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.”
Remittances To Africa Projected to Drop By 5.4% in 2021: UNECA
According to a new report from United Nations Economic Commission for Africa (UNECA), remittances to Africa are projected to drop by 5.4 percent to $41 billion in 2021 from $44 billion last year.
The report notes that the bleak situation has been compounded by the high cost of sending money to Africa from abroad, as the cost of remittances to Africa remains the highest in the world at 8.9 percent.
Remittances are an essential part of economic activity in low and middle-income countries (LMIC), including Africa. Due to the economic crisis induced by the COVID-19 pandemic and shutdown, global remittances are projected to decline sharply by about 20 percent in 2020. For Africa, remittances are projected to drop by 5.4 percent to $41 billion in 2021 from $44 billion last year, according to a new report by the United Nations Economic Commission for Africa (UNECA) projects remittances.
The report, titled “African regional review of the implementation of the Global Compact for Safe, Orderly and Regular Migration”, notes that the projected fall is mainly due to a fall in the wages and employment of migrant workers, who tend to be more vulnerable to loss of employment and wages amid the pandemic.
The report adds that the bleak situation has been compounded by the high cost of sending money to Africa from abroad as the cost of remittances to Africa remains the highest in the world at 8.9 percent.
“A migrant sending $200 to his/her family in Africa pays an estimated nine percent of the value of the transaction, indicating that the continent is still far from achieving the three percent target set out in Sustainable Development Goal 10,” the report stated.
This signals huge deficits in millions of African households depending on their friends and relatives abroad for a financial lifeline, thus threatening a perpetuation of macroeconomic imbalances on the continent.
The Addis Ababa Action Agenda of the Third International Conference on Financing for Development and Sustainable Development Goal indicator 10(c) provides that countries should, by 2030, reduce to less than three percent the transaction costs of migrant remittances and eliminate remittance corridors with costs higher than five percent.
In response, some African countries have taken action to lower the costs of remittance transfers by offering diaspora bonds to investors and relaxing foreign exchange controls to allow for electronic and mobile money transfers at reduced costs.
“It should be noted, in that regard, that the use of digital money transfer platforms reduces transfer fees in Africa by an average of 7 percent,” says the report.
“Private financial institutions also offer incentives to encourage members of diaspora communities to use their services, including low transaction fees for remittances, and facilitate diaspora-initiated projects, especially in the real estate sector. These measures all promote the financial inclusion of migrants and their families.”
The report recommends that member States support migrants and their families through adopting laws and regulations to facilitate the sending and receiving of remittances, including by fostering competition among banks and other remittance handling agencies to establish low-cost transfer mechanisms.
In addition, the report recommends that African countries make every effort to reduce the transfer costs associated with remittance payments by making more extensive use of digital transfer solutions, such as MPESA, and by streamlining the regulatory constraints associated with international money transfers.
Finally, the report concludes that the African States should also engage with destination countries to identify ways to enhance the provision of basic services to migrants in those countries as remittances are a primary source of national income for at least 25 African countries, all of which have large diaspora populations.
Nigeria’s Inflation Rate Declines to 17.01 Percent in August 2021
Prices moderated further in Africa’s largest economy, Nigeria, in the month of August despite rising costs and growing economic uncertainties.
Consumer Price Index (CPI), which measures inflation rate, grew by 17.01 percent year-on-year in August 2021, representing a 0.37 percent decrease when compared to the 17.38 percent recorded in the month of July 2021.
On a monthly basis, inflation rate increased by 1.02 percent in August 2021, slightly higher by 0.09 percent than the 0.93 percent filed in July, the National Buruea of Statistics (NBS) stated in its latest report.
Prices of goods and services continued to drop on paper in recent months even as costs are hitting record highs across most sectors in Nigeria.
Naira has plunged to a record-low against the United States Dollar and other global currencies following the Central Bank of Nigeria’s decision to halt sale of forex to Bureau De Change Operators in an effort to curb illicit financial flows and forex supplies to the black market.
