Nigeria’s economy grew by 7.36 percent in the full year 2011, down from 7.98 percent it recorded in 2010.
The recorded decline in growth reflects global economic slowdown coupled with the Euro financial crisis.
However, the 7.36 per cent growth recorded by the country, still outperformed most developing economies.
These were revealed in data released by the the National Bureau of Statistics (NBS) showed on Tuesday, which also showed that the nation’s economy grew at a faster rate in the fourth quarter of 2011 than the previous three months because of a stronger performance in the non-oil sector, which was led by the telecoms sector.
The nation’s Gross domestic product (GDP) rose to 7.68 percent in the fourth quarter 2011, compared with 7.40 percent in the third quarter, the NBS stated.
The report noted that there was a fall in the amount of crude oil production, with an average of 2.4 million barrels per day in the last three months of the year, down from 2.6 million barrels per day a year earlier. The fall was largely attributed to ‘production outages’.
But the nation’s non-oil sector grew by 9.07 percent in the fourth quarter, recording a higher performance than the 8.93 percent recorded in the same period in 2010.
“This growth was largely driven by improved activities in the telecommunications, building and construction, hotel and restaurant and business services,” the NBS said.
Nigeria is reliant on oil exports for more than 95 percent of its foreign exchange revenues but only 15 percent of GDP with agriculture being the largest contribution to GDP, at about 40 percent of it.
The report also affirmed the impressive growth of the telecoms sector stating that “this sector continued to perform impressively and has remained one of the major drivers of growth in the Nigerian economy, with its contribution to total GDP increasing continuously.”
According to the NBS, “the telecommunication sector recorded a real GDP growth of 36.31 percent in the fourth quarter of 2011,” but did not give a comparative figure for the previous quarter.
Investors are optimistic about the consumer potential in Nigeria as the second largest economy in Africa, but so far the telecoms surge has not been followed in other sectors.
BUDGET COMING UP
The federal government plans to change the base year for its GDP this year from to 2008 from 1990, a move that could lead to a “huge jump” in the estimated size of the economy.
When Ghana made a similar move to recalculate its GDP last November, its estimated output shot up by 60 percent, catapulting it into the ranks of the middle income countries.
The National Assembly is currently debating an amendment of the 2012 budget proposal submitted by the coordinating Minister of the economy, Ngozi Okonjo-Iweala in February.
Okonjo-Iweala widened the fiscal deficit projection in this year’s spending plans to 2.97 percent, from the 2.77 percent in a previous budget plan presented last year due to lower revenue expectations.
The government was expecting to receive more funds after the removal of fuel subsidies on January 1, but it was forced to reinstate them partially after tens of thousands took to the streets in more than a week of protests across the country.
“This is a cause for concern at a time when the government is trying to at least freeze recurrent expenditure and initiate some fiscal consolidation,” opined, Standard Bank’s Samir Gadio, adding that if they do it this time, the Central Bank of Nigeria would most likely be “forced to tighten monetary conditions further”.
Despite record high oil prices last year, the nation’s foreign exchange reserves remained flat even as oil prices remain high at over $125 a barrel.
Despite this growth, poverty is increasing across the country as stated by the NBS in its report last month which revealed that poverty has rose to 60.9 percent in 2010, compared with 54.7 percent in 2004, with almost 100 million people living on less than $1 a day.
“Growth without tangible development is a major risk to Nigeria’s outlook,” Gadio said.