- Says thereâ€™s a problem with wealth distribution
Ndubuisi Francis and Udora Odichimma in Abuja
The Statistician General of the Federation, Dr. Yemi Kale, has proffered reasons why Nigerians are yet to feel the impact of the economic turnaround, saying that growth in the services sector remained in the negative territory, making it difficult for the citizenry to feel the impact of the slight uptick in economic output.
He equally cautioned that the growth that ended the recession was fragile, calling for concerted efforts to sustain growth in diverse sectors of the economy.
Kale, who spoke at a media parley in Abuja Wednesday, following Tuesdayâ€™s official release of the second quarter Gross Domestic Product (GDP) report of the National Bureau of Statistics (NBS), showing that the economy grew by 0.55 per cent after five consecutive quarters of contraction, said: â€œTo say that thereâ€™s no growth because you donâ€™t feel it is incorrect, there is growth. Itâ€™s up to the government to create policies to ensure that the benefit of growth is spread across properly.
â€œThe inability to spread it across properly doesnâ€™t mean the growth doesnâ€™t exist. At the time there is a recession, some people are making huge amounts of money, that is the truth.
â€œThe time we were growing at 6 per cent, a majority of the population did not feel it, but those who were feeling it did.
â€œHow many Nigerians entered the Forbes Rich List in the last ten years? Did we have Nigerians in Forbes before? It shows that thereâ€™s growth in economic activities, itâ€™s just that thereâ€™s a problem with the distribution of the benefits across the country,â€ he explained.
Kale noted that it was important to draw a distinction on the various economic indicators, pointing out that GDP pertains to the output of goods and services in an economy.
â€œA recession is not about the price of your goods, it is not about whether unemployment is going up or down, or if there is quality education; itâ€™s purely your gross domestic product â€“ where your output of goods and services in the economy are going down.
â€œThe gross domestic product is an accumulation of 46 different economic activities in Nigeria and the overall number.
â€œWhether positive or negative, will determine whether you are in a recession or out of a recession. Now, within those 46 activities, some sectors will do very well and will be positive, some will do badly, some will be worse off and some will stay the same way they are,â€ reiterating that it was important for the country to maintain the positive growth so that it will not relapse into a recession.
Kale said though the nationâ€™s economy has exited recession, the issue of whether or not it relapses was a function of activities in the economy.
He equally cautioned that the output that ended the economic contraction was fragile, calling for concerted efforts to sustain the growth trajectory in diverse sectors.
Kale observed that the growth recorded by the economy in the second quarter in 2017 does not call for celebration.
He said what was important was ensuring that the economy does not slip back into a recession.
â€œI believe that there are three recovery stages: one is you get out of the recession. That is, you are not slumping any longer or you have stopped sinking.
â€œThe second stage is the economic recovery; economic recovery to me means going back to where you were before you started sinking. After that, you can now sustain your growth and grow.
â€œLogically, I did not say that means everything is fantastic and wonderful but that is a big step. At least, the slump has stopped, but we can go back into a recession next quarter.
â€œSo you can go positive this quarter and by next quarter you can go negative; it depends on what happens with the economy. So it is not about celebrating that we are out of a recession, itâ€™s about maintaining it, restoring it and then growing.
â€œThatâ€™s why most people are saying that the positive growth is a welcome development but they always emphasise that it is a fragile growth, it is not yet strong enough.
â€œSo itâ€™s not the right time to relax and say everything is okay, especially when the services sector which accounts for 50 per cent of GDP and is felt more by the public is still negative.
â€œUntil the services sector turns positive everybody still has to keep up, and that has to be understood very clearly,â€ the NBS chief executive said.
He added that the positive growth that culminated in the economy exiting the recession was largely oil sector driven, occasioned by increased oil production in the Niger Delta as well as the price increase in the global market.
In response to a question on whether the NBS was being political by announcing that Nigeria was out of the recession, Kale dismissed the notion, saying: â€œI have been the statistician-general for two different administrations led by different parties â€“ the PDP and APC.
â€œIn both administrations, I published data, both positive and negative. This administration was the one where we published that we are in a recession and I was the same person that said we have gotten out of the recession.
