The Federal Government has alerted Nigerians on possible global economic recession this year, saying that there is already a reduction in growth owing to the impacts of the COVID-19 pandemic.
However, the Nigerian government said the nation’s foreign exchange reserves were healthy enough to withstand and wave through the consequences of the global economic crisis.
Fielding questions during an interview on national television where these disclosures were made, the Minister of Finance, Budget and National Planning, Zainab Ahmed, lamented that people’s spending power had already been weakened as a result of the pandemic and inflation globally.
Ahmed said some measures had been put in place to achieve the N10 trillion revenue target of the Federal Government, as projected in the 2023 budget, saying that the realisation of this would go a long way in making the nation pull through the anticipated recession.
“Clearly there is going to be a decline in growth. And why we are having this decline in growth because of the sustained economic impact of the COVID-19 pandemic.
“We’ve seen the resurgence of COVID-19 in some developed economies, especially China, and also the effect of the Russia-Ukraine war that is having a global impact.
“It is true that’s our reserves during the first global recession. Our reserves are now down to $34bn, and that is still a healthy level. It means we are able to meet at least six months of imports and other expenses into the country.
“It means we can withstand another global shock if we are able to carry through a coordinated response between the monetary, fiscal as well as trade authorities. We have learnt a lot from the experience that we went through during the COVID and it shows that when we plan well we can actually withstand the shocks,” she assured.
The minister noted that Nigeria’s economy experienced a recession during the COVID but it was a short-lived one because there was a coordinated response from government and private organizations.
She added that at the time Nigeria was battling the pandemic alongside other nations of the world, the country was able to manouver because it cut cost of governance and spending to enable it pump more funds in the healthcare sector.
Ahmed maintained that, “with the right policies, we can weather another global recession.”
Meanwhile, Ahmed disclosed that the Federal Government borrows funds to purchase petrol.
This revelation is coming as the country continues to incur rising fuel subsidy bills and the present government’s insistence on removing subsidy from the second quarter of this year through gradual approach.
To achieve this, Ahmed stated that government would be able to increase the revenue performance on the 2022 figure, as well as reduce the debt service to revenue ratio.
She said, “we also have to exit fuel subsidy, because that is also a very significant contributory factor. You can look at it in two ways – it is revenue that would have come to the government but it doesn’t because it has been spent on fuel subsidy.
“But also, where there is nothing for the government to buy the refined petroleum products, we have to borrow to buy the petroleum products. So if you take that out, that’s about N3.25tn, that is a significant relief.”
On whether it would be possible to stop the fuel subsidy regime in June this year, Ahmed said, “what will be safer is for the current administration, maybe at the beginning of the second quarter, to start removing the fuel subsidy.”
Nigeria’s GDP Grows by 3.46% in Q4 2023, Driven by Services
Nigeria’s Gross Domestic Product (GDP) grew by 3.46% in the fourth quarter (Q4) of 2023 on the back of robust performance of the services sector, according to data released by the National Bureau of Statistics (NBS).
The GDP expansion though slightly lower than the 3.52% recorded in the same period of 2022, reflects a positive trajectory for the Nigerian economy amid ongoing challenges.
The growth rate surpassed the 2.54% recorded in the preceding quarter, indicating a rebound in economic activity.
The services sector emerged as the key driver of growth expanding by 3.98% and contributing 56.55% to the overall GDP.
This sector’s resilience underscores its pivotal role in Nigeria’s economic landscape, encompassing diverse industries such as telecommunications, finance, and real estate.
Also, the agriculture sector experienced growth, expanding by 2.10% compared to the same period in 2022.
Meanwhile, the industry sector recorded a notable improvement, growing by 3.86%, a stark contrast to the -0.94% contraction observed in the fourth quarter of 2022.
On an annual basis, Nigeria’s GDP expanded by 2.74% in 2023 compared to 3.10% in the previous year, reflecting sustained but moderated growth.
The positive trajectory in GDP growth reflects resilience in the face of various economic challenges.
However, sustaining and accelerating growth will require continued efforts to address structural bottlenecks, foster investment, and promote inclusive economic policies across sectors.
Nigeria’s Oil Sector Growth
During the fourth quarter of 2023, Nigeria’s oil sector posted a real growth rate of 12.11% year-on-year, signifying a significant improvement from previous periods.
This was driven by the surge in average daily oil production to 1.55 million barrels per day (mbpd), a positive shift in the sector’s performance.
Despite challenges such as global market fluctuations and production constraints, the oil sector contributed 4.70% to the nation’s total real GDP in Q4 2023.
Nigeria’s Non-Oil Sector
Nigeria’s non-oil sector sustained growth momentum, posting a 3.07% real growth rate in Q4 2023.
This growth was primarily attributed to key industries including finance, telecommunications, agriculture, manufacturing, and construction.
Accounting for 95.30% of the nation’s GDP in the same quarter, the non-oil sector continues to drive economic diversification efforts and reduce dependence on oil revenues.
Despite facing challenges, such as infrastructure deficits and regulatory bottlenecks, the sector’s resilience underscores its pivotal role in fostering sustainable economic development and inclusive growth agendas.
Senate Rejects Ministry of Power’s Proposed Electricity Tariff Hikes
The Nigerian Senate has firmly opposed the Ministry of Power’s proposed electricity tariff hikes, emphasizing the need to alleviate the burden on citizens amidst prevailing economic hardships.
The rejection comes as a response to the Ministry’s consideration of increasing electricity tariffs and removing subsidies in the face of escalating economic challenges across the nation.
During a recent plenary session, Senator Aminu Abbas moved a motion urging the Senate to retain electricity subsidies to mitigate the impact of rising living costs on Nigerians.
The motion garnered unanimous support, with senators expressing concerns over the implications of tariff hikes on an already financially strained populace.
The Senate’s resolution also directed the Committee on Power to conduct a comprehensive investigation into the N2 trillion required for electricity subsidy payments, outstanding debts within the sector, and the state of metering nationwide.
This decision reflects the Senate’s commitment to ensuring transparency and accountability in the power sector’s financial management.
The rejection underscores the Senate’s stance against policies that could exacerbate the financial burdens faced by Nigerian citizens.
The move aligns with the Senate’s broader efforts to prioritize the welfare of the populace and advocate for measures that promote economic stability and affordability.
Nigerian Oil Transporters End Two-Day Operation Suspension After Government Intervention
After a two-day suspension of operations by the Nigerian Association of Road Transport Owners (NARTO), oil transporters have resumed operations following government intervention.
The suspension had caused fuel queues in many states and the Federal Capital Territory, raising concerns among motorists.
The resolution came after talks mediated by the Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, in Abuja.
Representatives from NARTO, government officials, and stakeholders from the downstream oil sector were present at the meeting.
The agreement reached includes an adjustment in the freight rate for petroleum transporters and a commitment to address other concerns raised by NARTO members.
The decision to resume operations aims to alleviate the challenges faced by Nigerians in accessing petroleum products.
Yusuf Othman, the President of NARTO, confirmed the end of the suspension, urging members to return to work.
The association had initially suspended operations due to the high operational costs, particularly the escalating price of diesel needed to power their trucks for product transportation across the nation.
With operations now back on track, it is hoped that the resumption will help stabilize fuel distribution and prevent further scarcity, ensuring smoother access to petroleum products for consumers across Nigeria.
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