Nigeria exited recession after the country’s Gross Domestic Product recorded a slight growth of 0.11 per cent in the fourth quarter of 2020, the latest figures from the National Bureau of Statistics revealed on Thursday.
The NBS also stated in its report on ‘Nigeria’s Gross Domestic Product for Q4 and full-year 2020’ that the GDP contracted by 1.92 per cent in 2020.
However, experts have said that despite the fact that the Q4 result presented a positive figure, Nigerians were still grappling with the challenges that were prevalent in the economy during the recession period.
Part of the NBS report read, “Nigeria’s Gross Domestic Product grew by 0.11 per cent (year-on-year) in real terms in the fourth quarter of 2020, representing the first positive quarterly growth in the last three quarters.
“Though weak, the positive growth reflects the gradual return of economic activities following the easing of restricted movements and limited local and international commercial activities in the preceding quarters.
“As a result, while the Q4 2020 growth rate was lower than growth rate recorded the previous year by 2.44 per cent points, it was higher by 3.74 per cent points compared to Q3 2020.
“On a quarter on quarter basis, real GDP growth was 9.68 per cent indicating a second positive consecutive quarter on quarter real growth rate in 2020 after two negative quarters.
“Overall, in 2020, the annual growth of real GDP was estimated at -1.92 per cent, a decline of 4.2 per cent points when compared to the 2.27 per cent recorded in 2019.”
The Director-General, Lagos Chamber of Commerce and Industry, Dr Muda Yusuf, said, “Despite improved output performance in Q4-2020, we note that the economy faced multitude of challenges in the final quarter including subdued business activities across various sectors (evident in PMI data trend), foreign exchange pressures (evident in widened parallel market-NAFEX premium).
“Relatively lower oil prices and production, subdued global demand, spiralling consumer prices, repressed purchasing power, heightened unemployment levels, weak investor confidence, worsened insecurity and social tensions (EndSARS protest).”
He said output contraction recorded in 2020 further highlighted the country’s weak macroeconomic fundamentals and the persistent, structural, policy and regulatory issues in the economy.
He said, “Apart from declining growth, the economy is currently confronted with several challenges, including rising consumer prices (inflation now at 45-month high of 16.47 per cent in January 2021), weak employment level, persisting liquidity concerns in the foreign exchange market, high poverty incidence, weak investor confidence and insecurity, among others.
“These challenges which had been part of the country’s economic narrative prior to the pandemic were amplified by the COVID-19 induced disruptions.”
A professor of Economics at the Olabisi Onabanjo University, Sherrifdeen Tella, said, “I don’t think NBS is right because you don’t judge ending of recession based on one economic factor or variable.
“Other factors like inflation must be coming down, exchange rates must be improving and then unemployment should also be going down. The country is still in recession.”
He added, “So the economy is still in recession up till now because we still have high level of unemployment, inflation is still rising, exchange rate is still depreciating and even the GDP that they said has gone up just did after the report of this month when the price of oil has gone up. That’s not the actual growth that’s even required.”
The Fiscal Policy Partner and West Africa Tax Leader at PricewaterhouseCoopers, Mr Taiwo Oyedele, said nobody saw the positive growth of the GDP coming but the impact was yet to be felt by ordinary Nigerians.
He said, “On one hand, the GDP figures for the fourth quarter of 2020 turned out better than anybody had predicted including the Ministry of Finance and International Monetary Fund. Nobody saw a positive GDP for Q4 of last year.
“It turned out to be positive at 0.11 per cent. It is positive technically and therefore we are out of recession. But if we consider that and how it translates to Nigerians and business, Nigerians still think we are in a recession.”
IMF Queries FG Strategies On Fuel Subsidy, Unemployment, Inflation
The International Monetary Fund has raised the red flag over Nigeria’s resumption of petrol subsidy payments, describing it as injurious to the economy.
It also reiterated the importance of introducing a market-based fuel pricing mechanism and deployment of well-targeted social safety nets to cushion any adverse impact on the poor.
In a report produced after a virtual meeting with Nigerian authorities from June 1 to 8, the IMF also expressed concerns over the rising unemployment and inflation rates, even as it admitted that real Gross Domestic Product was recovering.
The IMF team, led by Jesmin Rahman, further hailed the Central Bank of Nigeria for its efforts at unifying the exchange rate by embracing needed reforms.
The Fund said: “Recent exchange rate measures are encouraging, and further reforms are needed to achieve a fully unified and market-clearing exchange rate.
“The resurfacing of fuel subsidies is concerning, particularly in the context of low revenue mobilisation.
“The Nigerian economy has started to gradually recover from the negative effects of the COVID-19 global pandemic. Following sharp output contractions in the second and third quarters, GDP growth turned positive in Q4 2020 and growth reached 0.5 percent (y/y) in Q1 2021, supported by agriculture and services sectors.
“Nevertheless, the employment level continues to fall dramatically and, together with other socio-economic indicators, is far below pre-pandemic levels. Inflation slightly decelerated in May but remained elevated at 17.9 percent, owing to high food price inflation. With the recovery in oil prices and remittance flows, the strong pressures on the balance of payments have somewhat abated, although imports are rebounding faster than exports and foreign investor appetite remains subdued resulting in continued FX shortage.
“The incipient recovery in economic activity is projected to take root and broaden among sectors, with GDP growth expected to reach 2.5 percent in 2021. Inflation is expected to remain elevated in 2021, but likely to decelerate in the second half of the year to reach about 15.5 percent, following the removal of border controls and the elimination of base effects from elevated food price levels.”
