Nigeria’s Gross Domestic Product grew by 5.01 per cent, year-on-year, in the second quarter according to the National Bureau of Statistics.
NBS disclosed this in its GDP Report for Q2 released on Thursday.
According to the report, the 5.01 per cent marks three consecutive quarters of growth following the negative growth rates recorded in the second and third quarters of 2020.
The Q2 2021 growth rate was higher than the -6.10 per cent growth rate recorded in Q2 2020 and the 0.51 per cent recorded in Q1 2021.
This is an indication of the return of business and economic activity near levels seen prior to the nationwide implementation of COVID-19 related restrictions.
The report stated that with steady recovery observed since the end of 2020 the gradual return of commercial activity as well as local and international travel accounted for the significant increase in growth performance relative to the second quarter of 2020 when nationwide restrictions took effect.
Year to date, real GDP grew 2.70 per cent in 2021 compared to -2.18 per cent for the first half of 2020.
Nevertheless, quarter-on-quarter, real GDP grew at -0.79 per cent in Q2 2021 compared to Q1 2021, reflecting slightly slower economic activity than the preceding quarter due largely to seasonality.
In the quarter under review, aggregate GDP stood at N39.12tn in nominal terms, higher than the second quarter of 2020 with aggregate GDP of N34.02tn, indicating a year-on-year nominal growth rate of 14.99 per cent.
The nominal GDP growth rate in Q2 2021 was higher than -2.80 per cent growth recorded in the second quarter of 2020 when economic activities slowed sharply at the outset of the pandemic.
The Q2 2021 nominal growth rate was also higher than 12.25 per cent growth recorded in Q1 2021.
The NBS stated that the average daily oil production fell to1.61 million barrels per day in Q2 from 1.72 million bpd recorded in the Q1 and 1.81mbpd recorded in the corresponding quarter of 2020.
The oil sector contracted by 12.65 per cent in Q2 2021, compared with a growth rate of 10.44 per cent recorded in the first quarter of 2021.
Its contribution to the aggregate GDP fell to 7.42 per cent from 8.3 per cent and 9.25 per cent recorded in Q1 2020 and Q2 2021 respectively.
The non-oil sector grew by 6.74 per cent in real terms in Q2 2021, 12.8 per cent higher than the rate recorded in the same quarter of 2020 and 5.95 per cent higher than that of Q1 2021.
Mere price changes can show GDP growth – Experts
An expert and senior lecturer in economics at the Pan Atlantic University, Olalekan Aworinde, who spoke in a telephone interview said that report was doubtful as the growth didn’t reflect the economic conditions in the country.
He said, “On paper, the growth might exist but in reality it doesn’t. This is what I mean by saying that in paper, it might exist; in the computation of GDP, is just the price of a particular commodity multiplied by the quantity of goods produced or the unit of services produced over time?
“Knowing fully well that the prices of goods and services are on the increase, if we do the multiplication, on paper, it might exist but in reality, that is not the case.
“This is because even in the productive sector of economy, we have a situation whereby a lot of people are losing their jobs. It is worrisome.”
Another expert and professor of economics at the Olabisi Onabanjo University, Sheriffdeen Tella, noted that according to the report, key sectors of the economy didn’t record significant improvement, making it improbable for the GDP to witness a five per cent growth.
He also noted that within the second quarter, the country continued to battle the challenges that were present in the first quarter.
“This GDP growth is doubtful; the NBS is just playing with figures. Also if you are to look critically at the report, you’ll see that there is no growth in the industrial sector as the sector recorded negative growth while the agricultural sector has slight positive growth.
“Those are the sectors that are supposed to generate employment and income. The sectors that they said are generating high level of growth such as transportation, trade, mining and so on; those sectors are serious employment generating units.
“What they should have told us is that because the price of oil has been rising, so we can now see that the GDP is growing.
“It is a matter of multiplying the price with the amount of oil we are exporting and then you get some growth. This is why despite the reported growth; it is not possible for Nigerians to see any positive change in our lives.