Naira plunged to N560 per United States Dollar at the black on Wednesday to set a new record low against the greenback and subsequently dragged on cost of import goods and profit of import dependent businesses.
Food Index also rose at a slower pace in August 2021 even with Nigerians complaining of over 50 percent increase in the price of food items. Food composite index rose by 20.30 percent in August, at a slower pace when compared to 21.03 percent recorded in the month of July 2021.
The rise in food index were caused by increases in prices of Bread and cereals, Milk, cheese and egg, Oils and fats, Potatoes, yam and other tuber, Food product n.e.c, Meat and Coffee, tea and cocoa, according to the NBS report.
On a monthly basis, the food sub-index grew by 1.06 percent in August 2021, representing an increase of 0.20 percent from 0.86 percent filed in the month of July 2021.
Looking at a more stable food index guage, the twelve-month period ending August 2021 over the previous twelve-month average, food index increased by 0.34 percent from 20.16 percent achieved in July 2021 to 20.50 percent in August 2021.
Glo to Reconstruct 64km Ota-Idiroko Road Using Tax Credit Scheme – Fashola
Mobile telecommunications giant, Globacom, has offered to reconstruct the 64 km Ota-Idiroko road in 2022, using Federal Government’s Tax Credit Scheme.
The Minister of Works and Housing, Mr. Babatunde Fashola, announced this on Wednesday during an inspection tour of the ongoing reconstruction of the Lagos-Ibadan Expressway.
“From Ota to Idiroko, we don’t have a contract there, but Chief Mike Adenuga of Globacom has offered to construct that road using the tax credit system.
“So, that has also started, they are doing the design, and hopefully, by sometime early next year, they should mobilize to site. The real reconstruction is going to happen if we have a deal with Glo,” Fashola said.
He said that FERMA would carry out rehabilitation works on the Ota-Idiroko road between October and December.
“But between now and December, FERMA has gone to take measurements there and they will move there from the end of September if the Ogun State Government does two things.
“Clear all the squatters, traders, and the settlers on the road and help us manage traffic and the governor as at last night has committed to doing that for us,” the minister said.
He said efforts were on to bring in Flour Mills of Nigeria Plc and Unilever to reconstruct the Badagry link to the Lagos-Ota-Abeokuta road under the Tax Credit Scheme of the Federal Government.
The minister said that the Lagos-Ota-Abeokuta road had become a problematic road due to years of neglect by previous administrations, as such the highway required a huge investment.
He commended Gov. Dapo Abiodun for his passion for fixing roads in Ogun State, adding that the reconstruction of the failed portions of the Lagos-Ota-Abeokuta road would be completed by December at the cost of N13. 4 billion.
The minister added that the project would be handled by the Federal Road Maintenance Agency (FERMA).
He called on federal lawmakers representing Lagos and Ogun States to ensure increased budgetary allocation for the roads to ensure their speedy completion to ease the hardship on road users.
“When people say Fashola is looking away, I am not looking away, I just can’t find the money,” he said.
He also called for support of citizens for parliamentarians to ensure more borrowing for infrastructure upgrades because the future depends on development strides today.
Also speaking during the inspection tour, Gov. Dapo Abiodun of Ogun said that the project became necessary because Ogun is the industrial hub of the nation that needed good roads for interconnectivity to boost commerce.
He said: “We have given the commitment that we will relocate traders, we will control and manage traffic, whatever that it is we need to do, we will ensure that we begin to bring succor and needed relief to our people.
“The state of that road today is pitiable. I went on that road myself and I felt bad for our citizens.”
Abiodun said the state government was ready to borrow to reconstruct the Lagos-Ota-Abeokuta Road should there be a delay in the Sukuk funding for the highway.
“If this Sukuk bond would not happen immediately, the state government is willing to go and borrow against that promise so that we can mobilize the contractor,” he said.
He thanked Fashola for the efforts to reconstruct roads in the state and pledged the support of the state government in fixing the highways.
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