rate such as a national development plan to unlock the manufacturing sector which recorded a negative growth rate of -2.75% in 2020 and 8.60% in Q4 2020, lower than the 8.74% recorded in the fourth quarter of 2019 and the 8.93% recorded in third quarter 2020.
On the agricultural sector which grew by 14.03 percent year-on-year in nominal terms in Q4 2020 higher than 2019, Ebo said the country needs to add more value to goods produced so that more goods can be exported to boost foreign exchange earnings.
Ebo further predicted positive growth for the first quarter of 2021 if there are no major disruptions to activities, commending the government on how the second wave of the COVID-19 pandemic was managed.
“I think we have moved out of recession quicker than expected. Analysts’ consensus was that Nigeria will exit recession from second quarter. But with this acceleration that we are seeing we have seen growth from the Q4 numbers.
“So, we believe that momentum would be sustained because if we also look at it from a base case. We believe that Q1 would be positive to sustain the growth as there has really been no major destruction to activities. Despite the second wave, it’s been well managed, businesses are moving. So, we believe we are out of recession so the focus now is how we want to achieve the growth rate that is above population growth rate,” he said.
THE NBS GDP REPORT
According to the National Bureau of Statistics (NBS), Nigeria’s Gross Domestic Product (GDP) grew by 0.11% (year-on-year) in real terms in the fourth quarter of 2020, representing the first positive quarterly growth in the last three quarters.
Though weak, the positive growth reflects the gradual return of economic activities following the easing of restricted movements and limited local and international commercial activities in the preceding quarters.
As a result, while the Q4, 2020 growth rate was lower than the growth rate recorded the previous year by 2.44 percentage points, it was higher by 3.74 percentage points compared to Q3, 2020.
On a quarter-on-quarter basis, real GDP growth was 9.68 percent indicating a second positive consecutive quarter-on-quarter real growth rate in 2020 after two negative quarters.
Overall, in 2020, the annual growth of real GDP was estimated at –1.92%, a decline of –4.20% points when compared to the -2.27% recorded in 2019.
In the quarter under review, aggregate GDP stood at N43,564,006.29 million in nominal terms. This performance is higher when compared to the fourth quarter of 2019 which recorded a GDP aggregate of N39,577,340.04 million, representing a year-on-year nominal growth rate of 10.07%.
This growth rate was lower relative to growth recorded in the fourth quarter of 2019 by –2.26% points but higher than the preceding quarter by 6.68% points with growth rates recorded at 12.34% and 3.39% respectively. For better clarity, the Nigerian economy has been classified broadly into the oil and non-oil sectors.
SECTORS THAT CONTRIBUTED TO THE GDP GROWTH
The non-Oil sector contributed 91.84% to real GDP
The non-oil sector grew by 1.69 percent in real terms in Q4, 2020, slower than the 2.26 percent recorded in the corresponding quarter of 2019, but better than the -2.51 percent growth rate recorded in the preceding quarter. For the full year of 2020 however, the non-oil sector grew –1.25 percent compared to 2.06 percent in 2019.
Growth in the sector was driven by Information and Communication (Telecommunications & Broadcasting). Other drivers were Agriculture (Crop Production), Real Estate, Manufacturing (Food, Beverage & Tobacco), Mining and Quarrying (Quarrying and other Minerals), and Construction, accounting for the positive GDP.
In real terms, the Non-Oil sector contributed 94.13 percent to the nation’s GDP in the fourth quarter of 2020, higher than the share recorded in the fourth quarter of 2019 (92.68 percent) and the third quarter of 2020 (91.27 percent). For 2020, the Non-Oil sector contributed 91.84 percent to real GDP, higher than 91.22 percent recorded in 2019.