Events of the Year: Economy

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Okonjo-Iweala

By Maureen Chigbo  |

NIGERIA’s economy in the year 2014 had a mixed bag of the good, the bad and the ugly. In the first quarter of the year the nation was greeted with the good news that the country has rebased its gross domestic product, GDP, from 1990 to 2010, resulting in the 89 percent increase in the estimated size of the economy. As a result, the country now boasts of having the largest economy in Africa with an estimated nominal GDP of $510 billion, surpassing South Africa’s $352 billion.

The exercise also reveals a more diversified economy than previously thought. Nigeria has maintained its impressive growth over the past decade with a record estimated 7.4 percent growth of real gross domestic product (GDP) in 2013, up from 6.7 percent in 2012. This growth rate is higher than the West African sub regional level and far higher than the sub-Saharan Africa level. The performance of the economy is underpinned by favourable improvements in the non-oil sector, with real GDP growth of 5.4 percent, 8.3 percent, and 7.8 percent in 2011, 2012 and 2013, respectively.

Agriculture – particularly crop production – trade and services – continues to be the main drivers of non-oil sector growth. The oil sector growth performance was not as impressive with 3.4 percent, -2.3 percent and 5.3 percent estimated growth rates in 2011, 2012 and 2013, correspondingly. Growth of the oil sector was hampered throughout 2013 and 2014 by supply disruptions arising from oil theft and pipeline vandalism, and by weak investment in upstream activities with no new oil finds. It got worse with the pumping of Shale oil into the international market and the resumption of production by some war-turn countries in the middle east who succeeded in repairing their burst pipelines and also increasing oil supply in the international market. This was followed by a crash in the price of oil and dwindling revenues from crude oil sales which accounts for the 85 percent of the Nigeria’s revenue. The made the country to adopt austerity measures to cope with the financial blues facing the country.

Adesina
Adesina

There is no gain saying that the good news of the GDP rebasing was overshadowed by the fall in oil prices which grossly affected the revenue of the country. This made the federal government to bench its 2015 budget on $65 per barrel of crude oil sales and brought down the growth rate at about 5 percent in 2015 with a budget of 4.3 trillion as announced by Ngozi Okonjo Iweala, minister of finance and coordinating minister of the economy on December 17. With the dwindling oil revenue, the nation is expecting a harsh economic environment in 2015 even though the government has assured that it has put measures in place the cushion the effect of the austerity measures on the masses. It also appears the rich will seemingly bear the brunt of the economic downturn as there will be increased taxation on luxury goods and service.

Nonetheless, poverty and unemployment continue to be the lot of many Nigerians despite the fact that government said that it created more than 1.7 million jobs in 2014 alone. But the good news is that the economy is being diversified especially in the agriculture sector where food supplies has continued to increase with a reduction in imported food items into the country. The inflation has also held steady standing at about 5.6 percent as at November with marginal increase in prices of food items. “We should see these challenging times as times of opportunities to further move this economy on the right path. Luckily, this administration had taken to diversification seriously and began to make inroads prior to this time. The non-Oil sector, whose growth has averaged about 8 percent in the last few years’ is the primary driver of growth in the economy unlike the oil sector which is actually contracting,” Okonjo-Iweala said.

Emefiele
Emefiele

Other evidence of this diversification, according to her, can be seen in the agriculture sector, where food imports declined from N 1.1 trillion ($6.7 billion) in 2009 to N 684 billion ($4.35 billion) in 2013 and continues to decline, according to the National Bureau of Statistics. NBS data on consumer price index for the month of November 2014 also shows that inflation eased for the third consecutive month from 8.1 percent to 7.9 percent as a result of slower rise in food prices. So the efforts of government to boost food production all across the country are paying off.

This year alone, the federal government added 12 million MT of food to our domestic food supply according to Ministry of Agriculture data. These include maize: 6.13 million MT; rice: 3.25 million MT; cassava: 2.12 million MT, amongst others. Despite crash in the value of the Naira from N150 per dollar in January to N185 per dollar in the parallel market in November,  there has been a very marginal increase in food prices due to increased food harvests. “Nigerians are not paying more for food despite the devaluation, because agriculture is working. Commodity prices monitored and published by the NOVUS Agro Nigeria Commodity Index buttress this assertion,” the minister said during the presentation of the Budget 2015 in Abuja.

The economy was also affected by the ongoing precarious security situation in certain parts of the country. Despite this and many other misgivings associated with its overall governance deficits, some international institutions and organisations have still reposed confidence in Nigeria to the point of getting her to host major international conferences in 2014. For example, in May Nigeria hosted the first ever World Economic Forum in the country despite the security scare that followed the twin bombings in Nyanya in Abuja, in which many were killed and hundreds injured and the kidnapped of Chibok school girls in Borno State.

Alison-Madueke
Alison-Madueke

It also hosted the 35th Conference/General Assembly of the 130-member country strong International Federation of Surveyors; the World Conference of Engineers and, of course, the UNESCO’s “World Book Capital for 2014” held in Port Hacourt, Rivers State.

On May 6, Barrack Obama, president of the United States of America, declared Nigeria as the world’s next economic success story, stressing that the discovery was one of the major reasons why his government was committed to helping the country build strong democratic institutions and as well remove constraints to trade and investment through the African Growth and Opportunity. Obama said this the US-Nigeria Trade and Investment Forum, an event organised by the Nigerians in Diaspora Organisation, NIDOA, in Washington DC, yesterday, President Obama was represented by Ambassador Eunice Reddick, a top official of the US Department.

In June, Godwin Emefiele assumed office as the new governor of the Central Bank of Nigeria, CBN following President Goodluck Jonathan’s sack of his predecessor Sanusi Lamido Sanusi, who went to court to challenge his removal from office before his due date for retirement early June.

On September 25, Cowrie Partners hosted its inaugural Nigeria Agriculture Investment Conference which focused on sustainable sources of Agriculture funding and how to address the attendant risks in Lagos. The conference will be held annually to create the forum to address topical issues pertaining to investment in Nigeria Agriculture.

On October 12, Emefiele, governor of Central Bank said at the the JPmorgan event in Washington on the sideline of the 2014 IMF/World Bank Group Annual Meetings, that “For the first half of 2014, the economy has created over 500, 000 jobs and “interestingly, almost 40 per cent of employers cited “business expansion” as the reason for hiring new staff.”  The jobs were created in the private sector.

— Dec. 29, 2014 @ 01:00 GMT

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