As Federal Government, Wednesday, officially announced that the country has slipped into a recession, the first in 29 years, there seems to be an agreement by the nation’s economists that agriculture is the magic wade that would pull out the nation’s economy from the wools.
The National Bureau of Statistics (NBS) while releasing its indices, Wednesday, revealed that Nigeria’s economy nose-dived again in the second quarter of 2016, with the Gross Domestic Product (GDP) dropping by 2.06 per cent (year-on-year) in the same period, sliding the economy into full recession.
The Minister of Finance, Mrs Kemi Adeosun, while confirming this, noted this was as a result of over dependence on oil, saying the massive resources deployed to agriculture will help ease the recess.
She said: “The largest beneficiary of our borrowing is agriculture because it is equally strategic and we have programmes by the Minister, some of which he inherited and is going to restructure and reform and some are new to the ministry”
Also Prof. Pat Utomi, speaking in Benin on Tuesday, alluded to this when he said the recession is blessing in disguise, saying he was happy that oil prices had fallen so that nation can now turn to agriculture for salvation.
However, the opposition party, the Peoples Democratic Party thinks Buhari Led administration has failed hence it called for President Buhari resignation.
According to the NBS data, on Wednesday, the negative growth was lower by 1.70 percent from the growth rate of 0.36 per cent recorded in the first quarter.
“In the Second Quarter of 2016, the nation’s GDP declined by -2.06 percent (year-on-year) in real terms. This was lower by 1.70 percent points from the growth rate of -0.36 per cent recorded in the preceding quarter, and also lower by 4.41 per cent points from the
growth rate of 2.35 percent recorded in the corresponding quarter of 2015.
“Quarter-on-quarter, real GDP increased by 0.82 percent during the quarter, nominal GDP was N23,483,954.78 million (in nominal terms) at basic prices. This was 2.73 percent higher than the Second Quarter 2015 value of N22,859,153. 01 million. This growth was lower than the rate recorded in the Second Quarter of 2015 by 2.44 percent points,”
the NBS stated.
The statistics bureau further noted that inflation rose by 17.1 percent (year-on-year), an 11-year high, translating to 0.6 points increase when compared with 16.5 per cent reported in June.
“In July the Consumer Price Index (CPI), which measures inflation, increased by 17.1 percent (year-on-year), 0.6 percent points higher from the rate recorded in June (16.5 percent),” the data indicated.
On the other hand, unemployment rate rose from 12.1 percent in the first quarter of 2016 by 1.78 per cent points to 13.3 per cent in the second quarter.
“In Q2 2016, the labour force population (i.e. those within the working age population willing, able and actively looking for work) increased to 79.9 million from 78.5 million in Q1 2016, representing an increase of 1.78% in the labour force during the quarter.
“This means 1.39 million persons from the economically active population entered the labour force,” the government agency said.
The gloomy situation was further confirmed by Adeosun, at a briefing after the Federal Executive Council (FEC) meeting presided over by President Muhammadu Buhari at the Presidential Villa, Abuja.
She pointed out that it was a difficult time for Nigeria, but said the nation could overcome the slump by diversifying its income base.
“I think that we have a long way to go. We are not confused and we are not deceiving ourselves that everything is rosy; it is not. It is a difficult time for Nigeria but I think Nigeria is in the right hands.
And if we can stick with our strategy – we still have some adjustments to make; I think we need to make some adjustments in monetary policy; it is quite clear we do and we will do that; we are working on that,” the Minister said.
She decried the country’s over dependence on oil, whereas 87 percent of Nigeria’s GDP is non-oil and asserted that the attacks on oil installations by militants in the Niger Delta had dragged down the GDP of the entire economy, hence the need to drive those other areas.
“We need to try and find a way to support the manufacturing sector better and we will do that. What we have is cost-put inflation and when you have cost-put inflation, it is structural inflation. It is not going to respond to monetary policy tools such as increasing the rate of interest. We have to address the structural causes of the inflation. The trend, the rate of inflation growth has slowed down and that’s a good sign,” Adeosun stated.
Prof. Utomi advised Nigerians not to panic because according to him it is a blessing to the entire country.
He said it was good it came this time, adding the nation’s overdependence on oil is the cause.
He advocated for a shift of focus from oil to other sectors of the economy to move out the nation from recession.
Utomi, who made this declaration at Ugboku, Edo state, at the groundbreaking ceremony of the $100 million Integrated Produce City (IPC), asked Nigerians to see the present economic recession as a golden opportunity to right our economic wrongs.
According to him, the recession presents an opportunity to finally get the Nigerian economy right, revealing that he prayed for oil prices to stay down and stay down for a long time for Nigerians to come to their senses to know that the country is really rich.
