The 3.54 per cent gross domestic product (GDP) growth in the second quarter of 2022 marked the seventh consecutive quarterly GDP growth since the exit from recession in the fourth quarter of 2020. This report reflects the resilience of the Nigerian economy amid extreme macroeconomic challenges Dr Muda Yusuf has said.
He said the economy has equally experienced galloping inflation, currency depreciation, foreign exchange illiquidity, high energy cost, heightened insecurity, weakening purchasing power, structural bottlenecks and trade facilitation issues.
Analyzing the growth of the sectors, Yusuf who is also the CEO, Centre for the Promotion of Private Enterprise (CPPE) said the real sector of the economy grew marginally with agriculture growing by 1.2per cent; manufacturing three per cent; and construction 4.2per cent.
In a document he made available to The Nation, he explained that the service sector growth outperformed the real sector, reflecting the sectoral variabilities in the constraints faced by investors in the economy.
Breaking it down, Yusuf explained that the road transport sector grew by 56.4per cent, which represented the highest sectoral growth, while air transport grew by 22.5 per cent; financial services grew by 20 per cent. ICT, according to him grew by 7.71per cent; trade sector 4.5 per cent and real estate 4.4per cent. He said the sectors he mentioned were the only sectors that posted positive growth in the second quarter of this year.
Quoting the National Bureau of Statistics (NBS), he said the report identified the following sectors as having experienced contraction in the second quarter of this year. According to NBS the highest contraction was in oil refining which was 42 per cent, rail transportation 38 per cent, crude oil and gas 11.8 per cent, metal ores 25.5 per cent and electricity vehicle assemblies at 7.8 per cent. Others are electricity, air-conditioning 7 per cent; motion pictures, music 6 per cent and textiles 2.8per cent.
Speaking on the key drivers of these contractions he said they include but not limited to the continued inactivity of the country’s major refineries, all of which have been posting losses in recent years the cloud of insecurity hovering over the railway system which has caused the suspension of railway services and the crude oil theft and vandalism of oil facilities in the oil producing areas.
He said: “By NNP estimates, the country loses two billion dollars monthly on account of oil theft. Loses are also suffered on account of vandalism of oil facilities, pipelines and the activities of illegal refineries. Productivity and competitiveness issues continue to impact negatively on the performance across sectors of the economy. The general operating environment continues to be very challenging for most investors. The Small Medium Enterprises (SMEs) were particularly more vulnerable to prevailing macroeconomic shocks, resulting in a high mortality rate of small businesses”, stated.
The CPPE boss also lamented that some sectors such as crude oil and gas, oil refining, textiles, electricity, gas and steam engines are in recession though the Nigerian economy has been out of recession since the fourth quarter of 2020.
He stressed that many businesses are struggling to cope with the numerous challenges and shocks to the economy and on the welfare front, the citizens are also experiencing serious economic hardship as a result of the galloping inflation and the impact on purchasing power he added.
He said the GDP report has further underlined the dominance of the non-oil sector which accounted for 93.67 per cent of the GDP while the oil sector accounted for 6.63 per cent. Yusuf regretted that the oil sector continues to play a leading role in the generation of foreign exchange and a significant role in the generation of government revenue. According to him this underscores the persistent productivity challenge which has continued to characterize the non-oil sector of the economy.
