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Nigeria’s Agricultural Sector Sees Sluggish 1.9% Growth in Q1-Q3 2023, Facing Multiple Challenges



Agriculture - Investors King

In the intricate tapestry of Nigeria’s economic landscape, the agricultural sector finds itself navigating turbulent waters, marked by a paltry 1.9% growth during the first three quarters of 2023.

This lackluster performance stands in stark contrast to the robust 6.1% growth achieved in the corresponding period of 2022, painting a vivid picture of the challenges plaguing the nation’s agrarian backbone.

Amidst the myriad obstacles hindering agricultural prosperity, the scarcity of the naira, foreign exchange woes, dwindling investments, climate change, and the geopolitical impact of the Russia-Ukraine war have collectively cast a shadow over the sector’s growth trajectory.

As Nigeria grapples with these multifaceted challenges, the once-vibrant agricultural domain faces a critical juncture in its pivotal role as a contributor to the nation’s economy.

The National Bureau of Statistics (NBS) sheds light on the intricate nuances of this decline, revealing that the four key sub-activities—crop production, livestock, forestry, and fishing—comprising the agricultural sector grew by a mere 5.24% year-on-year in nominal terms in the first quarter of 2023.

This marked a substantial decrease of 6.31 percentage points from the same quarter in 2022, reflecting the sector’s struggle to maintain its growth momentum.

Crop production emerges as the linchpin of the sector, constituting a substantial 86.85% of the overall nominal value in the first quarter of 2023.

However, despite its dominance, the sector witnessed a decline of 13.44 percentage points in year-on-year growth, plummeting from 18.67% in the preceding quarter to a mere -28.83% in the first quarter of 2023.

This underscores the severity of the challenges afflicting the agricultural landscape.

In real terms, the agricultural sector’s performance in the first quarter of 2023 further mirrors the struggles, with a year-on-year growth of -0.90%, showcasing a decrease of 4.06 percentage points compared to the corresponding period in 2022.

A quarter-on-quarter basis paints an even bleaker picture, with a decline of -30.95%, accentuating the sector’s vulnerability to a confluence of adversities.

Despite the sector’s vital contribution, accounting for approximately 23% of the real Gross Domestic Product (GDP), the agricultural landscape faces a pivotal juncture demanding strategic interventions.

The African Development Bank’s earlier projection hinted at the potential for transformative growth, envisioning Africa’s agricultural output skyrocketing from $280 billion to $1 trillion by 2030 with the right investments and policy initiatives.

Regrettably, the promises of agricultural revitalization have yet to materialize as the sector contends with a barrage of challenges, resulting in food price hikes that reverberate through the economy.

The commitment expressed by the former Minister of Agriculture and Rural Development, Mohammad Abubakar, now appears more crucial than ever.

However, the sector, once a beacon of promise, now stands at a crossroads, grappling with a meager 1.9% growth and a host of unresolved issues that demand urgent attention for its rejuvenation.

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Minister of Power Pledges 6,000 Megawatts Electricity Generation in Six Months



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Adebayo Adelabu has made a bold pledge to ramp up electricity generation to 6,000 megawatts (MW) within the next six months.

This announcement comes amidst ongoing efforts to tackle the longstanding issue of inadequate power supply that has plagued the country for years.

During an appearance on Channel Television’s Politics Today program, Adelabu said the government is committed to resolving the issues hindering the power sector’s efficiency.

He expressed confidence in the administration’s ability to overcome the challenges and deliver tangible results to the Nigerian populace.

Currently, Nigeria generates and transmits over 4,000MW of electricity with distribution bottlenecks being identified as a major obstacle.

Adelabu assured that steps are being taken to address these distribution challenges and ensure that the generated power reaches consumers across the country effectively.

The minister highlighted that the government has been proactive in seeking the expertise of professionals and engaging stakeholders to identify the root causes of the power sector’s problems and devise appropriate solutions.

Adelabu acknowledged the existing gap between Nigeria’s installed capacity of 13,000MW and the actual generation output, attributing it to various factors that have impeded optimal performance.

Despite these challenges, he expressed optimism that the government’s initiatives would lead to a substantial increase in electricity generation, marking a significant milestone in Nigeria’s energy sector.

Addressing concerns about the recent decline in power generation due to low gas supply, Adelabu assured Nigerians that measures are being taken to rectify the situation.

He acknowledged the impact of power outages on citizens’ daily lives and reiterated the government’s commitment to providing stable electricity supply within the stipulated timeframe.

The Minister’s assurance of achieving 6,000MW of electricity generation in the next six months comes as a ray of hope for millions of Nigerians who have long endured the consequences of inadequate power supply.

