Nigeria, Africa’s largest oil producer, experienced a slower-than-anticipated economic growth rate in the second quarter, primarily due to the persistent contraction of the oil sector.
This economic challenge further compounds the issues faced by President Bola Tinubu as he navigates the country’s economic landscape.
According to data released by the National Bureau of Statistics, the nation’s Gross Domestic Product (GDP) expanded by 2.5% in the three months ending in June compared to the previous year, a marginal increase from the 2.3% growth recorded in the preceding quarter.
However, this figure fell short of the 2.8% growth estimated by a Bloomberg survey of five economists.
The ongoing contraction in Nigeria’s oil sector, which has now extended into its 13th consecutive quarter, significantly dampened overall economic growth. The oil industry witnessed a sharp decline of 13%, with production plummeting to 1.2 million barrels per day, down from 1.5 million barrels per day in the previous year.
Nigeria has been grappling with various challenges in its efforts to increase oil production and meet its OPEC+ quota. These challenges include supply disruptions, theft, and pipeline vandalism.
The sluggish economic growth adds to the complex set of issues that President Tinubu must address to achieve his ambitious goal of double-digit expansion in the coming years. It’s worth noting that Nigeria last achieved a growth rate exceeding 10% in 2010.
Also, the decision by President Tinubu to eliminate fuel subsidies on May 29 and ease exchange controls shortly thereafter has contributed to the depreciation of the naira by 40% against the dollar, causing a surge in prices. In July, annual inflation surged to an 18-year high of 24.1%.
In a recent development, President Tinubu partially reversed these reforms by suspending gasoline price increases, demonstrating a commitment to addressing the economic challenges facing Nigeria.
The nation now faces a critical juncture as it seeks to revitalize its economy, diversify its revenue sources, and address the pressing issues in its oil sector to foster sustainable growth in the coming years.
