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The Nigerian Presidency, Thursday, reeled out an array of “facts” that snowballed into claims that the economy is firmly on the road to diversification.
A BusinessDay fact check however dispels those claims.
In a press statement signed by Femi Adeshina, special adviser to the President, the Presidency said
“According to the National Bureau of Statistics (NBS), the economy has recovered from the slow-down and eventual recession, which started in 2014,” the statement read, wrongly citing 2014 as the year the economy started to slowdown rather than 2015.
In 2014, the economy expanded 6.3 percent, after a GDP rebasing exercise that cemented Nigeria as Africa’s largest economy.
The slowdown, the Presidency alluded to, actually started in 2015, after the lengthy collapse in oil prices that started in mid-2014 caused growth to slow to 2 percent, the lowest in a decade, according to the National Bureau of Statistics (NBS).
The decline worsened and come 2016, the economy was soon left picking up the pieces from its first recession in over two decades.
But there has been some improvement as the Presidency rightly noted.
“There has been improvement, with stronger growth for three successive quarters,” the statement read, referring to progress made since the economy exited recession in the second quarter of 2017.
“From contracting by 0.91 percent in Q1 2017, the economy has grown by 0.72 percent in Q2 2017, to 1.17 percent in Q3 2017, and 2.11 percent in Q4 2017.
“The Q1 2018 GDP shows that the economy has recorded a GDP growth of 1.95 percent, compared to a contraction of 0.91 percent in Q1 2017.”
On a quarter on quarter basis, the economy actually performed worse, having gone from 2.11 percent in the fourth quarter of 2017 to 1.95 percent this year (first quarter 2018).
The Presidency went on:
“The growth is driven by Agriculture and Industry, which shows that finally, after more than 50 years of lip service, the Nigerian economy is on the road to diversification.
“The oil sector’s contribution to GDP is 9.61 percent, while non-oil sector’s share is 90.39 percent.”
But the non-oil sector has contributed more to GDP than the oil sector since 2014.
In the first quarter of 2018- when oil prices averaged $66 per barrel and production was 1.8 million barrels daily- oil contributed 9.61 percent to GDP, up from 8.5 percent in Q1 2017 and 6.75 percent as at the end of 2016 when the militant hostilities were at fever-pitch levels.
Also, contrary to the Presidency’s claim that growth in the first quarter was driven by Agriculture, our fact check shows otherwise as the sector slowed from 4.8 percent growth in Q4, 2017 to 3 percent growth in Q1, 2018.
In contrast to the scenario that played out in the previous quarter, the oil sector was the major growth driver in Q1’18.
The oil sector grew markedly by 14.77 percent on an annualised basis, as against a contraction of 15.60 percent in the first quarter of 2017, while the non-oil sector grew by 0.76 percent year-on-year from 0.72 percent in Q1 2017.
Real GDP growth for the Oil sector advanced by 14.77 percent in the quarter under review, in contrast to the negative growth of 15.60 percent in the corresponding quarter in the previous year.
Also, on a quarterly basis, Oil sector came in stronger (Q4’17 11.20% YoY). According to the NBS, the average daily oil production advanced by 2.6% QoQ to 2.0 million barrels per day (2mbpd) during the period under review. On a year-on-year basis, this represented a production increase by 14.3% on an annualised basis compared to 1.75mbpd in Q1’17.
The presidency’s claims that one of the factors responsible for the positive performance of the economy in Q1 2018 was the spending of about N1.5 trillion on infrastructure projects in 2017 may be true and for the past 15 months, inflation has declined consistently from 18.72% to 12.48%.
Capital importation has also improved, as the Presidency claimed, with the first quarter of 2018 recording the fourth consecutive quarterly increase since Q2 2017 with a total of $6.3 billion, powered by an astronomic surge in portfolio inflows.
Foreign reserves also stand at $47.79 billion as at May 2018, helped in part by foreign borrowings of about $7 billion.
The Presidency said Nigeria’s Stock Market ended 2017 as one of the best-performing in the world, with returns of about 40 percent. While this may be true the markets are only back to levels they were at before the President took office in mid-2015, as the market sold off following the plunge into recession in 2016.
The Presidency says milled rice production has increased from 2.5MT to 4MT, and rice imports have dropped from 580,000MT in 2015 to 58,000MT in 2016 while millions of dollars have been saved.
However data by the Thai rice exporters shows that Benin Republic imported 1,330, 809 metric tons of rice, between January and September 2017 a 51.9 percent increase from the 876, 228 metric tons which was imported in the same period of 2016.
Comparing the 2017 imports to total imports in 2015 also shows there has been a 65 percent increase. Most of the rice is destined for Nigeria through smuggling.
