- Nigerian Economy Expands at Slower Pace of 1.87% in Q1, 2020
Nigerian economy grew at a slower pace in the first quarter of the year as the negative impacts of global disruptions have started crystalising in Africa’s largest economy.
The disruption in global economy due to the coronavirus pandemic resulted in a sharp fall in global oil prices and weighed on economic activities towards the end of the quarter after the nation recorded its index case in February.
According to the National Bureau of Statistics (NBS), Nigeria’s Gross Domestic Product (GDP) expanded by 1.87 percent year-on-year in the first quarter (Q1) of 2020. This was 0.23 percent lower than the pace of growth recorded in Q1 2019 and 0.68 percent below the final quarter of 2019.
|Q1 2019||Q2 2109||Q3 2019||Q4 2019||Total||Q1 2020|
|CONTRIBUTION TO GDP|
|REAL GROWTH RATE AT BASIC PRICE||2.10||2.12||2.28||2.55||2.27||1.87|
|REAL GROWTH RATE AT MARKET PRICE||2.06||2.14||2.14||2.46||2.21||1.95|
|NON OIL GROWTH RATE||2.47||1.64||1.85||2.26||2.06||1.55|
|OIL GROWTH RATE||-1.46||7.17||6.49||6.36||4.59||5.06|
On a quarterly basis, the real GDP contracted by 14.27 percent when compared with the 5.59 percent growth rate recorded in the preceding quarter. This, the bureau attributed to the effects of the disruption in global supplies, especially in the non-oil sector of the economy.
In the quarter, aggregate GDP rose to N35,647,406.08 million with a growth rate of 12.01 percent in nominal terms. This was better than the N31,824,349.67 million reported in the first quarter of 2019 and 0.11 percent higher than the nominal growth rate but 0.32 percent lower than the preceding quarter.
In the first quarter, Nigeria produced 2.07 million barrels per day, more than the 1.99 mbpd recorded in Q1, 2019 and 0.06 mbpd higher than the fourth quarter of 2019.
Accordingly, the sector expanded by 5.06 percent year-on-year in the first quarter, an increase of 6.51 percent when compared to the corresponding quarter of 2019. Growth, however, decreased by 1.30 percent when compared with Q4 2019.
On a quarterly basis, the sector grew by 11.30 percent in the first quarter, contributing 9.50 percent to aggregate real GDP. Higher than the percentage contributed in the first quarter of 2019 as the share of the non-oil sector declined due to the COVID-19 pandemic.
The uncertainty surrounding the global economy weighed on the non-oil sector in the first quarter as the sector grew by 1.55 percent in real terms. This was 0.93 percent slowed than the rated filed for the same quarter of 2019 and 0.72 percent slower than the fourth quarter of 2019.
The sector was mainly driven by Information and Communication (Telecommunications), Financial and Insurance (Financial Institutions), Agriculture (Crop Production), Mining and Quarrying (Crude Petroleum & Natural Gas), and Construction, the NBS stated.
In real terms, the sector accounted for 90.50 percent of Nigeria’s GDP in the first quarter, slightly below the 90.78 percent and 92.68 percent recorded in the first quarter and fourth quarter of last year respectively.
It should be noted that while the report reflects the negative impact of COVID-19, it did not capture the full impact on the economy as COVID-19 broke out in Nigeria on February 27 and lockdown was announced in the last week of March. Therefore, the second quarter report would likely contract as economic activities were down most of the quarter.
Once Again The National Grid Collapsed
Nigeria’s electricity transmission system, also known as the National grid, has suffered another system collapse, plunging Lagos, the country’s commercial capital, Kano and other major cities into a blackout.
The collapse, which occurred about 11.00 am on Tuesday, was confirmed by two of the country’s electricity distribution companies in separate messages to their customers.
“We regret to inform you that the power outage being experienced across our franchise – Kaduna, Sokoto, Kebbi and Zamfara states – is as a result of the collapse of the national grid,” Kaduna Electric said on Twitter.
Eko Electricity Distribution Company Plc, in a text message to its customers, said: “Dear customer, there is a partial system collapse on the national grid. Our TCN partners are working to restore supply immediately. Please bear with us.”
The grid, which is being managed by the government-owned Transmission Company of Nigeria, has continued to suffer system collapse over the years amid a lack of spinning reserve that is meant to forestall such occurrences.
