President Buhari


Nigeria’s Gross Domestic Product, GDP, growth rate for 2019 of 2.27 percent released by National Bureau of Statistics, NBS, is an indication that the economy is still in the doldrums and dashes the hope of Nigerians for a speedy recovery of the economy. Experts expressed concern last week that this figure though not surprising, confirmed the fears of most people that the economy is stagnating in spite of the frantic effort of the monetary authority.

A major flaw in the economic policy implementation of the government has been the absence of strong fiscal policy to provide clear direction and framework for the economy, which has largely relied on monetary policies to drive growth. The Nigerian economy expanded some 17 basis points above the 2.10% growth rate estimated by the International Monetary Fund (IMF) to settle at 2.27%, but experts refuse to celebrate, saying the growth is uninspiring.

In their reviews, investment banking firms noted that the fact that population is growing faster than the economy, would reduce per capita income, and worsen standard of living of the people. Analysts said that the economic recovery would continue at a sluggish pace without the implementation of reforms and market-friendly policies.

A leading investment banking firm, Afrinvest said 2.27% increase recorded in the gross domestic product in 2019 is uninspiring. Afrinvest held that considering that growth is still short of long-term and population growth rates of 7.1% and 2.7%, there is little to cheer.

Afrinvest said the trajectory was higher than its analysts forecast of 2.4% for the period. Analysts said this was mainly driven by the oil sector which rose 2.3% from 1.9% in the previous quarter, supported by the agriculture and ICT sub-sectors.

In the oil sector, growth was upbeat but slightly moderated to 6.4% as against 6.5% in the third quarter as oil production fell by 40,000 barrels per day (bpd) to 2.0 million barrels per day. The performance in the fourth quarter of 2019 brings financial year 2019 economic growth rate to 2.27%, an improvement from 1.9% in 2018.

This was over Afrinvest revised forecast of 2.2%. It said considering that growth is still short of long-term and population growth rates of 7.1% and 2.7%, there is little to cheer. The oil sector increased its contribution to growth in 2019, expanding 4.6% from 1.0% in 2018, following stability in the Niger-Delta and new output from the EGINA FPSO.

It was observed that oil production rose 5.0% to an average of 2.0mb/d in 2019. The non-oil sector remained the major driver of growth as it improved 2.1% in 2019, although there was little changed from 2.0% in 2018. Aside the ICT and agriculture sectors, there was a broad-based under-performance in major sub-sectors.

“In our view, this suggests that the economic recovery would continue at a sluggish pace without the implementation of reforms and market-friendly policies”, Afrinvest said.

Analysts remarked that the underlying reasons for the sluggish performance of the non-oil sub-sectors buttress our point. Analysts review indicates that in the services sector, there was a faster expansion of 2.6% year on year in the fourth quarter of 2019 from 1.9% in the previous quarter while growth was 2.2% in 2019 from 1.8% in 2018.

While the ICT sector sustained its remarkable expansion, the trade and real estate sectors which account for 22.1% of GDP remained in a recession, though improving.

“In our view, the unfriendly trade policies of the government continue to affect the pace of recovery”, Afrinvest remarked.

In the real estate sector, aside the weak macroeconomic environment, poor investment in housing, the lack of flexible regulations around land use and registration as well as expensive and slow approvals of building permits are critical factors. More so, in the agriculture sector, growth was faster at 2.4% in 2019 from 2.1% in 2018 but weaker than its long-term average of 3-4.0%.

Afrinvest said beyond cheap credit, there has been little progress towards boosting agriculture yields, helping farmers adapt to a changing climate and curbing insecurity. In manufacturing, the weakness in consumer purchasing power remains the major theme as growth slowed to 0.8% in 2019 from 2.1% in 2018.

On the other hand, the financial services sector surged 22.3% in the fourth quarter of 2019, the highest growth recorded in a quarter. Similarly, the sector grew faster at 2.4% in 2019 from 1.4% in 2018.

“We suspect this was driven by the raft of policies rolled out by the Central Bank of Nigeria in the second half of 2019, particularly the 65.0% increase in loan-to-deposit ratio. We retain our growth forecast of 2.4% for 2020 as we do not expect significant improvements”, Afrinvest held.

Similarly, analysts at GTI Securities Limited also remarked that the GDP growth fell below population growth rate.

Meanwhile, in its note, WSTC Securities Limited stated that the actual GDP performance beats the firm estimates lightly. Analysts at the firm had estimated that GDP would grow by 2.24% which was 3 basis points away from actual growth. WSTC Securities’ analysts said:

“Although the Nigerian GDP grew by its highest figure since third quarter of 2015, we yet note that the economic growth is below the estimated population growth of about 2.60%. The implication of a GDP growth below the population growth rate is a lower GDP per capita and a lower standard of living”, analysts revealed.


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