The executive director of the Center for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, said that Nigeria needs reforms and interventions to address some sectors of the economy that posted declining GDP numbers in the third quarter of the year.
Dr. Yusuf said this in reaction to recently released quarterly real GDP numbers, which showed growth fell to 2.25% in Q3 compared to 4.03% in Q3 2021.
Nigeria’s GDP growth fell 1.78% points from the 4.03% growth rate recorded in the third quarter of 2021. It also decreased 1.29% points from 3.54% in the second quarter of 2021. 2022.
Cause of the fall in GDP: As previously reported, the reduction is attributable to the basic effects of the recession and difficult economic conditions that have impeded productive activities.
Macroeconomic instability, rising inflationary pressures, currency depreciation, illiquidity in the foreign exchange market and rising energy prices were some of these obstacles, according to Yusuf. Others, he added, include declining purchasing power, long-standing structural constraints, a lack of security, and crippling trade facilitation problems.
Concern for the economy: He sounded the alarm for the surprising drop of 1.91% in the manufacturing sector and the drop of 4.05% in the food and beverage industry.
He also pointed out that the drop in the performance of the manufacturing sector significantly affects employment, food inflation and food security. This, he said, is because the food processing sector has the most significant impact on jobs due to strong backward integration content and high multiplier effect in the agricultural value chain.
- “This is the first contraction of the sector since the recession of the second quarter of 2020. The food and beverage sector is the flagship of the Nigerian manufacturing industry and, for several decades, was the toast of investors in the stock market.
- “The sector contributed N2.2 trillion to GDP in the third quarter. This development is a reflection of a major setback for Nigeria’s manufacturing sector, which requires an emergency response from the government.” he said.
Yusuf, the founder of the Center for the Promotion of Private Enterprises (CPPE), said that recommendations to correct the fall in GDP growth included “improving the macroeconomic obstacles of high inflation and currency volatility.”
He also stressed the need to address structural impediments to production and other economic activities and reform the foreign exchange market to inspire investor confidence.
The economist added that the country must begin to face the challenges of insecurity and logistics and take urgent measures to control inflation and increase the purchasing power of citizens. He said:
- “Nigeria must speed up the implementation of the Petroleum Industry Act and efforts to ensure domestic refining of petroleum products. There must be creative support for small businesses to promote economic inclusion and reform monetary policies to facilitate the financial deepening of the economy.
- “The country also needs fiscal reforms that prioritize infrastructure development and transparency in the budget process.”
Some GDP data to keep in mind:
- The oil sector registered -22.67% (annual) as of 3Q 2022, which indicates a decrease of 11.94% with respect to the rate registered in the corresponding quarter of 2021.
- For its part, the non-oil sector grew 4.27% in real terms during the reference quarter (3Q 2022). This rate was 1.18% lower than that registered in the same quarter of 2021 and 0.50% lower than that of the second quarter of 2022
- The growth of the finance and insurance industries in real terms totaled 12.70% in the third quarter of 2023. The growth rate is 10.53% lower than that registered in the third quarter of 2021 and 5.78% lower than the one registered in the third quarter of 2021. previous quarter. Quarter-on-quarter growth in real terms stands at -10.14%.
