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COVID-19, Poor Economic Policy Plunge Nigeria Into Second Economic Recession in Four Years

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Poor economic policy amid COVID-19 pandemic has plunged Nigeria into second economic recession in four years, according to the latest report from the Nigerian Bureau of Statistics (NBS).

Africa’s largest economy contracted by 3.62 percent year-on-year in real terms in the third quarter of 2020, this was 2.48 percent better than the second quarter.

Nigeria’s economy shrinks by 6.10 percent in the second quarter, bringing its cumulative decline in the last two quarters to 9.72 percent, the worst of such contraction since 1987.

After two consecutive quarters of negative growth, Nigeria officially plunged into the second economic recession in four years in the third quarter of 2020.

A further breakdown revealed that the third-quarter growth rate was slower by 5.90 percent when compared to the 2.28 percent positive growth recorded in the same quarter of 2019.

NBS attributed the decline to COVID-19 lockdown and other measures put in place in the second quarter to contain the spread of COVID-19. This, the bureau said was evident in the numbers of economic activities that recorded positive (18) growth in the third quarter when compared to the second quarter (13).

The performance of the economy in Q3 2020 reflected residual effects of the restrictions to movement and economic activity implemented across the country in early Q2 in response to the COVID-19 pandemic. As these restrictions were lifted, businesses re-opened and international travel and trading activities resumed, some economic activities have returned to positive growth. A total of 18 economic activities recorded positive growth in Q3 2020, compared to 13 activities in Q2 2020,” NBS stated.

During the third quarter, aggregate Gross Domestic Product (GDP) stood at N39,089,460.61 million in nominal terms. Representing an increase of 3.39 percent when compared with the N37,806,921.41 million recorded in the same period of 2019.

Oil Sector

In the third quarter, Nigeria’s daily crude oil production stood at 1.67 million barrels per day or 0.37mbpd lower than the same quarter of 2019 and 0.14mbpd lower than the production attained in the second quarter of 2020. Suggesting that OPEC and allies’ accord signed to artificially boost oil prices is having a negative impact on Nigeria’s output.

Therefore, the oil sector contracted by 13.89 percent year-on-year in the third quarter, representing a decline of 20.38 percent when compared with the same quarter of 2019.

Accordingly, real oil growth decreased by 7.26 percent in the quarter under review, down from 6.6 percent growth recorded in the second quarter of 2020.  However, on a quarterly basis, the sector expanded by 9.64 percent in the third quarter of 2020. Contributing 8.79 percent to total GDP, down from 9.77 percent recorded in the corresponding period of 2019 and 8.93 percent in the preceding quarter.

Non-Oil Sector

As expected, the non-oil sector performed better in the third quarter. Contracting by 2.51 percent in real time, a decline of 4.36 percent from the same quarter of 2019 and 3.54 percent better than the second quarter of 2020. The sector was driven mainly by the Information and Communication (Telecommunications) sector, with other drivers being Agriculture (Crop Production), Construction, Financial and Insurance (Financial Institutions), and Public Administration.

The non-oil sector contributed 91.27 percent to the nation’s GDP in the third quarter of 2020, higher than the 90.23 percent posted in the corresponding quarter of 2019 and 91.07 percent in the second quarter of 2020.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Economy

Seyi Makinde Proposes N266.6 Billion Budget for Oyo State in 2021

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The Executive Governor of Oyo State, Seyi Makinde, has presented the Oyo State Budget Proposal for the 2021 Fiscal Year to the Oyo State House of Assembly on Monday.

The proposed budget titled “Budget of Continued Consolidation” was said to be prepared with input from stakeholders in all seven geopolitical zones of Oyo state.

Governor Makinde disclosed this via his official Twitter handle @seyiamakinde.

According to the governor, the proposed recurrent expenditure stood at N136,262,990,009.41 while the proposed capital expenditure was N130,381,283,295.63. Bringing the total proposed budget to N266,6444,273,305.04.

The administration aimed to implement at least 70 percent of the proposed budget if approved.

He said “The total budgeted sum is ₦266,644,273,305.04. The Recurrent Expenditure is ₦136,262,990,009.41 while the Capital Expenditure is ₦130,381,283,295.63. We are again, aiming for at least 70% implementation of the budget.”