Spinning reserve is the generation capacity that is online but unloaded and that can respond within 10 minutes to compensate for generation or transmission outages.
FG Consider Diversification To Generate Revenue
As revenue from oil nosedives following incessant global price fluctuations, the Federal Government is now channeling efforts to the development of minerals in the mines and steel industry to shore up foreign exchange earnings.
Officials of the Federal Ministry of Mines and Steel Development said on Wednesday that while there had been concerted efforts to develop various minerals in the sector, much emphasis had been placed recently on the development of bitumen, barite and gold.
They told our correspondent in Abuja that the government through the mines and steel ministry was striving to diversify the Nigerian economy away from oil as the major foreign exchange earner for Nigeria.
They also confirmed that large quantities of gold had been discovered in various locations in Zamfara and Osun states.
Asked if the government had initiated programmes to explore the minerals and boost revenues now that the country’s income had plunged, the Special Assistant on Media to the Minister of Mines and Steel Development, Ayodeji Adeyemi, replied in the affirmative.
He said, “Indeed, the ministry has the mandate to generate revenue and diversify the economy through the mines sector.
“And bitumen is one of the key resources which the nation is abundantly endowed with, that has been identified for strategic development.”
To buttress his position, Adeyemi shared some recent presentations of the Minister of Mines and Steel Development, Olamilekan Adegbite, where the minister said his ministry was gathering data on some bitumen fields across the country to attract investors.
“A lot of people are interested in bitumen, which is coming from both local and foreign investors. However, we are still acquiring data in some of the fields,” the minister stated.
On barite, the minister said the mines and steel ministry was working on raising the quality of barite produced in Nigeria to an internationally acceptable standard, as certified by the American Petroleum Institute.
Adegbite said his ministry had contracted a consultant to help raise the standard in the local production of barite to ensure that oil industry players make use of barite produced in Nigeria as against importing the commodity from other countries.
He said, “Barite is a critical weighting material in drilling fluids used in the oil industry. We have a lot of barites but the issue is that it is not produced to API standards. However, we are putting a system in place which would be ready to launch in about July.
“We have got the millers who can produce barite to API standard. Hence we will be able to compete with foreigners and it would save Nigeria a lot of foreign exchange in import substitution.”
On the development of gold, officials at the ministry further stated that the commodity had been aggregated for the production of bullion bars and that this was the first time that such aggregation was happening in Nigeria.
They stated that the gold was sourced from artisanal miners, while the final refining to bullion was done in Turkey.
The sources stated that the ministry had registered two refineries that would now refine to LBMA standard when they come on stream. LBMA is the de facto standard, trusted around the world.
Nigeria Sovereign Investment Authority Generates N160.06 Billion in 2020
The Nigeria Sovereign Investment Authority (NSIA) generated revenue of N160.06 billion in 2020, according to the latest audited financial reports announced by the Managing Director of NSIA Mr. Uche Orji.
The NSIA income came from devaluation gain of N51 billion, and core income of N109 billion compared to N33.07 billion in 2019.
But Orji lamented: “Covid-19 adversely affected logistics around infrastructure projects, especially the toll road projects and the presidential fertiliser initiative.”
Despite the pandemic, the Authority achieved 33 percent growth in Net Assets to N772.75 billion compared to the previous year’s performance of N579.54 billion.
Orji said the NSIA “received additional contribution of $250 million; and provided first stabilisation support to the Federal Government of $150 million withdrawn from Stabilisation Fund last year.”
The same year, the NSIA received $311 million from funds recovered from the late General Abacha from the United States Department of Justice and Island of Jersey for deployment towards the Presidential Infrastructure Development Fund (PIDF) projects of Abuja-Kaduna-Kano Highway, Lagos Ibadan Expressway and Second Niger Bridge.
In response to COVID-19, Orji said: “NSIA partnered the global Citizen, a not-for profit group, to form the Nigeria Solidarity Support Fund. Separately NSIA acquired and distributed oxygen concentrators to the 21-teaching hospital as part of corporate social responsibility; in addition to staffing support to the Presidential taskforce on COVID-19.”
In 2020, the NSIA “invested additional capital into NG Clearing, the first derivative clearing house in Nigeria to maintain NSIA’s shareholding at 16.5 per cent following the company’s rights issue of 2020″ Orji said.
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