Last week, the National Bureau of Statistics (NBS) delivered the country from a year-long hibernation when it declared that the ominous word ‘recession’ has been deleted from our economic predicament. Dr Yemi Kale, the Statistician-General of the Federation and Chief Executive of NBS, gave the soothing news when he said Nigeria’s Gross Domestic Product (GDP) had grown by 0.55% in the second quarter of 2017, coming out of the negative aggregate output that pervaded the economy in 2016 and crawled into the first quarter of 2017. The GDP is arrived at by calculating the aggregate output of the country’s goods and services, divided by population over a period of time, in this case, on a quarterly basis.
Dr Kale stated that in arriving at the current out-of-the-woods GDP, the NBS took into account the products and services of 42 economic activities. He added that growth in the petroleum, agriculture, banking and insurance, electricity, gas, steam, and air conditioning supply and other services, which on the aggregate grew by 0.45 percent, helped to drag the economy out of recession.
Apparently, improved crude oil export and the relatively higher oil prices in the international market were the vehicles that transported the economy out of the dangerous terrain. In the quarter considered for the statistical analysis, crude oil export averaged 1.84million barrels per day, which is put at 0.15 million barrels per day higher than the daily average production recorded in the first quarter. Also, the reduction in the activities of vandals in the Niger Delta has made it possible for Nigeria to improve its efforts to meet its OPEC crude oil export quota. No doubt, this has been achieved due to ongoing engagements between government and stakeholders in the Niger Delta region. We, therefore, commend government for engaging in measures that have calmed frayed nerves and curbed, to some extent, the criminal sabotage of our oil pipelines.
The Statistician-General was quite frank about the interpretation of the figures reeled out by the NBS. Dr Kale admitted that it was an average of the performances of the 42 economic activities. The nature of statistics is that it could summarily present the global picture of economic activities, but the true picture – beautiful or ugly – is appreciated by looking closely at the relative performance of each of the economic activities. He revealed that while the agriculture sector grew, the manufacturing sector contracted by -10.88 per cent, motor vehicle (-19.72 per cent), electrical and electronics (-1.7 per cent) and chemical and pharmaceutical products declined by 0.98 per cent.
It is for this reason that many Nigerians would not feel the impact of the economic growth. As Kale explained, the GDP growth will be appreciated by those in the sectors that did very well, especially the petroleum and agricultural sectors. It is noteworthy that the bumper harvest in the agriculture sector was attained due to the whole-hearted attention government gave to it. Rice production, especially, was powered by diverse incentives, including the Anchor Borrowers Scheme (ABS). Government would have to build a more solid structure on the foundation it has laid in the past year if this kind of cheering result is to be posted in subsequent quarters.
For government to claim a breakthrough in agricultural production, the current performance should be sustained, and even surpassed, over a period of five years, regardless of the vagaries in the sector. We should not beat our chest for a two-quarter growth in agriculture, because unless we consolidate, the hope raised in the outgoing year would be replaced by a devastating disappointment in unemployment, poverty and general reversal of fortune for those who have heavily invested in agriculture. For instance, the pricing policy on rice and rice farmers’ exposure to competition from Asia render vulnerable the achievements recorded in the sector. We need an efficient pricing policy, a produce marketing board where farmers could sell their crops at profitably. A situation in which farmers are abandoned with their gluts in harvest, such that shylock middlemen mop them up at less-than-production-cost, is disastrous and discouraging. For the sector to grow, more hands must return to farm, and for them to do so, government should protect farmers from avoidable losses.
Furthermore, government should engage in strategic efforts to revive moribund companies and to boost epileptic ones in the manufacturing sector. This could be achieved, first, by stabilizing the power sector. It is very apparent that government has not got the right approach to stable electricity in Nigeria as all agencies set up to modify and raise it from collapse churn out a litany of excuses to justify the frustrating state of the power sector. Without effective and efficient supply of electricity, manufacturing companies would produce their goods at a very high cost, and pass same down to the unfortunate final consumers. That is why, faced with cheaper Chinese products, locally manufactured goods fail to win the Naira war in the Nigerian market.
Related to the power situation is the interest rate on loans, which has remained very prohibitive. The two-digit interest rate on loans is not good for business, especially for those that require a long gestation period before costs are recouped. No doubt, government has to review the current monetary policy to ensure that the manufacturing sector is given the kind of support that would encourage higher productivity and their capacity to compete, even in our local markets.
As President Muhammadu Buhari has noted personally, the GDP growth would make sense to the ordinary Nigerian if his living standard grows. It is not so at the moment. There is grueling poverty and frightening rate of unemployment, put at about 15 per cent of the Nigerian population. As we relish in the euphoria of our exit from recession, government must embark of pragmatic measures to redeem the majority of Nigerians from this cul-de-sac. The growth in the oil sector can impact on the downtrodden only when the earnings from petroleum are distributed with a formula that targets the downtrodden. Without such measure our exit from recession will be mere statistical talks.