He added that “It was my honour to present the Oyo State Budget Proposal for the 2021 Fiscal Year to the Oyo State House of Assembly, today. This Budget of Continued Consolidation was prepared with input from stakeholders in all seven geopolitical zones of our state.”

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World Bank Expects Nigeria’s Per Capita Income to Dip to 40 Years Low in 2020

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The World Bank has raised concern about Nigeria’s rising debt service cost, saying it could incapacitate the nation from necessary infrastructure development and growth.

The multilateral financial institution said the nation’s per capita income could plunge to 40 years low in 2020.

According to Mr. Shubham Chaudhuri, Country Director for World Bank in Nigeria, the decline in global oil prices had impacted government finances, remittances from the diaspora and the balance of payments.

Chaudhuri, who spoke during the 26th Nigerian Economic Summit organised by the Nigerian Economic Summit Group and the Federal Government, said while the nation’s debt is between 20 to 30 percent, rising debt service remains the bane of its numerous financial issues and growth.

Nigeria’s problem is that the debt service takes a big part of the government revenue,” he said.

He said, “Crisis like this is often what it takes to bring a nation together to have that consensus within the political, business, government, military, civil society to say, ‘We have to do something that departs from business as usual.’

“And for Nigeria, this is a critical juncture. With the contraction in GDP that could happen this year, Nigeria’s per capita income could be around what it was in 1980 – four decades ago.”

Nigeria’s per capita income stood at $847.40 in 1980, according to data from the World Bank. It rose to $3,222.69 in 2014 before falling to $2,229.9 in 2019.

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Economy

Nigeria Will Have no Business With Fish Importation in the Next Two Years- FG

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At the 35th annual conference of the Fisheries Society of Nigeria (FISON) held in Abuja on Monday, the minister of Agriculture and Rural Development, Mr  Sabo Nanono, expressed plans of the federal government to initiate and implement programmes that are aimed towards diversification, especially in the agricultural sector.

The minister explained that the fishery sub-sector contributes about 4.5 percent to the National Gross Domestic Products, with an estimation of over 12 million Nigerians actively involved in fish farming and production.

He further said that despite this number, Nigeria produces 1.1 million tonnes of fishes annually, while there is a total demand of 3.6 million tonnes of fish and this puts Nigeria is at a deficit of 2.5 million tones. The shortage is supplemented through importation.

“Let me inform you that the vision of Mr President is to grow Nigeria’s agriculture sector to achieve a hunger-free nation, through agriculture that drives income growth, accelerate the achievement of food and nutritional security, generate employment and transform Nigeria into a leading player in the group of food and fish markets, and to create wealth for millions,” he said.

He also explains the ministry’s plans of diversification and development of various empowerment programmes that aid job creation.

“In line with the theme of this conference, the ministry has developed various programmes to increase domestic food/fish production and the main target is the empowerment of the youth and other groups especially the women,” he stated, adding: “All these programmes are tailored towards wealth and jobs creation, arrest and prevention of youth restiveness”.

He said the government has directed all fish importers to commence backward integration for local consumption and export to international markets, these are part of the measures of the ministry to generate employment and reduce importation of fish into the country.

In regards to this plans, Nanono said that the ministry is optimistic that Nigeria will have no business with fish importation in the next two years, considering that several companies have complied to the laid down policy.

Representing the Director of Federal Department of Fisheries, Mr Imeh Umoh, he stressed that the fishery is one of the value chains in the ministry and a force that drives wealth, job creation, contribute to food nutrition, poverty reduction and creation of diverse investment for Nigerians “especially during the economic recession which is occasioned by the COVID-19 pandemic”.

Nanono said that considering the current economic situation due to the global health pandemic and the ongoing economic recovery programme, the contribution of the fisheries and aquaculture sub-sector of Nigeria will make a significant impact in terms of job creation, income generation, poverty alleviation, foreign exchange earnings and provision of raw materials.

Mr Adegoke Agbabiaka, President of FISON said that in the last decade the government has made a paradigm shift under the Agricultural Transformation Agenda and is now considering agriculture, including fisheries and aquaculture, as a business and this will aid to achieve self-sufficiency in fish production.

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