After more than six months marked plunging revenue caused by attacks on oil pipelines in the Niger Delta and ballooning inflation, the Federal Government said on Wednesday said it was expecting a better second half of the year.
The government’s optimism is in spite of a forecast by the International Monetary Fund that the country’s 2016 year gross domestic product could contract by 1.8 percent.
“The just recently released data from the National Bureau of Statistics showed that Gross Domestic Product declined by -2.06% in the second quarter of 2016 on a year-on-year basis,” said Special Adviser to the President on Economic Matters, Dr Adeyemi Dipeolu in a statement by Laolu Akande, senior special assistant, media and publicity, Office of the Vice President.
“A close look at the data shows that this outcome was mostly due to a sharp contraction in the oil sector due to huge losses of crude oil production as a result of vandalisation and sabotage.”
“Agriculture grew by 4.53% in the second quarter of 2016 as compared with 3.09% in the first quarter. The metal ores sector showed similar performance with coal mining, quarrying and other minerals also showing positive growth of over 2.5%.
“Notably, also, the share of investments in GDP increased to its highest levels since 2010, growing to about 17% of Gross Domestic Product.”
“The manufacturing sector though not yet truly out of the woods is beginning to show signs of recovery while the service sector similarly bears watching.”
Though the manufacturing sector is yet to rebound, Dipeolu said there was a reduction in imports and an increase in local produced goods and services. He said this process will be maintained “although it will start off slowly in these initial stages before picking up later.”
The sluggish growth could go on for “another two years”, said Dawn Dimowo, an analyst at consultancy firm Africa Practice.
Even if the oil price rebounds and rebels stop sabotaging oil production, Nigeria has to address its decript infrastructure and revamp its refineries.
“There is a critical need for massive investments in infrastructure and import replacement, which will take years to come through,” Dimowo said.
“Power is a major barrier, that sector needs to be a priority”, she said.
Without power, growth may improve but diversifying the economy will be near impossible, Daniel Richards, West Africa analyst for BMI Research, told AFP.
“If import substitution is to be realised and the manufacturing sector bolstered, then more headway must be made in improving power supply.”
But Dipeolu said he hoped the economy would do better.
“It is likely the second half will be better than the first half of 2016. This is because many of the challenges faced in the first half either no longer exist or have eased,” he said. The Guardian