With ongoing reforms and targeted interventions, there is optimism that Nigeria’s power sector will witness a transformative change, ushering in an era of improved access to electricity for all citizens.

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Nigeria’s Economic Woes to Drag Down Sub-Saharan Growth, World Bank Forecasts



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The World Bank’s latest report on the economic outlook for Western and Central Africa has highlighted Nigeria’s sluggish economic growth as a significant factor impeding the sub-region’s overall performance.

According to the report, while economic activities in the region are expected to increase, Nigeria’s lower-than-average growth trajectory will act as a hindrance to broader economic expansion.

The report indicates that economic activity in Western and Central Africa is set to rise from 3.2 percent in 2023 to 3.7 percent in 2024 and further accelerate to 4.2 percent in 2025–2026.

However, Nigeria’s growth, projected at 3.3 percent in 2024 and 3.6 percent in 2025–2026, falls below the sub-region’s average.

The World Bank underscores the importance of macroeconomic and fiscal reforms in Nigeria, which it anticipates will gradually yield results.

It expects the oil sector to stabilize with a recovery in production and slightly lower prices, contributing to a more stable macroeconomic environment.

Despite these measures, the report emphasizes the need for structural reforms to foster higher growth rates.

In contrast, economic activities in the West African Economic and Monetary Union are projected to increase significantly, with growth rates of 5.9 percent in 2024 and 6.2 percent in 2025.

Solid performances from countries like Benin, Côte d’Ivoire, Niger, and Senegal are cited as key drivers of growth in the region.

The report also highlights the importance of monetary policy adjustments and reforms in supporting economic growth.

For instance, a more accommodative monetary policy by the Central Bank of West African States is expected to bolster private consumption in Côte d’Ivoire.

Also, investments in sectors such as agriculture, manufacturing, and telecommunications are anticipated to increase due to improvements in the business environment.

However, Nigeria continues to grapple with multidimensional poverty as highlighted by the National Bureau of Statistics.

Over half of Nigeria’s population is considered multidimensionally poor, with rural areas disproportionately affected. The World Bank underscores the need for concerted efforts to address poverty and inequality in the country.

Sub-Saharan Africa as a whole faces challenges in deepening and lengthening economic growth. Despite recent progress, growth remains volatile, and poverty rates remain high.

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Fitch Downgrades China’s Outlook to Negative Amid Real Estate Slump



fitch Ratings - Investors King

Fitch Ratings has downgraded China’s economic outlook to negative, citing concerns over the country’s mounting debt and the ongoing slump in its real estate sector.

This decision casts a shadow over China’s economic recovery efforts and raises questions about the resilience of its financial system in the face of mounting challenges.

The downgrade comes at a critical juncture for China as the government grapples with the fallout from a prolonged downturn in the real estate market, which has long been a cornerstone of the country’s economic growth.

Fitch’s decision underscores the severity of the challenges facing China’s economy and the urgent need for policymakers to implement effective measures to address the underlying issues.

Amid growing uncertainty about the outlook for the world’s second-largest economy, Fitch warned that the Chinese government is likely to accumulate more debt as it seeks to stimulate economic growth and mitigate the impact of the real estate slowdown.

The agency’s negative outlook reflects concerns that China’s debt burden could continue to rise, posing risks to the stability of its financial system.

The real estate sector, which has been a key driver of China’s economic growth in recent decades, has been experiencing a pronounced slowdown in recent months.

This downturn has been exacerbated by government measures aimed at curbing speculative investment and addressing housing affordability concerns. As property prices continue to decline and housing sales stagnate, fears of a broader economic slowdown have intensified.

China’s government has sought to downplay concerns about the impact of the real estate slump on the broader economy, emphasizing its commitment to maintaining stability and pursuing sustainable growth.

However, Fitch’s downgrade suggests that the challenges facing China’s economy may be more significant than previously thought and require a more comprehensive and coordinated policy response.

The negative outlook from Fitch follows a similar move by Moody’s Investors Service in December, highlighting the growing consensus among rating agencies about the risks facing China’s economy.

While financial markets initially showed little reaction to Fitch’s announcement, analysts warn that the downgrade could weigh on market sentiment in the near term, especially as investors await key economic indicators due to be released in the coming weeks.

China’s public debt has surged in recent years, fueled by government stimulus measures aimed at supporting economic growth and offsetting the impact of the COVID-19 pandemic.

With public debt nearing 80% of gross domestic product (GDP) as of mid-last year, according to the Bank for International Settlements, concerns about the sustainability of China’s debt levels have been mounting.

Despite these challenges, China’s sovereign bond market remains relatively insulated from external pressures, with foreign ownership accounting for a small fraction of total holdings.

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