Guardian GDP: Fact sheet of Nigeria’s oscillating economy WEDNESDAY, 02 OCTOBER 2013 00:00 CHUKA ODITTAH BUSINESS SERVICES - MONEY WATCH Recently, the National Bureau of Statistics (NBS) released data on Nigeria’s Gross Domestic Product (GDP). The estimates, which covered year 2012, the first and second quarter of 2013, reflected the downturn and rebound of Nigeria’s economy in key areas. CHUKA ODITTAH x-rays how the GDP figures were generated. THE current data from the National Bureau of Statistics (NBS) indicated that Nigeria’s economy grew by 6.18 per cent rate in the second quarter of 2013. This figure was arrived at when sectors of the economy were measured on aggregates of the real Gross Domestic Product (GDP). However, the 6.18 per cent growth fell short of the 6.56 per cent growth recorded in the first quarter of 2013 and 6.39 per cent growth observed in the corresponding quarter of 2012. The nominal GDP for the second quarter of 2013, the NBS said, was an estimated N9, 115320.72 million. This was lower than N9, 840,226.91 million recorded for the corresponding quarter of 2012 and N9, 493,779.44 million in the first quarter of 2013. All of these points to a shrinking revenue size in the economy within the period under review. Although the volume of revenue and output from the oil sector experienced a shortfall in the second quarter of 2013, due mainly to production interruptions, the non-oil sector conversely experienced a boom within the same period. The GDP survey identified drop in oil production as a key factor for the decline in oil revenue to the nation. The non-oil sector growth was on the other hand driven by vibrant economic activities recorded in areas like agriculture, aviation, telecommunications, hotel and restaurants, as well as building and construction sub-sectors. According to the NBS, the average daily production of crude in the second quarter of 2013 was 2.11 million barrels per day, a decline from 2.29 million barrels per day recorded in the second quarter of 2012. The combination of oil proceeds together with associated gas components accounted for the 1.15 per cent growth rate recorded in the oil GDP for the second quarter of 2013, as opposed to the 0.54 per cent recorded in the first quarter of 2013 and 0.78 per cent for the corresponding period of 2012. The gloom in the once cardinal sector was also blamed on disruptions caused by pipeline vandals. But NBS nonetheless, agreed that Nigeria still benefited immensely from the relative stability in the international crude oil market price, as well as a favourable Naira exchange rate. In all, the oil sector was said to have contributed approximately 12.9 per cent to real GDP in the second quarter of 2013, but lower than the 14.75 per cent contribution in the first quarter of 2013, and the 13.86 per cent recorded during the second quarter of 2012. In the face of challenges in the oil sector, the non-oil sector began to hold sway and substantially sustained the Nigerian economy. In the second quarter of 2013, the non-oil sector recorded 7.36 per cent growth in real terms compared with 7.63 per cent in the corresponding period in 2012 and 7.89 per cent in the first quarter of 2013. The decline experienced in the non-oil sector was partly attributed to a drop in volume of electricity generated during the period, a development, which took its toll on the manufacturing, telecommunications, as well as the wholesale and retail trade. In agriculture sector, the real GDP growth in the second quarter of 2013 stood at 4.52 per cent, up from the 4.21 per cent recorded in the corresponding period of 2012, and higher than the 4.14 per cent recorded during the first quarter of 2013. This growth pattern, according to the quarterly Gross Domestic Product (GDP) estimates indicated the highest growth rate in that sector over the last seven quarters. This was irrespective of the fact that 2012 was adjudged a particularly challenging year for the agricultural sector in Nigeria. For instance, security challenges were known to have had severe effect on value added output on agricultural produce, just as the devastation caused largely by flood during the third quarter of the same year negatively impacted at least 25 out of the 36 states of the federation. Initiatives such as the dry season farming, supplying seeds and fertilisers directly to farmers, as well as providing mechanised equipment at affordable rates to farmers, among other reforms, gave rise to increased output in 2013. Agricultural output also was largely supported by sufficient rainfall. The finance and insurance sub-sectors have also played key role in boosting the economy. They include the banking, insurance, pension and stock-broking firms. These firms operate in the various segments of the financial markets such as money market, capital market and the foreign exchange market. Each one played prominent roles in ensuring an efficient financial bridge for the economy. A study of the growth rate in these two sectors (first quarter of 2008 to second quarter of 2013) revealed that 5.18 per cent growth was achieved in the second quarter of 2013, up from 3.61 per cent recorded in the first quarter of 