Nigeria needs reforms and interventions to address some sectors of the economy with declining and contracting Gross Domestic Product (GDP) figures in the third quarter of the year.
This was disclosed by Dr Muda Yusuf, Founder/CEO of Centre for the Promotion of Private Enterprise (CPPE), in reaction to the Nigerian quarterly real GDP growth, which dipped to 2.25% in the third quarter when compared to 4.03% in the third quarter of 2021.
The reduction in Nigeria’s growth is attributable to the base effects of the recession and the challenging economic conditions that have impeded productive activities.
The Q3 2022 growth rate decreased by 1.78% points from the 4.03% growth rate recorded in Q3 2021 and decreased by 1.29% points relative to 3.54% in Q2 2022
The macroeconomic instability, escalating inflationary pressures, currency depreciation, lack of liquidity in the foreign exchange market, and rising energy prices were some of these hindrances, according to Yusuf. Others, he added, included declining purchasing power, enduring structural limitations, a lack of security, and crippling trade facilitation problems.
He continued, expressing alarm over the startling 1.91% decline in the manufacturing sector and the 4.05% decline in the food and beverage industry.
He asserts that the decline in the manufacturing sector’s performance significantly affects employment, food inflation, and food security.
This, he said, was because the food processing sector had the most significant impact on jobs because of the solid backwards integration content and high multiplier effect in the agriculture 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, it 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 the Nigerian manufacturing sector, which calls for an emergency response by the government,” he said.
Yusuf, the founder of the Centre for the Promotion of Private Enterprises (CPPE), said recommendations to fix the GDP growth decline included” improving the macroeconomic headwinds of high inflation and currency volatility.”
He also emphasised the need to address the structural impediments to production and other economic activities and reform the foreign exchange market to inspire investors’ confidence.
The economist added that the country must begin to address the challenges of insecurity and logistics and take urgent steps to tame inflation and boost the purchasing power of the citizens.
He said, “Nigeria must accelerate 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 the monetary policies to facilitate financial deepening in the economy.
“The country also needs fiscal reforms which prioritise infrastructural development and transparency in the budgetary process,” he said.
The oil sector recorded -22.67% (year-on-year) as of Q3 2022, indicating a decrease of 11.94% relative to the rate recorded in the corresponding quarter of 2021.
On the other hand, the non-oil sector grew by 4.27% in real terms during the reference quarter (Q3 2022). This rate was lower by 1.18% points compared to the rate recorded same quarter of 2021 and 0.50% points lower than the second quarter of 2022
Growth in finance and insurance industries in real terms totalled 12.70% in the third quarter of 2023. The growth rate is lower by 10.53% points from the rate recorded in the third quarter of 2021 and down by 5.78% points from the rate recorded in the preceding quarter. Quarter-on-Quarter growth in real terms stood at -10.14%.
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