â€œSo I donâ€™t think thereâ€™s any consistency in anything NBS does in terms of politics. The recession announcement came two months to the renewal of my tenure.
â€œNow, anybody thatâ€™s political does not come out to tell the government that wants to renew their tenure that you are in a recession and inflation is in double digit. Itâ€™s not done.
â€œThe fact that the NBS can boldly say we are in a recession and inflation has gone from 9 to 17 per cent, then I donâ€™t think anyone should be in any form of doubt about the integrity and independence of the NBS at this point in time.
â€œItâ€™s totally ridiculous; thereâ€™s no basis for that. In every administration, we have released both positive and negative data, we are the ones that published these numbers so you canâ€™t decide when we are political.â€
Kale pointed out that only a few days ago, the statistical agency said food prices were the highest in nine years, asking rhetorically: â€œSo did APC forget to reach out to me before I published that one?â€
He emphasised that the NBS can never be political, adding that if the countryâ€™s GDP turns negative in the third quarter, it will be reported.
Asked to forecast what the third quarter outlook might look like, Kale said: â€œI don’t know; we will wait until we see all the numbers. You can never tell until you have everything.
â€œThere is the PMI (Purchasing Managersâ€™ Index) that says the purchasing margins have remained above 50 all this while. If that is correct, fine but then the PMI is looking at it month-by-month, GDP looks at it year-on-year.
â€œAnd again, 2016 was an extremely horrible year, so itâ€™s not that difficult to compare 2016 and 2017. I donâ€™t think any of us here will suggest things are as horrible today as they were this time last year. You might say they are still bad but were they as bad as last year?â€
On the inflationary pressure brought on by high food prices, Kale explained that if general food prices were much lower, GDP growth would have been higher than 0.55 per cent in Q2 2017.
â€œThe reason why GDP growth was 0.55 per cent is because high food prices are affecting consumer spending. It pulled down the overall GDP, so if you bring down the inflation rate, you encourage people to spend more which means they can buy more of these goods and services, which will pull up GDP.
â€œSo inflation affects the extent to which your GDP can grow by affecting how much you can spend on the economy. When you reduce inflation, people can spend more, when they can spend more, people will produce more. When manufacturers produce more, they can start hiring people to produce more,â€ he added.
Also commenting on the countryâ€™s emergence from the recession, the Minister of Budget and National Planning, Senator Udoma Udo Udoma, said the slight recovery was a product of the various policies of the government towards reflating the economy, as encapsulated in the Economic Recovery and Growth Plan (ERGP).
He stated that the various policies of the government were yielding fruits, as confidence was returning to the Nigerian economy.
Udoma said in a statement by his media aide, Mr. Akpandem James, that the GDP Q2 report of the NBS was a testimony to the fact that government was moving in the right economic direction.
He noted that two major objectives were in focus when the ERGP was launched by President Muhammadu Buhari early this year â€“ to get the economy out of the recession and then put it on the path of sustained inclusive and diversified growth.
â€œNow that we have accomplished the first task, attention will now be on growing the economy as rapidly as we can.
â€œWe are happy that people are beginning to see the results of the efforts we have been putting in the last two years to get the economy back on track and to place it on the path of growth and sustained development,â€ Udoma was quoted as stating.
He added that as the economy continues to grow, people will begin to feel the impact of the growth.
The minister pointed out that the major focus of government was to reflate the economy through spending in strategic sectors like infrastructure, agriculture, solid minerals etc., to galvanise economic activities and empower the people.
Efforts, he said, have also been concentrated on increasing revenue generation to meet the challenges of the economy, which was why the government has been giving attention, among other things, to the challenges of the Niger Delta region.
He, however, admitted that it was still early days, as much more work needed to be done to ensure that the growth is sustained.
â€œTherefore, the government will continue to pursue aggressively the implementation of the Economic Recovery and Growth Plan. Government is also working on improving the ease of doing business to attract more investments.
â€œWhile appreciating the efforts of all concerned in the drive towards the countryâ€™s economic recovery, the minister said the government will require the cooperation of all Nigerians to enhance the recovery rate and ensure the achievement of the objectives of the ERGP,â€ the statement added.