The IMF also recognised that tax revenue collections were gradually recovering but noted that with fuel subsidies resurfacing, additional spending for COVID-19 vaccines and to address security challenges, the fiscal deficit of the Consolidated Government is expected to remain elevated at 5.5 percent of GDP.
Nigeria-South Africa Trade Hits $2.9bn
The volume of trade between Nigeria and South Africa hit $2.9 billion last year with expectation of it rising further with the African Continental Free Trade Area (AfCFTA) agreement.
Nigeria’s Consul General, Malik Abdul, in a statement noted that Nigeria accounts for 64 per cent of South Africa’s trade in West Africa and is one of his country’s top three sources of crude oil.
He further added that in 2020, South Africa imported R35 billion ($2.48 billion) worth of goods, predominantly crude oil from Nigeria and exported R6 billion ($425milion) to Nigeria.
He stated: “South Africa is currently among the top 10 per cent of investors in Nigeria, globally and Nigeria is South Africa’s 10th biggest export market in Africa and thirty-second globally. Nigeria accounts for 64 per cent of South Africa’s trade with West Africa and is one of South Africa’s top three sources of crude oil.
“Also, Nigeria in 2020 was South Africa’s top import market in Africa and sixth globally, after China, Germany, USA, India and Saudi Arabia. Over the past year, South Africa imported $2.48 billion worth of goods predominantly crude oil from Nigeria and exported $425 million worth to Nigeria.”
Also, the consulate said his embassy issued a total of 10,341 passports to Nigerian citizens in South Africa between March 2020 and May 2021.
The consul general further said the Mission had 404 unclaimed passports, and advised all those whose passports were processed and pending from August 2020 to come for collection.
Abdul added that the consulate was working to clear all COVID-19 lockdown backlog of applications, urging members of the public to exercise patience while the mission was resolving the backlogs.
On the re-introduction of administrative fees and charges for lost passports, Abdul said that the step was taken to harmonise and standardise consular services following approval from the Ministry of Foreign Affairs, Abuja.
The Mission had increased the fees for lost passports from R1,500 to R2,000, and admin charges of R120 for data capturing.
“On this issue, the Mission could not unilaterally impose any charges without headquarters’ approval or consent.
“The admin fees of R120 pertains to all services rendered by the two Missions,” he said.
According to the Nigerian envoy, the decision was taken to remove disparities in all consular services, noting that visa fees have also been harmonised.
On penalty for lost passports, Abdul disclosed that 484 Nigerian passports were reported missing at the mission between August 2020 and May 2021 with request for re-issue.
Abdul said it was discovered that there were criminal undertones and immigration rules infractions associated with the ‘so-called’ lost passport declarations.
“In line with practice in other Missions, there was a need to impose fines to deter people from engaging in such infractions.
“At such an astronomical rate of loss declarations, the option will be to refer such losses to Nigeria for processing.
“This will save the booklet for genuine requests of re-issue and thereby reducing the backlog and pressure on the Mission,” the envoy said.
Abdul disclosed that the consulate had received a directive to embargo processing of lost passports pending further instructions from the headquarters.
The consul general then accused some Nigerian groups in South Africa of, “peddling lies and outright falsehoods” against the Mission and his person.
“These disgruntled elements have gone ahead to incite fellow Nigerians with intent to sabotage the Mission.
“Moreover, a lie and falsehoods often repeated amounts to a propaganda which can be misinterpreted by the gullible and undiscerning as truth,” he said.
NNPC Engages Gas Producers to Improve Power Supply
The Nigerian National Petroleum Corporation (NNPC) has started engaging gas producers across the country in an effort to boost gas supply to power generation companies (Gencos) and subsequently improve electricity supply.
Mr. Yusuf Usman, the Chief Operating Officer, Gas and Power, NNPC, disclosed this in Lagos during his tour of Egbin Power Plc facility on Monday.
Usman, who responded to concerns raised by the Chairman of Egbin Power Plc, Mr. Temitope Shonubi, said the company’s concern on gas supply and transmission restrictions had been noted, adding that the corporation would support it to ensure constant power supply.
“I have listened to all the concerns you raised. An area of concern to me is when you talked about the gas constraints. We are going to support you to make sure that the power supply is steady. We are having a session with gas suppliers in this regard.
“I am aware that works are ongoing in this regard to ensure that all the power we generate is safely evacuated,” Usman said.
Usman, however, said he was impressed by the level of progress being recorded by Egbin, noting that the effort of the company’s management to effect turnaround maintenance at the company through overhaul of the entire system, was commendable.
Usman added: “The visit has been an eye opener for me. We have seen turbines that have been running for over 40 years. We have seen efforts being made by Egbin management to effect a turnaround at the plant through overhaul of the entire system.
“We have also seen the support you have been given to the youths through employment and capacity development opportunities.”
Shonubi, in his remarks, said Egbin Power was planning to increase power generation by 1,900 megawatt.
Shonubi said: “Egbin has 1,320MW capacity. As at the time we took over, the plant was generating 300MW which is abysmal 22 per cent. As at today, our generation capacity has surged and we do 89 per cent.
“We have reached the highest peak of 970MW and we are working hard to ensure sustainability of this feat.
“The 970MW we hit is the highest recorded this year and based on our core value of sustainability, we are working round the clock to make sure that we sustain the gains, which we have made.”
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