By Tunde Oso
Last Thursday, the National Bureau of Statistics (NBS) announced that Nigeria’s economy has exited recession in the fourth quarter of 2020 as Gross Domestic Product grew 0.11% in the three months through December from a year earlier, compared with a decline of 3.6% in the third quarter.
The surprising rebound means Nigeria’s economy recovered faster than expected and this has elicited some comments from economists and financial sector analysts.
Speaking to Sunday Vanguard, the Director-General of the Manufacturers Association of Nigeria, MAN, Mr Segun Ajayi-Kadir said “even though I am yet to fully study the report and make the necessary comparison with the figures and scenario we have in the manufacturing sector, I will say the momentum should be sustained and improved upon to finally and convincingly get us out of recession.”
The MAN DG added: “One of the sectors that contributed to this positive growth, according to the NBS, in the manufacturing sector, specifically the food and beverage and tobacco sub-sector. When you take a general look at the performance of the nine other sub-sectors, you will see a sector that is struggling. And this is aptly demonstrated by MAN CEOs Confidence Index (MCCI) report that showed a decline from 43.30 per cent in the third quarter of 2020 to 42.06 in the fourth quarter.”
Director-General, Lagos Chamber of Commerce and Industry, LCCI, Dr Muda Yusuf said “Strong commitment to key reforms will not only boost output recovery but will also put the nation on a path of macroeconomic stability and declared support for FG’s plan to sell off some identified national assets by privatising idle public assets to help the economy unlock liquidity needed for strong economic growth and improved revenue mobilization.
“Proper harmonization of fiscal and monetary policies is necessary for the course of stimulating domestic output and stabilizing prices. It is imperative for both sides of authorities to develop a medium-term recovery plan that anchors on boosting local productivity, supporting ease of doing business, attracting private capital flows, developing physical and soft infrastructure, business-friendly regulatory policies, economic diversification, and employment generation, among others,” the LCCI said.
Yusuf said there must be mobilizing efforts in making the business environment more conducive for Medium and Small Scale Enterprises MSMEs and large corporates by addressing structural bottlenecks and regulatory constraints contributing to the high cost of doing business.
Seye Adetunmbi, Convener of Capital Market Roundtable in Nigeria maintained that it is good news for the fact that domestic production has been increasing consistently. Apparently, the growth in the agriculture and telecommunications sectors of the economy had offset a sharp drop in oil production.
The chartered stockbroker said this points to the growing significance of the non-crude sector. For the impact of coming out of recession to be felt by the common man, the trend of increasing GDP has to be sustained and the productivity in other economic sectors beyond oil has to increase consistently.
Adetunmbi, also the Chief Responsibility Officer of Value Investing Limited said though we still have our challenges – recurring waves of COVID -19, naira devaluation, high inflation, recurring foreign-exchange shortages etc still posing risks to boosting production at full capacity. The fact that we have seen a recovery in the non-oil GDP growth is a positive development nonetheless.
Razia Khan, Chief Economist for Africa and the Middle East at Standard Chartered Bank explained to Bloomberg that “The fact that we have seen a recovery in non-oil GDP growth is positive. However, the headwinds associated with the second wave of Covid-19 may still be considerable.”
Lead Director, Centre for Social Justice, Eze Onyekpere maintained that 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. “It must put its house in order and lead with the interest of all Nigerians at heart.”
Onyekpere added that it would be advantageous to sustain investments in the growth drivers of the economy while striving to unlock the potentials of the other sectors so that they would contribute reasonably to revenue generation efforts.
CPJ further said on areas for improvement, the agriculture sector could contribute more to the GDP if the” full value chain approach is adopted. Furthermore, the issue of insecurity needs to be addressed. The number of incidences of attacks, killings and maiming of local farmers cultivating their lands is on the rise. The scourge of miscreant herders and bandits has made most farmers abandon their farmlands in a bit to stay safe. This has worsened the composite food index which rose to 20.57% in January 2021 as against its value in the preceding month at 19.56%. The inflation rate, at 16.47% as of January 2021, represents a 0.71% increase from its value in December 2020 i.e. 15.75%. 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 a 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,” Onyekpere said.