Non-oil Sector Growth Looks Positive Amid Q2 Decline

Picture of Oyingbo Market (Nigeria): Selling smoked fish at Oyingbo marketPicture of Oyingbo Market (Nigeria): Selling smoked fish at Oyingbo market

Nigeria’s Gross Domestic Product has contracted by 2.1 per cent in the second quarter of 2016, according to data from the National Bureau of Statistics. However, seven activities in the non-oil sector recorded positive growth.

The activities that drove growth in the non-oil sector included: agriculture; Information and Communication; water supply; arts, entertainment and recreation; professional, scientific, education and technical services..

Although growth in the sector declined by 0.38 in real terms in Q2 2016, the sector contributed 91.74 per cent to the nation’s GDP, higher from shares recorded in Q1 which was 89.71 per cent and Q2 2015 which was 90.20 per cent, according to the NBS data.

An earlier data compiled by the Bloomberg had put growth in the sector at -0.36 per cent in Q1 2016.

A 2.1 per cent GDP contraction beat analysts’ forecast by 0.5 per cent. The median of 17 economist estimates compiled by Bloomberg was for 1.6 per cent contraction.

Bloomberg quoted an analyst at the London-based Capital Economics Limited, John Ashbourne, as saying that there was poor performance across almost the entire economy, adding, “Every engine has blown out.”

But there have been a lot of efforts on the part of the government to diversify the economy by leveraging agriculture and other activities. In line with this vision, the Minister of Agriculture and Rural Development, Chief Audu Ogbeh, has been carrying out sweeping reforms meant to enhance crop production across key food chains.

He stated during the launch of his most recent reform-the Agriculture Promotion Policy- that it was a “refreshed strategy” to tackle foreign exchange scarcity, end food importation and boost local food production.

According to him, the programme has placed priority on improving productivity of a number of crops and activities such as rice, wheat, maize, fish (aquaculture), dairy milk, soya beans, poultry, horticulture (fruits and vegetables), and sugar.

He said, “Nigeria believes that the gap can be closed by partnering private investors across farmer groups and companies to develop end-to-end value chain solutions. These chains will receive facilitated government support as they make deep commitments to engaging a new generation of farmers, improving supply of specialised fertilizers and protection chemicals, as well as wider scale use of high-yielding seeds.”

The agriculture programme is also receiving support at the state levels where states like Taraba, Lagos, Ebonyi and so many others have embarked on aggressive programmes targeted at enhancing productivity in crops and activities where each state has comparative advantage. While Taraba and Ebonyi have been consolidating on local rice production advantage, Lagos State has taken advantage of its natural environment to develop aquaculture and other key minerals found in abundance in the state.

The Federal Government is targeting tax revenue from activities in the non-oil sector to finance the 2016 budget amidst declining oil revenue.

About the Author

Samed Olukoya
Samed Olukoya is the CEO/Founder of investorsking.com, a digital business media, with over 10 years' experience as a foreign exchange research analyst and trader. A graduate of University of East London, U.K. and a vivid financial markets analyst.

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