The Nigerian government has attributed the growth in the non-oil sector indicated in the third Quarter GDP figures to the economic policies of Buhari’s administration even as the nation’s economy is still in recession.
A report released on Monday by the National Bureau of Statistics, (NBS) showed a 0.03% growth in the non-oil sector, contributing 91.81% to the nation’s GDP.
It also showed that the Nigerian economy was still in recession, with growth in Gross Domestic Product contracting by -2.24% in the third quarter as compared to the decline of -2.07% experienced in the second quarter.
Giving the government’s position on the released report, the Vice President’s office said the over-riding impact of the oil and gas sector, where vandalism and sabotage of critical installations negatively affected production output, explains the persistence of the recession.
A statement by a spokesman for the Vice President, Mr Laolu Akande, said that efforts to resolve the Niger Delta situation were continuing, as the Federal Government has opened several channels of communication with all relevant groups in the Niger Delta.
In further reaction to the NBS’ reports, spokesman for the Economic Management Team headed by the Vice President, Dr. Adeyemi Dipeolu, said: “The slight deterioration in national economic performance owes largely to the continued poor performance of the oil and gas sector which worsened to -22.01% in the third quarter as compared to -17.48% in the second quarter of 2016. The immediate cause of this, as is now generally recognised, is the steep decline in oil and gas production in the third quarter of 2016 due to acts of vandalism and sabotage of oil export facilities.
“Remote causes include the continued outsized influence of the oil and gas sector on the rest of the economy as typified by its contribution to government revenue and foreign exchange earnings, which continue to be important motors of economic activity. Moreover, due to time lags, it is still too early for policy interventions of the Federal Government to begin to impact fully on economic activity”.
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He, however, pointed out there are however some ‘green shoots’ of economic recovery beginning to emerge.
According to him, on-going consultations to bring lasting peace to the Niger Delta have enabled an increase in oil and gas production which if sustained at current prices, will bring a measure of relief to the economy.
He said that the “growth in the non-oil economy although still weak at 0.03% showed a return to positive territory after two consecutive quarters of negative growth.
“This was partly due to the continued good performance of agriculture and the solid minerals, two sectors prioritised by the Federal Government. Agriculture grew by 4.54% in the quarter under consideration of which growth in crop production at nearly 5% was at its highest since the first quarter of 2014. Growth in the solid mineral sector averaged about 7%.
“The financial sector rebounded quite strongly in the period under review growing by 2.85% from a negative growth of -13.24% in the second quarter”.
On the chances of economic stability expected by most Nigerians that are facing harsh inflation, Dr. Dipeolu said that the recently approved first tranche of $600 million to be borrowed from the African Development Bank would also provide some relief in budgetary terms and supplement capital inflows.
“Indeed, there was a slight uptick of capital inflows into the economy in the third quarter of 2016. Overall capital inflows in the third quarter of 2016 increased by 74.84% over the second quarter,” he explained.
As indicated in the report, the performance of the manufacturing sector continued to be of concern given its key role in value addition and job creation in the economy.
But the spokesman for the economic team said it is expected, however, that with greater local sourcing of raw materials, expected improvements in infrastructure, especially power and reductions in the cost of doing business, the manufacturing sector would soon experience a sustained improvement in its contribution to the national economy.
He pointed out that while inflation is still high at 18.3% on a year-on-year basis it has begun to level out on a month-on-month basis and should enable the deployment of more policy tools to support growth and employment.
The report showed that growth of headline inflation slowed down appreciably from 13.8% in May to as low as 1.70% in September.
Explaining the report further, he said: “The year to date growth is about -1.58% and is set to improve given some of the points mentioned earlier especially regarding agriculture, oil and gas, and power supply. In addition, there have also been reductions in the rate of contraction of household and government consumption expenditure. Household consumption expenditure fell for instance by -3.25% in the third quarter of 2016 as compared to -6.0% recorded in the second quarter.
“The ratio of investment to GDP also showed a notable improvement rising by 7.6% in the third quarter of 2016 as compared to a contraction of -7.4% in the fourth quarter of 2015.
“The Strategic Implementation Plan for the implementation of the 2016 Budget of Change prioritised capital expenditures for power, roads and rail as well as social investments. In addition to creating jobs and promoting social inclusion, these expenditures will also provide a stimulus by putting money in the hands of people. The usual economic activity that takes place in the Yuletide season will also likely have a positive impact on the wholesale and retail trade sector”.
He said more economic policies would be unveiled in the Economic Recovery and Growth Plan that would be adopted before the end of the year, assuring Nigerians that it would lend further momentum to on-going efforts to revitalise and reposition the economy.