Nigeria’s GDP grows by 5.01% in Q2, highest in six years
…Buhari hails managers of economy for hard work, commitment
…Growth signals gradual normalization of Nigeria’s economy- Expert
…COVID-19 Third wave, rising insecurity, others threat to GDP growth —LCCI
…Nigerians are yet to feel the growth .impact —Prof. Ajibola
By Matthew Denis & Ariemu Ogaga Abuja
Nigeria’s Gross Domestic Product (GDP), grew by 5.01 per cent (Year-on-Year) in real terms in the Second Quarter of 2021 (Q2, 2021), marking three consecutive quarters of growth since the recession in 2020
The National Bureau of Statistics (NBS) said this on Thursday in its Q2, 2021 GDP report published on its website.
According to NBS, the growth rate is higher than the -6.10 per cent growth rate recorded in Q2 2020 and the 0.51 per cent recorded in Q1 2021 year on year.
It said this indicated the return of business and economic activity near levels seen prior to the nationwide implementation of COVID-19 related restrictions.
The NBS said that the steady recovery observed since the end of 2020, with the gradual return of commercial activity and the local and international travel accounted for the significant increase in growth performance relative to Q2 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.”
The report said that in the quarter under review, aggregate GDP stood at N39.12 trillion in nominal terms, higher than Q2 2020 with aggregate GDP of N34.023 trillion.
This, it said, indicated a year-on-year nominal growth rate of 14.99 per cent.
It also revealedsaid that the nominal GDP growth rate in Q2 2021 was higher than the -2.80 per cent growth recorded in Q2 2020 when economic activities slowed sharply at the outset of the pandemic.
The report revealed that the Q2 2021 nominal growth rate was also higher than 12.25 per cent growth recorded in Q1 2021.
The NBS classified the Nigerian economy into the oil and non-oil sectors.
For the oil sector, it revealed that average daily oil production stood at 1.61 million barrels per day (mbpd) in Q2 2021, which was -0.19 mbpd lower than the average daily production of 1.81 mbpd recorded in the same period of 2020 and -0.10 mbpd lower than the 1.72 mbpd recorded in Q1 2021.
“Real growth of the oil sector was -12.65 per cent (year-on-year) in Q2 2021 indicating a decrease of -6.02 per cent points relative to the growth rate recorded in the corresponding quarter of 2020.
“Growth decreased by -10.44 per cent points when compared to Q1 2021 which was -2.21 per cent.
“For the first half of 2021, real GDP was recorded at -7.13 per cent, compared to -0.80 per cent for the first half of 2020, the performance reflecting lower oil output.”
It, however, said that quarter-on-quarter, the oil sector recorded a growth rate of -20.35 per cent in Q2 2021.
According to the NBS, the sector contributed 7.42 per cent to total real GDP in Q2 2021, down from figures recorded in the corresponding period of 2020 and down compared to the preceding quarter, where it contributed 8.93 per cent and 9.25 per cent respectively.
For the non-oil sector, there was growth by 6.74 per cent in real terms during the period under review as growth rate was higher by 12.80 per cent compared to the rate recorded in the same quarter of 2020 and 5.95 per cent higher than the first quarter of 2021.
During the quarter, the sector was driven mainly by growth in trade, information and communication (Telecommunication), transportation (road transport), electricity, agriculture (crop production) and manufacturing (food, beverage and tobacco).
This, reflected the easing of movement, business and economic activity across the country relative to the same period in 2020.
“In real terms, the non-oil sector contributed 92.58 per cent to the nation’s GDP in Q2 2021, higher from shares recorded in Q2 2020 which was 91.07 per cent and Q1 2021 recorded as 90.75 per cent,” it said.
President Muhammadu Buhari, has lauded the new report by the NBS reflecting growth in Nigeria’s GDP for the second quarter of 2021 with significant growth.
Consequently, the President in a statement issued on Thursday by his special adviser on media and publicity, Femi Adesina said, the NBS report reflecting the GDP grew by 5.01% in Q2 2021 following 0.51per cent growth in Q1 2021, was commendable.
He said the growth, which continues the progress of the preceding two quarters, was a continuing trend reflecting Nigeria’s economy is rebounding following the COVID-19-induced contractions seen in Q1 and Q2 2020.
According to the statement, “the non-oil sector is a significant contributor to the economic performance in Q2 2021 with a growth of 6.74per cent in real terms, the fastest growth in the sector since the third quarter of 2014, adding that the contribution of the non-oil sector to GDP increased from 91.07per cent in Q2 2020 to 92.58per cent in Q2 2021.”
Buhari commended managers of the economy for hard work and commitment, urging them to keep at it till the positive development “touches the lives and pockets of the average Nigerian.”
The president noted the decline in real growth in the oil sector in Q2 2021, compared to a year ago. Oil production levels were at 1.62million barrels per day, compared to 1.67million barrels per day in Q2 2020.
He said the lower production output as well as the volatility in oil prices since the beginning of the COVID-19 pandemic, is responsible for the decline in performance of the oil sector.
Buhari assured 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 (PIB), are certain to attract new investment to the oil and gas sector, and create conditions for more robust levels of growth in the future.
He added that it is gratifying to note that the various policies of the administration, aimed at boosting agricultural production, improving the business environment, and investing massively in infrastructure, are beginning to yield fruit.
According to him, the positive effects of the Economic Sustainability Plan (ESP), which helped fast-track the country’s exit from the COVID-induced recession of 2020, continue to be evident, as some of the sectors driving the Q2 2021 growth have benefited or are benefiting from government-led interventions.
He stated that the successful roll-out of vaccines and COVID-19 protocols has also helped to reduce pressures on the healthcare system and the need for a lockdown.
