Buhari commends economy managers •Analysts raise caution note  

As NBS effects change of leadership

 By Yinka Kolawole, Johnbosco Agbakwuru  & Elizabeth Adegbesan

Amidst the cheers from the Federal Government over the second quarter, Q2’21,  Gross Domestic Products, GDP, growth rate, analysts have cautioned over its sustainability in the short-to-medium term, while attributing the higher numbers to a lower base effect.  

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The National Bureau of Statistics, NBS, had, yesterday, reported that the nation’s GDP grew year-on-year (YoY) by 5.0 percent in Q2’21, up from the 0.51 per cent recorded in Q1’21.

But the same report indicated that GDP contracted 0.8 percent quarter-on-quarter, QoQ, as real GDP in monetary term dropped to N16.90trillion as against  N16.96trillion recorded in the preceding quarter, Q1’21.

Examining the figures, Dr. Muda Yusuf, an economist and immediate past Director General of the Lagos Chamber of Commerce and Industry, LCCI, said that the GDP numbers only suggest that the Nigerian economy is still essentially in a recovery phase.

He stated: “The 5.01% GDP growth (year on year) signposts an incremental recovery in the economy.  It also reflects a gradual normalization of economic and business activities in the country.    

“However,  it is important to stress that there is a profound base effect in the Q2’21  GDP growth outcomes.    

“The Q2’21 figure was  a comparison with the worst contraction the economy suffered in recent history, which was -6.3% in Q2’20. This was the period the economy was completely shut down because of the pandemic.  The 5.01% GDP growth is largely an indication of the restoration of economic activities.  

“The Nigerian economy is still essentially in a recovery phase.  The major drivers of the growth numbers are not significant contributors to the GDP,  except the trade sector.  Many of the sectors that posted impressive growth numbers do not contribute significantly to the GDP.”  

Also expressing reservations over the latest GDP numbers, analysts at CardinalStone Finance, a Lagos based investment banking group, wondered if Nigeria would sustain the current growth momentum.

They stated: “The current growth traction mainly reflects the impact of a materially low base in Q2’20. Hence, it is likely that lingering socio-political and structural impediments could come back to the fore as the impact of base effect wanes. 

“To this point, we believe that unless frail economic structures are strengthened, consumption and investments are likely to deteriorate. “This could cascade to high unemployment, worsening insecurity and tamer GDP readings in coming quarters.”

The NBS in its GDP report for Q2’21 released yesterday, noted that the Oil sector’s contribution to GDP fell by 1.83 percent points to 7.42 per cent in Q2’21 from 9.25 per cent in Q1’21. However, non-oil sector contribution to GDP rose by 1.93 per cent points to 92.58 per cent from 90.75 percent.

The Bureau cited the steady recovery observed since the end of 2020, with the gradual return of commercial  activity as well as local and international travel, as cause of increase in the growth.  

NBS stated: “GDP grew by 5.01 per cent year-on-year, YoY, in real terms in Q2’21, marking three consecutive quarters of growth following the negative growth rates recorded in the second and third quarters of 2020.  

“The Q2’21 growth rate was higher than the -6.10 per cent growth rate  recorded in Q2’20 and the 0.51 per cent recorded in Q1’21 YoY, indicating the return of business and economic activity near levels seen prior to the nationwide implementation of COVID-19 related  restrictions.”

The report further disclosed, “Year to date, real GDP grew 2.70 per cent in 2021 compared to -2.18 per cent for the first half of 2020.  Nevertheless, QoQ, real GDP grew at -0.79 per cent in Q2’21 compared to Q1’21, reflecting slightly slower economic  activity than the preceding quarter due largely to seasonality.”  

Meanwhile, President Mohammadu Buhari has applauded the GDP report showing a third consecutive quarter of positive growth of Nigeria’s economy, as well as the highest quarterly growth in GDP since 2014.

A statement issued by Special Adviser to the President on Media and Publicity, Chief Femi Adesina, said: “This growth, which continues the progress of the preceding two quarters, is a continuing trend reflecting Nigeria’s economic rebound following the COVID-19-induced contractions seen in Q1 and Q2 2020.

“Buhari commended managers of the economy for hard work and commitment, urging them to keep at it till the positive development “touches the lives and pockets of the average Nigerian.”

In another development, Simon Harry has emerged the new Statistician General of the NBS following the conclusion of the second term of Yemi Kale.

This was disclosed in a statement released yesterday by Yunusa Tanko Abdullahi, Special Adviser, Media and Communication, to the Minister of Finance, Budget and National Planning.

The release stated: “Currently, Dr Harry is the Director, corporate planning and technical coordination, Department of NBS with almost three decades of statistical experience,” the statement reads.

“He joined the erstwhile Federal Office of Statistics as Statistician 11 in 1992 and rose to the position of a substantive Director of Statistics in 2019.

“In the course of his civil service career, Dr Harry has contributed to several reform initiatives including the reform of the then Federal Office of Statistics which transformed to the current National Bureau of Statistics, the reform of the Nigerian Statistical System which resulted to the creation and establishment of State Bureaus of Statistics at the sub-national level.”

Kale was first appointed Statistician-General by President Goodluck Jonathan in 2011 and was reappointed by President Muhammadu Buhari in 2016.