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The Nigerian economy has reportedly turned the corner by recording an expansionary GDP growth rate in the second quarter of this year (2Q17). GDP figures released last Tuesday by the National Bureau of Statistics (NBS) indicated that the economy grew by 0.55% in real terms within the period under review. While this is very significant is that it is the first time the growth rate was above 0% after five consecutive quarters of contraction dating back to 1Q16.
The facts behind the numbers also show that this growth is 2.04% higher than the rate recorded 12 months ago (-1.49%), and 1.46% higher than that of 1Q17. The released GDP details also show that the real GDP growth rate was 3.23% quarter on quarter and that the GDP increased by 14.6% in 2Q17 in nominal terms over the figure for 1Q17.
One can forgive opposition party politicians since their primary consideration is making the president and his ruling party look bad, and not good, with the approach of the 2019 national and state elections. It was therefore hardly surprising to hear spokespersons for the Peoples Democratic Party (PDP) belabour to remind Nigerians that economic growth doesn’t automatically translate to economic development. Truly spoken! But isn’t this the same party, while it was in power for 16 years, that kept blowing its trumpet for the steady increase in the growth rate of the GDP even as all the indices of economic development headed south?
The real surprise, I must confess, came in the form of comments made by supposed economic and financial experts. Majority of them, including editorial opinions carried by reputable business newspapers, averred that the GDP still was at a level far below its potential and that the growth falls far short of the growth rates the Nigerian economy should be achieving. For crying out, what did they expect of an economy just coming out of the woods after a recession that lasted for more than a year! A JSS2 student would have made a better analysis.
Yes, the less than one percentage growth rate might not be fascinating to many analysts and politicians, but it is a very welcome development. It may be lower than what most of them expected but it, certainly, gives ground for cautious optimism, especially to this columnist who, about 12 months ago, had appeared in a segment of Nancy Illoh’s “Money Show” on African Television Authority (AIT) to openly predict that based on what I could perceive from the activities of the Buhari administration, things – even as they regressed from bad to worse over the time – would come out of the woods within 12-18 months. At that time, it looked like a tall order and Nancy had warned me that she will call me up when the day of reckoning arrives. Well, Nancy, guess who’s laughing last now!
The good news about the 2Q17 GDP report is that the growth is driven by both the oil and non-oil sectors. Crude oil prices have risen from their low point and relative peace in the Niger Delta has meant that a higher quantity of crude oil is being sold. Still, oil prices are a far cry from the above $100 level of a couple of years back. The real drivers are Agriculture which maintained a credible 3% growth rate even when other sectors were contracting.
Industry grew by 1.45% in 2Q17 – the first positive growth rate in as many as nine quarters! FX reserves also grew from a low of $24.53billion in 3Q16 to $31billion in 2Q17. The creativity and ingenuity with which the Godwin Emefiele-led Central Bank of Nigeria (CBN) effectively resolved the FX Gordian knot that threatened to asphyxiate the economy has handsomely paid off in a 95% year-to-year increase in capital importation (FDI in 2Q17 was 30% higher than 1Q17).
As President Buhari himself noted, the real impact of the end of recession would be better felt when ordinary Nigerians experience a meaningful improvement in their living standards but it doesn’t obviate the imperative of the rest of us to see the development as a glass that’s half full rather than half empty.
And in this wise, I call on all the unions and associations that have either embarked on a strike or are contemplating doing so to give the economy a chance to concretize the gains before anything else. For example, if the inflation rate were to further decline, their real purchasing power would increase; but if market women, landlords, transporters, etc join the bandwagon, as is usually the case, we would be back to a case even worse than Ground Zero.