The president also assured Nigerians that there is much to be optimistic about. He assures that the investments in agriculture and infrastructure will continue, as will on-going efforts to achieve a significant improvement in the security situation across the country.
“There is no doubt that a more secure environment – which the security agencies are working hard to achieve – will spur and energize the shoots of economic progress being seen and felt in the country,” he said.
Reacting, Economist and Private sector Advocate, Dr Yusuf Muda said the growth signals gradual normalization of the Nigeria’s Economy.
He stressed that impact of the GDP growth on citizens’ welfare and the productivity in the investment environment are crucial. He emphasized that these are the metrics that matter most, ultimately.
He further added that that the GDP figures are not ends in itself, rather means to an end.
He noted that essentially the nation’s economy is still on a recovery phase.
According to him, “Second Quarter GDP Numbers, the 5.01per cent GDP growth (year on year) is a welcome development. It signposts an incremental recovery in the economy.
“It also reflects a gradual normalization of economic and business activities in the country. However, it is important to stress that there is a profound base effect in the Q2 GDP growth outcomes.
“The Q2 2021 figures was a comparison with the worst contraction the economy suffered in recent history, which was 6.3 per cent in Q2 2020. This was the period the economy was completely shut down because of the pandemic. Economic activities were completely crippled, movement was restricted, supply chains collapsed etc.
“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 major drivers of the growth numbers are not significant contributors to the GDP, except the trade sector.
“While it is worthy of note that Road transportation grew by 92 per cent; Rail grew by 53 per cent; electricity, Gas and Steam and Air Conditioning, 78 per cent; Coal Mining, 34per cent; Trade, 22 per cent. Water and Waste Management, 18 per cent; Insurance, 15.7 per cent, Strangely, other financial institutions contracted by 4.5 per cent.
“Telecommunications grew by 6 per cent; music and motion pictures, 5 per cent; health and social services five per cent; manufacturing, 3.5 per cent.
“Meanwhile, the biggest contractions were from oil refining, 47 per cent; crude oil and gas, 13 per cent. This reflects the enormity of the challenges faced by investors in the sector.
“The GDP numbers suggest the need to reset, rejjig 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.
“There are still worries about the macroeconomic challenges reflecting in spiralling inflation, weakening of the currency, forex market illiquidity, spiking debt profile, among others. The security situation remains a major source of risk inhibiting investment s whether domestic or foreign.
“It is good to celebrate the GDP growth numbers, but this should be done cautiously,” he said.
In a chat with Nigerian NewsDirect, the Former president Chartered Institute of Bankers of Nigeria, President, Prof. Segun Ajibola lauded the development but insist that the effect is yet to be felt among majority of Nigerians.
“It is a good development that Nigeria is on the path of growth and recovery, as reflected by the real growth in real GDP in the last three quarters. But the challenges facing majority of Nigeria are multifaceted and having at its center poor welfare conditions of the masses.
“Economic growth is necessary for improved welfare conditions but NEVER a sufficient condition. Issues that bother on equitable distribution of economic resources, quality infrastructure, security of lives and properties, etc influence the standard of living of the people.
“The recent real growth and reduction in the rate of inflation are good development but until they translate to better welfare conditions of the masses, the man on the street is not likely to feel the impact. And the clamour for a better economic environment will continue”, he stated.
Third wave of Coronavirus infections, rising insecurity among others threat to GDP growth- LCCI
However, the Lagos Chamber of Commerce and Industry (LCCI) said sustaining the country’s reported Q2 2021 Gross Domestic Product (GDP) performance will result in an upward growth review in the coming weeks.
Director-General, LCCI, Dr Chinyere Almona on Thursday noted that the figure reflected a strong and more desirable growth when looked at the non-oil growth of 6.7 per cent compared with the 0.79 per cent in Q1 2021.
“This shows an increase in non-oil sector activities through growth in trade, information and communication technology (ICT), transportation, electricity, agriculture and manufacturing,” she said.
She, however, stated that the country must watch and respond appropriately to the major threats to this growth performance like the third wave of Coronavirus infections, rising spate of insecurity among others.
She noted that the contraction in ICT growth in Q2 was simply a base effect factor when you look at the positive growth in Q2 compared to what was recorded in preceding quarters especially in 2020.
“The Information and Communication Sector grew by 5.50 per cent in Q2 2021 from 6.31 per cent in Q1 2021 and 16.52 per cent in Q2 2020.
“The concentration on the use of ICT during the lockdown periods of 2020 recorded a double-digit growth rate.
“Since this year we have recorded single-digit because the use concentration may have slightly reduced especially as comparatively fewer people work from home against what was obtained in 2020,” she said.
In addition, the Executive Director, the Nigerian Workforce Strategy and Enlightenment Centre (NIWOSEC) and Fellow Chartered Public Administrator, Dr David Ehindero said “ I question the sincerity of data collection in Nigeria.
According to him, most Government agencies do not have the tenacity to follow through the process as, they often collect statistical data by imaginations.
He said, “this is largely due to poor funding of the process or institution and corrupt activities as usual. I do not want to sound pessimistic.
“The fact remains that the reality of economy progression is not in books but table of the Masses.
“The reality is that government may have good intentions and might have come out with all manner of programs and projects to help the dwindling economy, but wanton corruption is not allowing it to get down to the desired level, so often government officers frame data to give a scenario of good performance, hence the need for proper monitoring.”
Ehindero emphasized that “Nigerians are not feeling the impact of the so call economic growth, let the leadership not be carried away.
“People are running away from Farms, Trans-trade movement within Nigeria is discouraging because of glaring security challenges.
“High interest rates and bank charges is discouraging savings and investment culture. Unemployment rate among Nigerians has not abated, so you wonder where the statistics are coming from?”
