Following the pronouncement by the National Bureau of Statistics (NBS) that Nigeria’s Gross Domestic Product (GDP) grew by 4.03 per cent in the third quarter of the year, a member of the organised private sector has disclosed that there are lingering concerns around growth and productivity in the non-oil sector of the economy.
Indeed, the OPS pointed out that specifically, the non-oil sector accounted for 92.51 per cent of the GDP, saying their concerns are underpinned by the weak contribution of the sector to foreign exchange earnings, revenue and quality of jobs. In addition, it also underscored the weak global competitiveness of the sector of the economy.
Dr. Muda Yusuf, the Founder and Chief Executive Officer (CEO), Centre for the Promotion of Private Enterprise (CPPE), disclosed this to New Telegraph, saying that the 4.03 per cent GDP growth recorded in the third quarter of 2021 marked the fourth consecutive quarters of GDP growth since the exit of Nigeria from recession in Q4’20. Yusuf admitted that Q3’21 GDP results relating to the non-oil sector’s performance indicated that there were some key challenges bedevilling the non-oil sector of the country’s economy, with issues bordering on instability, currency depreciation, poor forex liquidity, regulatory constraints, policy inconsistency, security of lives and property, structural bottlenecks and barriers to import and export trade and burdensome bureaucracy.
According to him, these challenges portend grave danger signals to future prospect of the country’s non-oil sector’s contribution to GDP. Speaking further as a private sector operator, the renowned economist said that the recent positive growth trend in the GDP could be attributed to rebound in domestic economic activities following the relaxation of restrictions and movement within the country, revitalisation of sectors that were earlier on lockdown following the onset of COVID-19 such as hospitality, entertainment, aviation, road transportation and tourism, among others. It also includes the restoration of supply chains that were disrupted at the inception of the pandemic; recovery of the global economy following improvements in investors sentiments as a result of improved vaccination in many parts of the world; rebound in commodity prices, which had a positive impact on macro-economic outlook as crude oil price,for instance, has recorded an impressive recovery in last couple of months. Other contributing factors include base effect as a comparative benchmark for the computation of GDP was period of recession, and economic stimulus programmes by monetary and fiscal authorities.
The CPPE CEO, while breaking down the sectoral growth performance, especially sectors that grew in the just released Q3’21, noted that the rail sector did very well. According to him, the 59.93 per cent growth performance in the rail sector was the highest sectoral performance during the period under review. This was driven largely by hgh passenger traffic in the rail sector, especially along the Kaduna-Abuja axis and Warri- Ajaokuta axis; safety concerns as the rail system is considered safer than the roads; quality of the roads, which often results in long travel time and risk of road accident; and incidents of banditry and kidnapping on the highways. Also, the metal ores sectors recorded an impressive 54.92 per cent growth driven by the mperative of local sourcing of minerals for manufacturing and other processes as a result of a depreciating exchange rate and the liquidity problems in the foreign exchange market.
This has led to increased demand for domestic solid minerals with an increase in investment in solid minerals as s result of the opportunities created by the scarcity of foreign exchange for the importation of some of these minerals. The air transport sector recorded an impressive rebound at 33.31 per cent growth. This positive trajectory was driven by the following: •Resumption of economic activities across all sectors in the economy with a corresponding increase in mobility and velocity of circulation within the country.
•Safety concerns around road transportation, especially incidences of kidnapping and banditry on the highways. This led to many travellers opting for flight. The electricity, gas and steam sectors recorded a growth of 14.36 per cent, possibly as a result of the market segmentation models used by the DisCos that impacted positively on the liquidity of the electricity providers.
Economic activities have since resumed as a result of the relaxation in the COVID protocols and the use of vaccines. This led to an increase in energy demand, especially for gas and electricity. There is an increase in the use of gas for industries and households, which impacted on its demand. The road transportation sub-sector recorded a GDP growth of 21.11 per cent, this again is impressive and driven by the following factors: The water transportation sector recorded a GDP growth of 16.30 per cent. This was driven by increased use of inland waterways as a result of the rise in water levels especially along rivers Niger and Benue.