2013, as opposed to the 5.01 per cent recorded in the second quarter of 2012. Although there was considerable activity in both the finance and insurance sub-sectors, compared to the corresponding quarter of 2012, the sector’s contribution to real GDP in second quarter of 2013 declined slightly to 3.95 per cent, as against 3.98 per cent recorded in the preceding year. In the wholesale and retail trade sector, growth rate here stood at 7.44 per cent in the second quarter of 2013, compared to 8.65 per cent recorded in the second quarter of 2012. Growth was also lower, when compared to the first quarter of 2013, which was put at 8.22 per cent. The sector however, remained the second largest contributor to Nigeria’s GDP, seconded by agriculture. Noticeable decline in growth recorded in the second quarter of 2013 and the first quarter of the same period was attributed to a drop in electricity generation and supply, which negatively impacted on the whole sale and retail trading activities. The telecommunications and posts sub-sectors recorded a real GDP growth of 22.12 per cent in the second quarter of 2013, a little lower than the 24.53 per cent recorded in the first quarter of the year, and 29.38 per cent recorded in the second quarter of 2012. While the telecommunications sector continued to play vital buffer role for growth in non-oil sector and the nation’s economy in general, growth in the sector however declined in the second quarter of 2013 as a result of power supply and other infrastructure challenges. The sector nonetheless, remained highly competitive for operators who embark on extensive value adding marketing strategies to gain grounds. The growth recorded in real estate sector stood at 10.88 per cent as at the second quarter of 2013, compared with 10.06 per cent in the first quarter of 2013.This indicated higher economic activity and value, compared with the corresponding quarter in 2012, which was estimated at 10.81 per cent. The real estate services is classified into two classes of properties- the low end and the high-end properties. The low end are places of low development capacity, often driven by investments from individuals and few corporate bodies for residential buildings, whereas the high end comprises of areas where aggressive and high-value investments in the real estate properties are made. During the second quarter of 2013, manufacturing output decreased relative to the same period in 2012. Real GDP growth recorded in that sector was 6.81 per cent, down from 8.41 per cent recorded in the first quarter of 2013, and 7.59 per cent recorded in the corresponding quarter of 2012. This decline was due partly to a challenge in power supply. Meanwhile, other services business sector recorded a real GDP growth of 11.33 per cent in the second quarter of 2013, compared with 8.63 per cent recorded in the first quarter of the same year, and the 11.26 per cent recorded in the second quarter of 2012. The significant improvement in growth recorded in the second quarter of 2013, relative to its performance in the first quarter indicates an improved economic activity, after the usually slower first quarter lull. According to NBS Statistician-General, Dr. Yemi Kale, much of the data provided in the GDP survey were partly sourced from the Quarterly National Accounts (QNA), which are an integrated system of macroeconomic accounts designed to describe the entire system of production in a nation on a quarterly basis. “They provide a picture of the current economic status of the economy that is more timely and frequent than the one provided by Annual National Accounts. The key attribute of QNA is that they provide a reasonable level of details of the economy that help government to assess, analyse and monitor economic growth on a regular basis. QNA adopts the same concepts, definitions and structure as ANA. In principle QNA covers the entire sequence of accounts and balance sheets as reflected in the 1993 System of National Accounts. However, data for this analysis were obtained from the Quarterly Establishment Survey conducted by the National Bureau of Statistics (NBS) based on economic activities at current and constant prices,” he said. Presently, Nigeria, with the support of the Central Bank of Nigeria (CBN), the World Bank, IMF, among other global and regional institutions, is currently working together to help the country carry out the rebasing of its GDP, which was last captured in 1992. The NBS said that it had started improving the GDP figures since 2008, by jointly conducting a Quarterly Establishment Surveys. The exercise covers the four quarters of each year, to complement the annual surveys, which take place in the first and second quarter of the year. No doubt, the success of government’s future planning and investment policies will depend entirely on the accuracy and credibility of this exercise. With the reduction in revenue from oil, Nigeria now stands a chance of fully harnessing the economic potentials in the non-oil revenue sources, but only through effective planning and deliberate compliance with set goals.
Posted on: Wed, 02 Oct 2013 07:28:09 +0000
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