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Nigeria’s Economy Moderates in Q1 2022 as Oil Sector Contracts by 23.89%

Nigeria’s GDP moderated to 3.11% year-on-year in real terms in the first quarter (Q1) of 2022

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Despite the surge in global oil prices due to the ongoing war in Ukraine, the Gross Domestic Product (GDP) of the largest exporter of the commodity in Africa, Nigeria moderated to 3.11% year-on-year in real terms in the first quarter (Q1) of 2022, the National Bureau of Statistics (NBS) stated in its latest report.

Nigeria’s GDP was 2.60% higher than the 0.51% recorded in Q1 2021 when COVID-19 disrupted business activity and dragged on economic productivity. However, this was 0.88% lower than the 3.98% filed in the fourth quarter of 2021.

On quarterly basis, the nation’s real GDP grew at -14.66% in the quarter under review when compared to the fourth quarter of 2021.

Aggregate GDP increased by 13.25% year-on-year from N40,014,482.74 million in nominal terms in the first quarter of 2021 to N45,317,823.33 million in Q1 2022. According to the NBS, “the nominal GDP growth rate in Q1 2022 was higher relative to the 12.25% growth recorded in the first quarter of 2021 and higher compared to the 13.11% growth recorded in the preceding quarter.”

Nigeria’s Oil Sector

In the first quarter, Nigeria’s crude oil production dropped to 1.49 million barrels per day (mbpd), down from 1.72mbp achieved in the same quarter of 2021. This was also lower than the 1.50mbpd recorded in the fourth quarter of 2021. Suggesting that despite the increase in global oil prices in the quarter, Nigeria’s inability to up crude oil production impeded investment in the sector and subsequently dragged on revenue generation.

As expected, the real growth of the oil sector contracted by 26.04% year-on-year in Q1 2022, representing a decline of 23.83% when compared to the same quarter of 2021. Also, growth decreased by 17.99% when compared to -8.06% filed for Q4 2021.

On a quarterly basis, the oil sector grew by 9.11% in the quarter under review. The sector contributed 6.63% to Nigeria’s total real GDP in Q1 2022, own from 9.25% contributed in the corresponding quarter of 2021 and slightly higher than the 5.19% achieved in Q4 2021.

Nigeria’s Non-Oil Sector

As usual, the non-oil sector grew by 6.08% in real terms in the first quarter. This was better than the 5.28% recorded in the first quarter of 2021 and 1.34% higher than the fourth quarter of 2021.

The report attributed the growth in the non-oil sector to the increase in activities in the following sectors; Information and Communication (Telecommunication); Trade; Financial and Insurance (Financial Institutions); Agriculture (Crop Production); and Manufacturing (Food, Beverage & Tobacco).

Nigeria’s non-oil sector contributed the most to total economic growth. The sector contributed 93.37% to the nation’s GDP in the quarter under review.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Economy

Digital Economy: China Seeks More Partnerships With Nigeria

The Consulate General of the People’s Republic of China in Lagos, Mr. Chu Maoming had advocated for more robust China-Nigeria partnerships in the Digital Economy.

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The Consulate General of the People’s Republic of China in Lagos, Mr. Chu Maoming had advocated for more robust China-Nigeria partnerships in the Digital Economy.

Investors King learnt that the Chinese Consular General has called for enhanced strategic cooperation between Nigeria and China. The diplomat noted that such a corporation on the digital economy will help to address the challenges confronting Nigeria. 

Speaking in Lagos during the 2022 Africa-China Economic Partnership Agenda Conference, (ACEPAC), Mr Chu Maoming noted that China and Nigeria are the largest economies respectively in Asia and Africa, and both countries are actively developing their digital economies with notable success.

Maoming further stated that Nigeria is one of the most important economies in Africa and Lagos is the economic, financial and technological centre of Nigeria. He, therefore, seeks more collaborations in key digital economic areas of 5G Construction, Mobile Payments Systems and E-Commerce Platform. 

Mr Maoming also noted that digital economy potential lies in the number of mobile internet users in Nigeria which has exceeded 150 million as of June 2022, with an internet penetration rate of nearly 70 percent.

On the other hand, the Director General of the Nigerian Institute of International Affairs, (NIIA) Prof Eghosa Osaghae stated that Nigeria will be open to the new possibilities which the digital economy has to offer. 

Furthermore, the Executive Director of Afri-China Media, Ikenna Emewu described the conference as an important event that will further drive Nigeria towards the digital economy. 

The Executive Director said that Nigeria and Africa cannot afford to lag in adopting digital possibilities to improve their economies.

