Analysts Proffer Ways to Sustain Recession Exit, Grow Economy

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By Goddy Egene

As the federal government continues to celebrate the exit of the Nigerian economy from recession, financial analysts and economic experts have suggested strategies to adopt so that the economy will not slip back into recession.

The nation’s economy entered into a recession in the second quarter (Q2) of 2016 due to  two consecutive quarters of Gross Domestic Product (GDP) contraction. However, the recovery in crude oil production and price and the introduction of the Investors’ and Exporters’ (I&E) foreign exchange window by the Central Bank of Nigeria, which increased the supply of foreign exchange to end users, helped to pull the economy out of recession.

After five consecutive quarters of contraction in the Real Gross Domestic Product (GDP), the Nigerian economy has exited the recession.  According to the Q2 figures that the National Bureau of Statistics (NBS) released recently, the GDP recorded a growth rate of 0.55 per cent. The growth in the GDP was mainly due to the growth recorded in Agriculture, Financial and Insurance, Electricity, Gas, Steam and Air Conditioning Supply, and Mining and Quarrying sectors of the Nigerian economy.

 The oil sector, which grew by 1.64 per cent in Q2, 2017, recorded the first growth since Q4, 2015. The growth in the non-oil sector at 0.45 per cent in Q2 2017 decelerated from a growth rate of 0.72 per cent recorded in Q1, 2017.

However, analysts at FSDH Research have said that to sustain the growth and improve on the recovery going forward, there is the need for the federal government to find a lasting solution to the attacks on farm lands in Nigeria in order to increase production.

“There should also be incentives in the form of tax reliefs and favourable land acquisition laws for the agro-allied industry in order to boost agriculture. Additionally, there should be more focus on agricultural training and research institutes in the country to increase farm yields. Concrete steps should be taken to involve the private sector in the provision of transport and storage facilities to reduce waste and give farm produce easy access to markets. Government may also consider tax holidays and reduction to companies that make use of local agricultural raw materials in their production process. This will increase both human and material employment of local resources in Nigeria,” the analysts said.

Information and Communication contributed 12.39 per cent to the GDP in Q2 and analysts said going forward, it is  important to allow for an adjustment in the communication tariff to boost investments and improve facility maintenance.

“In order to support the growth of real estate, government at all levels should partner with real estate developers, both local and foreign, to support the development of mass housing projects for low and middle income earners. These housing units should be made available through long-term financing structures, which should be guaranteed by the government. This would provide both direct and indirect employment opportunities to Nigerians in real estate, construction and manufacturing sectors. In addition, it will help to protect the revenue of the government against the volatility in the oil industry and ultimately guarantee sustainable economic growth and development,” they said.