As the year 2015 drew to a close, there were already bold hints that the Nigerian economy was heading towards choppy waters. The price of oil, the country’s biggest revenue source, had slid on the international market, leaving government at all tiers gasping. Many state governments were, so to speak, in intensive care units, as they could no longer pay staff salaries let alone carry out developmental initiatives.
This was hardly the most hospitable condition for a new government. President Muhammadu Buhari, who took office in May of that year, found that his promise to reform the economy and boost infrastructural development, as contained in the “Change” manifesto of his government, faced a mile-high odd. The nation’s coffers were virtually bare; inflation had climbed to 9.6% by in December 2015, according to the National Bureau of Statistics (NBS).
The following year arrived with what was a vicious blow to the new administration and, of course, Nigerians. The price of oil on the international market slid below the $50 per barrel benchmark. This had the none-too-surprising effect of ripping up the government’s plans and expenditure for capital projects and social security programmes. The country lost its titular designation as “Africa biggest economy” to South Africa.
Worse was to come. The NBS announced that the economy contracted by 2.06% between April and June 2016. The implication was that Nigeria, technically, had slipped into recession.
Despite having attained a 10-year record high Gross Domestic Product (GDP) growth rate of 6.22% in 2014, the country’s economy, in a space of two years, had shrunk alarmingly. The situation provided ammunition for the critics of the administration, which was condemned to find a way out of the economic difficulty the country was mired in.
The response was to initiate policies that would bring about resuscitation. These took the form of several business policies and executive orders, notably the Executive Order One (EO1) Ease of Doing Business. These have sparked a slow but steady growth in the country’s GDP, which measures the monetary value of final goods and services produced in a country in a given period of time.
The country exited recession by the second quarter of 2017 and bounced back stronger. The economy’s improvement has been validated by the recent figures released by the NBS on the country’s GDP, the most reliable gauge of a country’s overall economic activity.
The NBS report entitled, Nigerian Gross Domestic Product Report: Q4 and Full Year 2018, noted that the country’s GDP grew by 1.93% in 2018 from the 0.82% attained at the end of 2017, representing a 1.1% growth in the economy. The GDP growth rate of 2018 rhymed with the projection of the Bretton Wood Institutions, the World Bank and International Monetary Fund, which had tipped the GDP to grow by 1.9 per cent in 2018.
A further evaluation of the report reveals that the country’s GDP grew by 2.38% in real terms (year-on-year) in the fourth quarter. This represents an increase of 0.27% when compared to the fourth quarter of 2017, which recorded a growth rate of 2.11%. It also indicates a rise of 0.55% when compared with the growth rate of 1.81% recorded in Q3 2018. The real GDP growth on a quarter on quarter basis for the year 2018 was 5.31%.
Taking a holistic look at the GDP figures for the past four years, it is discernible that real progress has been achieved and that the economy has improved. From a growth rate of 2.79% in 2015, the GDP crashed to a growth rate of -1.58% in 2016 due to the recession.
The nominal GDP for the year 2018 was N127,762, 545.58 million, representing a nominal growth rate of 12.36% when compared to N113,711,634.61million recorded in the year 2017.
Also, upon assumption of office, President Buhari promised Nigerians that his administration will work relentlessly to ensure that the country greatly reduces its overdependence on oil. Just under four years, the path towards less dependence seems to be much clearer and resolute. The non-oil sector growth rate was at 3.75% in 2015, but sharply declined in 2016 to -0.22%, partly due to the recession which affected all economic sectors. A bounce occurred in 2017 when it grew by 0.4% and even considerably improved in 2018 when it recorded a growth of 2%.
Looking at the opposite side of the divide, it has really been a turbulent four-year period for the oil sector. The dwindling prices of oil had a catastrophic effect on the Nigerian economy as its proceeds form a huge bulk of the country’s revenue. In 2015, the sector’s growth rate contracted at -5.45% and shrunk further to -13.65% in 2016. But the Buhari administration’s policies rectified the anomaly, with the oil sector recording a 4.69% growth in 2017, before it declined to 1.14% in 2018.
In terms of the individual sectors, there has also been a consistent growth rate in sectors such as agriculture, industry and service.
Agriculture, particularly, has been a fulcrum of the Buhari administration’s economic reform agenda, which aims for self-sufficiency in food production. Analysis of its GDP growth rate shows that agriculture grew by 3.7% rate in 2015, rose to 4.11% in 2016 before declining to 3.43% and 2.12% in 2017 and 2018 respectively.
For the industry sector, which includes manufacturing, construction, mining and quarrying, and information and communication, there was contraction to -2.24% in 2015, and -8.85 percent in 2016. It, however, recorded a 2.15% growth in 2017 before sliding to 1.94% in 2018.
The service sector, which consists of transportation and storage, arts and recreation, financial and insurance, administrative and support services among others, recorded a 4.78% growth in 2015, but contracted in 2016 and 2017 to -0.82% and 0.91% respectively. A better output for the industry occurred in 2018, as it recorded a growth of 1.83%.
A summary of the statistical indices as highlighted above shows that the country’s economic profile has improved, even after suffering the debilitating recession.
The economy has not only recovered, but moving towards a more sustainable level of assurance for all Nigerians. Such progression can only continue if more astute policies are well-conceived and implemented without any iota of corruption and with financial prudence as the Buhari administration is currently doing.
––Abubakar, a public affairs analyst, writes from Sokoto