Nigeria’s economic expansion remains sluggish and below expectations, analysts have said, noting that with the current growth rates, more Nigerians are falling into poverty.
Gross Domestic Product (GDP) grew by 1.81 percent (year-on-year) in real terms in the third quarter of 2018, driven by the non- oil sector, the National Bureau of Statistics (NBS) said in a report Monday.
The rate came in lower than analysts’ consensus as well as Afrinvest’s projection of 2.1 percent for Q32018, said Ayodeji Ebo, MD, Afrinvest Securities Limited.
“The real GDP growth rate further confirms that a lot of Nigerians are going into poverty when compared with the population growth rate of 2.6 percent,” Ebo said.
The non-oil sector contributed 90.62 percent of the growth in the quarter under review, with the oil sector contributing the remaining 9.38 percent, the NBS said in a report released today.
Nigeria, Africa’s biggest oil producer and exporter, has sought to diversify the economy away from dependence on oil. Nigeria fell into a five-quarter recession from Q1 2016 to Q1 2017 that resulted from the collapse of oil prices.
Ibrahim Tajudeen, Head of Research, Chapel Hill Denham said there was a bit of improvement in the nation’s GDP.
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“Nigeria is delivering growth rates below expectation of 7-8 percent. It reflects a slight improvement (over the Q2 rate) but below expectation. There was a recovery in agriculture to 1.19 percent in Q3 from 1.91 percent in Q2 but that is still below 3 percent that it recorded before,” Tajudeen told BusinessDay.
Johnson Chukwu, CEO, Cowry Asset Management Limited said “we improved in terms of GDP growth rate, but in terms of real GDP per capita, it is still negative. The population is still growing at about 2.7 percent while GDP is growing at 1.8 percent .The GDP growth rate is an improvement from Q2 2018, but it is far from the growth rate that we need to reduce the incidence of poverty.”
A breakdown of non-oil sector contribution to GDP in the quarter under review shows that services contributed 48.79 percent while agriculture contributed 29.25 percent and industries 21.97 percent.
This is compared to the 53.97 percent, 22.18 percent and 23.18 percent contributed by services, agriculture and industries in Q2 2017, respectively.
Aggregate GDP in the review quarter stood at N33.37 trillion in nominal terms, the NBS said. This performance is higher when compared to the third quarter of 2017 which recorded a GDP value of N29.38 trillion thus, presenting a nominal growth rate of 13.58 percent.
Growth in the nonoil sector was driven mainly by Information and Communication.
Other drivers were Agriculture, Manufacturing, Trade, Transportation and Storage and Professional, Scientific and Technical Services.
Speaking on GDP expectation for the fourth quarter, Tajudeen said he expects that the economy will record stronger growth.
“If you look at it, the major focus is the non-oil sector because that is where growth came from in Q3 and one will expect further growth. We expect recovery in the agricultural sector and sustained growth in the trade sector,” Tajudeen said.
Ebo argues that partnership between the public and private sectors to solve the infrastructure and power-sector challenges will be the silver bullet to resolve the country’s economic problems.
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