“Let me shock you by saying that the recession we face in Nigeria is a golden opportunity. It is not a problem; it is an opportunity to finally get the Nigerian economy right.
“So without appearing to scandalise anybody, I actually pray for oil prices to stay down and stay down for a long time. Then, we will come to our senses and we will know that Nigeria really is a rich country.
“Right now, we are not behaving as we should be behaving. Competitively driven industrial policy in select value chains will be helpful in confronting the misery index and bringing hope to millions”, Prof. Utomi said.
Also, Special Adviser to the President on Economic Matters, Dr Adeyemi Dipeolu, said the situation as not as hopeless as many may want to believe.
He pointed out that besides the growth recorded in the agriculture and solid mineral sectors, the Nigerian economy, in response to the policies of the Buhari presidency, was doing better than what the International Monetary Fund (IMF) had estimated, with indications that the second half of the year would be even much better.
In July, the IMF had projected that the country’s economy was likely to contract by 1.8% this year, sliding it into recession.
Dipeolu in a statement by the spokesman to the Vice President, Lagos Akande, said the GDP figures released by the NBS had indicated a hopeful expectation in the country’s economic trajectory despiteconfirming a temporary economic decline.
He said the Buhari presidency would continue to work diligently on the economy and engage with all stakeholders to ensure that beneficial policy initiatives are actively pursued and the dividends delivered to the Nigerian people.
“A close look at the data shows that this outcome was mostly due to a sharp contraction in the oil sector due to huge losses of crude oil production as a result of vandalism and sabotage,” the Economic Adviser pointed out.
He, however, expressed confidence that the rest of the Q2 data was beginning to tell a different story as there was growth in the agricultural and solid minerals sectors, which are the areas in which the federal government had placed particular priority.
Dipeolu noted that agriculture grew by 4.53 per cent in the second quarter of 2016 as compared with 3.09 per cent in the first quarter, the metal ores sector showed similar performance with coal mining, quarrying and other minerals also showing positive growth of over 2.5 per cent and notably, the share of investments in GDP increased to its
highest levels since 2010, growing to about 17 per cent of GDP.
“The manufacturing sector, though not yet truly out of the woods, is beginning to show signs of recovery while the service sector similarly bears watching.
“Nevertheless, the data already shows a reduction in imports and an increase in locally produced goods and services; and this process will be maintained although it will start off slowly in these initial stages before picking up later,” he added.
The economic adviser said although the inflation rate remains high, the good news was that the month-on-month rate of increase had fallen continuously over the past three months.
“Unemployment remains stubbornly high, which is usually the case during growth slowdowns and for reasons of a structural nature,” he said.
According to him, the picture that emerged, barring unforeseen shocks, is that the areas given priority by the Federal Government are beginning to respond with understandable time lags to policy initiatives.
“Indeed, as the emphasis on capital expenditure begins to yield results and the investment/GDP numbers increase, the growth rate of the Nigerian economy is likely to improve further,” he stated, asserting that as these trends continue, the outlook for the rest of the year is that the Nigerian economy will beat the IMF prediction of -1.8 percent for the full year 2016.
“The IMF had projected a growth of -1.8 percent for 2016; however, the economy is performing better than the IMF estimates so far. For the half year, it stands at -1.23 percent compared to an average of -1.80 percent expected on average by the IMF.
“What is more, it is likely the second half will be better than the first half of 2016. This is because many of the challenges faced in the first half either no longer exist or have eased,” he added.
But the Peoples Democratic Party (PDP), seems to have lost hope in the Buhari-led administration as it called for the resignation of President Buhari following the new statistics released by NBS.
According to the party, “Nothing better showcases the absolute ineptitude and incompetence of the Muhammadu Buhari administration than the GDP, Inflation and unemployment figures released by the Nigerian Bureau of Statistics today. These figures reveal what we have repeatedly said over the last 15 months; President Buhari is
destroying the Nigerian economy.
“The result of these indices is that Nigeria is in its worst economic state for 29 years – dating back to 1987 when the nation had to take harsh steps to recover from President Buhari’s policies of 1984-85.
“It is disheartening that the Buhari administration is destroying the Nigerian economy & our collective future by the implementation of his archaic & incoherent economic policies which failed in 1984-85 & are failing spectacularly now. Our dismay is made worse by the fact that every sphere of the Nigerian socio-political space (ranging from the
conduct of elections human rights, respect for the rule of law, security, technology, health etc) is negatively affected by Buhari’s government.
“We join all well meaning Nigerians to call on Buhari to resign if he is unable to reverse the economic decline he has brought on us. May God bless Nigeria, especially in these very difficult times,” the party said.