BY EMEKA EJERE
The report by the National Bureau of Statistics (NBS) which put Nigeria’s Gross Domestic Product (GDP) growth in 2021 at 3.4 percent, has sparked controversy, with economists arguing that the said growth could be linked to the base effects of the recession witnessed in 2020.
The GDP report released on Thursday also showed that the economy weakened further in the fourth quarter of 2021, after recording a decline in the third quarter of last year.
Specifically, the report revealed that the quarterly GDP growth fell to 3.98 per cent in Q4 2021, from the 4.03 per cent and 5.01 per cent recorded in Q3 and Q2, respectively.
The annual growth rate of 3.4 per cent is the highest the country has recorded in seven years. The last time the country’s annual GDP growth rate exceeded three per cent was in 2014, when a 6.22 per cent growth was recorded.
In 2015, annual GDP stood at 2.7 per cent; it contracted to -1.58 per cent in 2016; rebounded slightly to 0.8 per cent in 2017; grew to 1.91 per cent in 2018 and 2.27 per cent in 2019. Due to the impacts of the COVID 19 pandemic, the country’s annual with GDP again contracted to -1.92 per cent 2020.
The World Bank had in the latest edition of its Nigeria Development Update in November raised its 2021 and 2022 economic growth forecasts for Nigeria to 2.7 per cent and 2.8 per cent respectively, saying the economy had experienced a rebound that was faster than expected. In the June 2021 edition of the NDU, the Bretton Wood institution projected a growth rate of 1.8 per cent in 2021 and 2.1 per cent in 2022.
Earlier in April, the International Monetary Fund (IMF) had in the reviewed 2021 World Economic Outlook raised Nigeria’s 2021 growth projection to 2.5 per cent, a figure 1.5 percent point higher than January’s estimate and much higher than the 0.8 per cent forecast in October 2020.
The latest NBS report read in part, “Nigeria’s Gross Domestic Product (GDP) grew by 3.98 per cent (year-on-year) in real terms in the fourth quarter of 2021, showing a sustained positive growth for the fifth quarter since the recession witnessed in 2020 when output contracted by -6.10 per cent and -3.62 per cent in Q2 and Q3 of 2020 under the COVID-19 pandemic.
“The fourth quarter growth indicates a steady economic recovery accounting for an annual growth of 3.40 per cent in 2021.
“The Q4 2021 growth rate was higher than the 0.11 per cent growth rate recorded in Q4 2020 by 3.87 per cent points and lower than 4.03 per cent recorded in Q3 2021 by 0.05 per cent points.
Speaking with Business Hallmark, Prof Leo Ukpong of the Department of Economics, University of Uyo, described the growth figure released by the NBS as questionable.
“Well, if the figures are true, it is a good thing, considering that the economy is still recovering from the shocks of Covid-19 and oil price crash.
“However, when you look at the level of unemployment, rate of inflation among other issues, you begin to wonder where the growth is coming from.”
Founder and Chief Executive Officer of Centre for The Promotion of Private Enterprises (CPPE), Dr. Muda Yusuf, in an interview with Business Hallmark, noted that the recent GDP numbers are indicative of a gradual recovery of the economy.
He observed that that the full year GDP growth of 3.4% and the fourth quarter GDP growth of 3.98%, surpassed both IMF and World Bank projections of 2.6% and 2.7% respectively.
According to him, the positive growth outcomes were driven by a strong base effect and the easing of shocks of the pandemic on the economy.
He said: “The base year (2020) was characterized by devastating shocks of the Covid 19 pandemic. There was a collapse of commodity prices, supply chains were disrupted, travels were restricted and many sectors were on complete lockdown.
“But in 2021, we saw a rebound of oil prices, relaxation of travel restrictions, improvements in vaccination rates, lifting of lockdowns and economic stimulus programmes by government.
“The fourth quarter typically witnessed increased spending and heightened tempo of economic activities because of the end of year festivities. These were the critical drivers of the growth.
“However, GDP growth is not an end in itself, it is a means to an end. For growth to be meaningful, it must impact on citizens welfare, create jobs, alleviate poverty, reduce inequality, ensure prosperity of small businesses and promote inclusion.
“Economic performance on the score of these metrics has been suboptimal. Galloping inflation and the sharp depreciation of the currency had inflicted immeasurable shocks on business performance and the welfare of citizens. Citizens’ purchasing power was considerably eroded thus aggravating poverty.
“While we welcome the positive growth numbers, we reckon that there is still a great deal of work to be done to translate the growth to improved welfare and prosperity of small businesses. This would require a mix of fiscal, monetary and social policy interventions.”
In a similar view, the Executive Vice Chairman, HighCap Securities, Mr. David Adonri, observed that the figures surpassed projections by both analysts and international organisations like the World Bank and IMF.
He, however, argued that the growth figures as released by the NBS may simply be as a result of base effect, since it is coming just after a year of terrible economic inactivity.
“However, you know that 2020 was so bad with the pandemic, high unemployment, high inflation and crashed oil prices”, Adonri said.
“So, the growth they’re talking about is mainly as a result of what we call base effect. What that means is that since 2020 was so bad and down, anything recorded subsequently will be so magnified. So, that growth doesn’t mean much to me.”
Meanwhile, the federal government and the Peoples Democratic Party (PDP) have exchanged verbal blows over the report. In an interview with a national daily on Thursday, National Publicity Secretary of the PDP, Mr. Debo Ologunagba, said Nigeria’s economy could not have witnessed growth because of the voodoo economics being implemented by President Muhammadu Buhari-led federal government.
The PDP spokesman, who wondered how Nigeria could have witnessed economic growth with the high level of insecurity and unemployment, said the All Progressives Congress (APC) was running a government of liars, by liars and for liars.
He said, “This is the voodoo economics of Buhari. When you talk of economic growth it must have a direct impact on the lives of the people. If it is growth, it cannot grow downwards, growth goes upwards. We all know the economy of Nigeria has been going dow.”.
“They say there was economic growth in the last quarter of last year when there were massive killings in the North-West? Growth has to do with production and human development index. So, what is the basis of this growth? We don’t have the right statistics.”
Ologungba said the NBS could have been deceived at the point of the collation of data which is usually provided by the federal government.
Responding to the PDO, the Minister of Information and Culture, Lai Mohammed, said it was unfortunate that the opposition party was sad over Nigeria’s progress.
The minister stated, “A vibrant opposition is important in any democracy. However, we have an opposition that doesn’t want to hear anything good about the country and this administration. It is the same NBS that reported that the country was in recession. At that time, it was not fake or cooked.
“So, I think we should learn to believe in the country, we should understand that while opposition is very good for a vibrant democracy, a nihilistic opposition that sees nothing good in the administration should be condemned.”
On why many Nigerians were not yet feeling the impact of economic growth, Mohammed said economic recovery is a slow process like a human being getting cured of an ailment, adding that more Nigerians will feel the impact of the government’s policy in due course.