THE 2021 GDP GROWTH RATE
Growth must impact majority of the citizens positively to be meaningful
The Nigerian economy posted a 3.4 per cent growth in Gross Domestic Product (GDP) in the fourth quarter (Q4) of 2021, according to recent figures by the National Bureau of Statistics (NBS). This represents the strongest rise since 2014, and surpassed projections by both the World Bank and the International Monetary Fund (IMF) of 2.5 per cent and 2.7 per cent respectively. It is cheery news that the Q4 GDP growth was largely driven by the non-oil sector, propelled by services, agriculture, trade, ICT as well as the financial and insurance segments which accounted for 94.81 per cent overall. The oil sector contributed just 5.19 per cent.
It is indeed heart-warming that the non-oil sector has continued to significantly drive GDP growth in the country. In the 2020 fiscal year, agriculture contributed around 24.14 per cent to Nigeria’s GDP, while 28.22 per cent came from industry. The service sector which continues to grow contributed 46.39 per cent. But the modest performance of the non-oil sector to GDP often creates a delusional claim in government quarters that the economy is diversified. This is despite the obvious fact that agriculture and solid minerals sectors which have huge potential to alter the diversification journey remain largely undeveloped.
As we therefore bask in the euphoria of a positive GDP growth, the economic managers must not lose sight of the fact that while growth is desirable, it must impact majority of the citizens positively to be meaningful. That is why our fiscal and monetary authorities must roll up their sleeves and fashion out appropriate policies and strategies that would engender an inclusive economic growth capable of addressing high unemployment, inflation and poverty rates in the country. Going by the NBS figures, household consumption as a proportion of GDP rose to 76 per cent in 2021, the highest level since 2010. Cost of foods in Nigeria also increased by 17 per cent in December 2021 over that of December 2020. Unemployment rate was put at 35 per cent in 2021 and is projected to hit 40 per cent in 2022, with a third of the 69.7 million strong labour force unemployed.
To compound the problem is the burgeoning debt servicing quagmire, with its huge negative impact on government deliverables to the people. According to the International Monetary Fund (IMF), as of September 2021, debt servicing to revenue value stood at 76 per cent, implying that 76 kobo out of every N1 earned by government was spent on payment of interest on debt. The IMF also projected that the government is likely to spend as much as 92.6 per cent of its revenue to service debt in 2022. These stark economic statistics are antithetical to the desired inclusive GDP growth, especially in a country where the population is growing at alarming rate.
The focus should therefore be on how to grow national productivity to obvious potential. Several urgent things need to be done. One, we must tackle insecurity, which has been a drag on the agricultural sector and the movement of people and goods. Two, we need to invest more on infrastructure, especially electricity. Three, we must reduce the cost and difficulty of doing business (especially over-regulation and over-taxing of Small and Medium Scale Enterprises (SMEs). Four, we must target investment in human capital, and social sector like education and health, to improve the productive capacity of our people. Five, we need to stop destructive anti-trade policies; identify and incentivise growth areas like technology and attract investments.
Overall, government at all levels must remove the binding constraints, get out of the way, and unshackle national productivity.