Meanwhile, Nigerian Minister of Communications and Digital Economy Professor Isa Pantami says the Ministry has completed over 2000 projects within three years to enhance the digital economy across the country. The minister disclosed this during an inspection tour of the National Shared Service Centre in Abuja.

Pantami noted that Nigeria is making progress in the digital economy while the numerous projects which are spread across the country will help to improve the productivity of many Nigerians. 

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Economy

MSMEs Critical to Nigeria’s Economic Development- President Buhari

President Muhammadu Buhari has said Small and Medium Enterprises (MSMEs) are critical to Nigeria’s economic growth as they contribute about 48 percent to the nation’s Gross Domestic Product.

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President Muhammadu Buhari has said Small and Medium Enterprises (MSMEs) are critical to Nigeria’s economic growth as they contribute about 48 percent to the nation’s Gross Domestic Product.

President Buhari, who was represented by the Minister of Industry, Trade and Investment, Otunba Richard Adebayo, at the 17th International Trade Fair organised by the Abuja Chamber of Commerce and Industry (ACCI), stated that trade is key to ending poverty and also plays a significant role in the economic growth of any nation.

In his words, “It helps to build wealth and improve foreign reserves. Trade is key to ending poverty across countries, raising standards of living and improving productivity. No economy can thrive without robust trade

“The MSME segment is critical to the stimulation of economic development. Nigeria is estimated to be home to over 40 million MSMEs who, together, contribute about 48 per cent of our GDP. Many of us just see MSMEs as the mamas that fries Akara or the friendly Malam that owns the kiosk on our street.

“That is not the case; some of the fastest growing Fintech start-ups in Africa are in fact MSMEs. This trade fair provides an opportunity to change the narrative of what MSMEs are and demonstrates how innovative they can be.”

“I see enterprises that employ large cross-sections of our youth population. I see enterprises with the capacity to export. I do not see small businesses here, I see future mighty business.”

“The Federal Government is keen to help MSMEs achieve their full potential and has developed strategic policy interventions, enshrined laws and established institutions to create a supportive business environment for entrepreneurs and MSMEs.

“In line with this, the Federal Ministry of Trade and Investment (FMITI) has developed a programme that will enhance access to credit for over 10 million MSMEs at single digit rate.

“Aside from the provision of finance, this project will address key ecosystem issues such as the development of MSME clusters to lower operating costs as well as capacity-building initiatives.

“The Ministry has also commenced the process of adopting a centralised automated platform for the registration of Trademarks, Patents and Designs. The overall objective is to fully digitise existing records and automate the registration process to enable ownership and commercialisation of innovation,” he stated.

It would be recalled that Investors King on October 2, 2022 reported that the federal government has directed the Development Bank of Nigeria (DBN) to step up its efforts to increase its funding for MSMEs.

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Economy

High Interest Rate Will Hurt New Job Creation, Exacerbate Unemployment – Manufacturers Tells FG

The Manufacturers Association of Nigeria (MAN) has said the recently increased interest rate would drag on new job creation and subsequently lead to job loss amid Nigeria’s already worrisome unemployment rate.

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The Manufacturers Association of Nigeria (MAN) has said the recently increased interest rate would drag on new job creation and subsequently lead to job loss amid Nigeria’s already worrisome unemployment rate.

In a statement signed by the Director-General of MAN Segun Ajayi-Kadir, manufacturers disclosed that the increase in the Monetary Policy Rate and the Cash Reserve Ratio portended worrisome negative consequences for the manufacturing sector.

MAN noted that the increase in MPR from 14 percent to 15.5 percent would rub off negatively on other rates and dash the hope for a single-digit lending rate for the productive sector of the economy.

It further said that the recent development would lead to an increase in the cost of borrowing by manufacturers, further beyond the double-digit rate, which would disincentivize new investments in the sector.

The statement read in part, “The observed continuous contractionary monetary policy posture without complementary fiscal support may not effectively reduce the prevailing inflationary pressure on the economy.

“This is not unconnected with the fact that the current increase in consumer price index as reported by NBS is not largely driven by the monetary phenomenon, as self-inflicted weak foreign exchange rate management can be linked to the pressure.”

MAN disclosed that the rate hike would cause increased factor costs which will inflate the price of  products, stating that it was hopeful that the CBN would creatively go beyond the conventional monetary management system because global economic dynamics were changing and conventional measures might no longer be effective.

The statement further read, “It is important that the monetary authority strategically set in motion mechanism for holistic balancing of the real interest rate, which is critical to investment and not just following leading economies to adjust Interest rate without considering domestic peculiarities.”

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