Nigeria’s Economy Contracts by 6.10% in Q2 2020 as COVID-19 Bites
Nigeria’s economy contracted by the most on record in the second quarter as COVID-19 negative impacts plunged activities, according to the data released by the National Bureau of Statistics (NBS) on Monday.
Africa’s largest economy contracted by 6.10 percent year-on-year in real terms in the quarter under review. Bringing an end to a 3-year of low but steady economic recovery started after the 2016 economic recession.
NBS attributed the decline to drop in global and local economic activities due to the global pandemic that disrupted both logistics and global economic activities during the quarter.
Nigeria’s revenue generation plunged to a record-low during the period as low oil price and weak demand dragged on the nation’s foreign reserves and ability to services its petrol-dollar economy.
“The domestic efforts ranged from initial restrictions of human and vehicular movement implemented in only a few states to a nationwide curfew, bans on domestic and international travel, closure of schools and markets etc., affecting both local and international trade. The efforts, led by both the Federal and State governments, evolved over the course of the quarter and
persisted throughout,” the NBS noted.
However, when compared with the same period of 2019, when the economy grew by 2.12 percent, the economy declined by 8.22 percent and recorded a 7.97 percent decline when compared to 1.87 percent posted in the first quarter of 2020.
Accordingly, Nigeria’s real GDP contracted by 2.18 percent year-on-year in the first half of the year, down from 2.11 percent growth recorded in the same period of 2019.
On a quarterly basis, the real economy decreased by 5.04 percent. The report noted that only 13 sectors recorded positive real growth in the quarter, down from 30 posted in the first quarter.
Similarly, aggregate GDP declined by 2.8 percent from N35,001,877.95 million achieved in the corresponding quarter of 2019 to N34,023,197.60 million in nominal terms.
In general, the nominal growth rate contracted by 16.81 percent and 14.81 percent when compared with the second quarter of 2019 and the first quarter of 2020.
During the period under review, Nigeria’s daily crude oil production stood at 1.81 million barrels per day (mbpd), representing 0.21 mbpd decline from 2.02 mbpd posted in the same period of 2019 and 0.26 percent lower than the 2.07 mbpd pumped in the first quarter of 2020.
Despite the reasonable moderate production level, growth in the oil sector contracted by 6.63 percent year-on-year in the second quarter, a decrease of 13.80 percent when compared to the corresponding period of 2019. Growth in the sector declined by 11.69 percent from 5.06 percent growth achieved in the first quarter.
On a quarterly basis, the sector contracted by 10.82 percent. Largely due to weak global demand for the commodity, especially the expensive Nigerian oil when compared to Saudi Arabia and Iraq offering huge discounts to sustain sales.
Still, the sector contributed 8.93 percent to the total real economy in the second quarter, lower than the corresponding period of 2019 and the preceding quarter, where it accounted for 8.98 percent and 9.50 percent, respectively.
The real GDP of the non-oil sector contracted by 6.05 percent in the reference quarter. The first decline since the third quarter of 2017 and represents a 7.70 percent decline from the number posted in Q2 2019 and 7.60 percent lower than the first quarter of 2020 result.
Output in the sector was driven largely by Financial and Insurance, Information and Communication, Agriculture and Public Administration. NBS said these four non-oil sectors moderated the economy-wide decline.
According to the bureau, the Transport and Storage, Accommodation and Food Services, Construction, Education, Real estate and Trade experienced the largest decline in the quarter under review.
The non-oil sector accounted for 91.07 percent of Nigeria’s aggregate GDP in real terms. Again, higher than the 90.50 percent recorded in the first quarter and 91.02 percent posted in the same period of 2020.
Nigeria Receives £4.2 Million Looted By James Ibori
The government of the United Kingdom has repatriated the sum of £4.2million that was looted by associates and family members of the convicted former governor of Delta State, James Ibori.
The Attorney-General of the Federation and Minister of Justice, Mr. Abubakar Malami, SAN, on Tuesday confirmed the receipt of the looted fund in a statement he made available to newsmen in Abuja.
In the statement signed by Malami Special Assistant on Media and Public Relations, Dr. Umar Gwandu, the Minister of Justice disclosed that the naira equivalent of the amount was credited into the designated Federal Government account on May 10, 2021.
The AGF had earlier signed a Memorandum of Understanding for the repatriation of the loot fund on behalf of the Federal Government of Nigeria.
According to him, “the development was a demonstration of the recognition of reputation Nigeria earns through records of management of recovered stolen Nigerian stolen in the execution of public oriented projects”.
AfDB, European Bank To Bridge $2.5tn Africa’s Financing Gap
The African Development Bank Group and the European Bank for Reconstruction and Development signed a Memorandum of Understanding on Monday to promote sustainable private sector development in Africa.
In a statement issued by its Communication and External Relations Department, the AfDB said, “The MoU will help catalyse new sources of financing to help bridge the $2.5tn annual financing gap for development in Africa.
“This gap requires that development finance institutions work in partnership.”
The bank stated that under this partnership, the AfDB and the EBRD would capitalise on their respective
expertise and experience, with a particular focus on climate change, green and resilient infrastructure and capital markets development.
“They will also work on improving business environments, bolstering the real economy and mobilising private sector investment,” the AfDB stated.
It observed that COVID-19 was threatening progress made towards the United Nations Sustainable Development Goals and was exacerbating the debt vulnerability of many African countries.
The bank stated that sustainable private sector development would be key to recovery and prosperity across the continent.
AfDB’s President, Akinwumi Adesina, after signing the memorandum with his counterpart, EBRD President,
Odile Renaud-Basso, was quoted as saying, “The new partnership agreement between our two institutions will pave the way for us to do more together, especially in supporting the growth of Africa’s private sector.
“The impact of COVID-19 on government resources is huge and we need to mobilise more private resources to help African countries build back stronger.”
On his part, Renaud-Basso, said, “The COVID-19 crisis has made the need for better and ever closer collective action even more urgent.
“Collaboration between the EBRD and the African Development Bank has grown from strength to strength over the years in the region.”
Despite Rising Debt Profile, President Buhari Seeks New N2.342T External Loan
President Muhammadu Buhari, on Tuesday, urged the Senate to approve a new external loan of N2,343,387,942,848.00, about $6.183billion, for the Federal Government to finance the 2021 budget deficit.
Senate President Ahmad Lawan read Buhari’s letter of request on the floor of the Senate at plenary.
Last Month, Investorsking recalled that there was a controversy when Edo State Governor, Godwin Obaseki had raised concerns over the financial trouble Nigeria might find herself due to the continuous rising debt profile.
In a recent report carried out by PWC, it was reported that:
“Actual debt servicing cost in 2020 stood at N3.27 trillion and represented about 10 percent over the budgeted amount of N2.95 trillion. This puts the debt-to-revenue ratio at approximately 83 percent, nearly double the 46 percent that was budgeted.
“This implies that about N83 out of every N100 the FG earned was used to settle interest payments for outstanding domestic and foreign debts within the reference period. In 2021, the FG plans to spend N3.32 trillion to service its outstanding debt. This is slightly higher than the N2.95 trillion budgeted in 2020”.
According to DMO Nigeria’s total public debt as at December 31, 2020, was N32.915 Trillion.
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