“The issue of insecurity and other militating factors are still there and are becoming worse. For instance, insecurity is seriously affecting agricultural output and the industrial sector; nobody wants to invest in an economy that is insecure.
The President, Major General Buhari (retd.), on Thursday welcomed with delight, the Q2 2021 report by the Nigerian Bureau of Statistics.
The president opinion was contained in a statement by the Special Adviser to the President on Media and Publicity, Femi Adesina, titled ‘President Buhari lauds GDP 5.01 per cent growth in Q2 2021’.
Buhari assured citizens that recent reforms and efforts like the conclusion of the Marginal Fields Bid Round, the renewed focus on gas development (including the NLNG Train 7 project, and various pipeline construction projects) as well as the passage and assent to the Petroleum Industry Bill, were certain to attract new investment to the oil and gas sector, and create conditions for more robust levels of growth in the future.
He said “It is gratifying to note that the various policies of the government, aimed at boosting agricultural production, improving the business environment, and investing massively in infrastructure, are beginning to yield fruit.
“Equally gratifying is the complementary news of the steady decline in the rate of inflation, over the last few months.”
Watch major threats, says LCCI
The Director-General of the Lagos Chamber of Commerce and Industry, Dr Chinyere Almona, stated that the GDP growth by five per cent y/y compared with 0.5 per cent recorded in Q1 2021 was a strong and a more desirable growth.
She said, “The loss of jobs due to the negative effects of the pandemic may have driven more people into the retail trade, commerce, and logistics.
“The positive growth in the transport subsectors like road and rail transport may have also had some positive impact on trade with the easing of movement.
“This is also evident that the Nigerian economy is recovering fast and sustained by the reduction in supply chain disruptions especially as there was no serious lockdown on economic activities in the second quarter
“With this Q2 performance and if this is sustained, the growth projections for Nigeria will be reviewed upwards in the coming weeks.
“However, we must watch and respond appropriately to the major threats to this growth performance like the third wave of COVID-19 infections that could lead to restrictions of movement, the rising spate of insurgency, banditry, kidnapping, and the persistent farmer/herder conflicts.”
Address taxation, hostile regulatory environment, ACCI tells govt
The Abuja Chamber of Commerce and Industry called for concerted efforts to ease the many challenges facing the business sector in the country.
Reacting to the report from the NBS, the President, ACCI, Al-Mujtaba Abubakar, said the report was a welcome development especially in view of the very difficult security situation across the country and the many huddles facing Nigerian businesses.
The ACCI chief, however, noted that easing tax and other regulatory ropes on businesses would catapult the non-oil sector growth beyond 6.7 per cent recorded in the current data.
An economist and private sector advocate, Dr Muda Yusuf, stated that the 5.01 per cent GDP growth YoY was a welcome development.
Yusuf said, “However, it is important to stress that there is a profound base effect in the Q2 GDP growth outcomes.
“The 5.01 per cent GDP growth is largely an indication of the restoration of economic activities. The Nigerian economy is still essentially in a recovery phase.
“The GDP numbers suggest the need to reset, rejig and reform key sectors of the economy.
“We need to fix issues around regulatory environment, tax environment and the multitude of levies imposed on businesses by all levels of government, foreign exchange policies, ports environment, and other structural bottlenecks to productivity in the economy.”
MAN expresses concern over low contribution of manufacturing to GDP
The Manufacturers Association of Nigeria, however, has expressed worry over the low level of industrialisation in the country.
The President of MAN, Mansur Ahmed, who said this at the 38th Annual General Meeting of Oyo, Odun, Ondo, Ekiti Branch of MAN in Ibadan on Thursday expressed concern about the low contribution of the manufacturing sector to the Gross Domestic Product of the country.
Ahmed appealed to the governments of Oyo, Osun, Ondo and Ekiti states to step up their support for manufacturing sector to enable the companies thrive despite the harsh economic environment in the country.
This, he said, would boost the level of industrialisation and make the sector to contribute more to the economy of the stages and the country.
Support InfoStride News' Credible Journalism: Only credible journalism can guarantee a fair, accountable and transparent society, including democracy and government. It involves a lot of efforts and money. We need your support. Click here to Donate