Menu

Recession

recessionpix

Economist dismisses possibility of recession in Nigeria in 2023

Economist, Mr Bismarck Rewane, Chief Executive Officer, Financial Derivatives Company Ltd, has projected that the Nigerian economy will experience slower growth rate of 2.7 percent in 2023.

According to the National Bureau of Statistics, Nigeria’s economic growth rate in the third quarter of 2022 decreased by 1.78 per cent points from the 4.03 per cent growth rate recorded in the corresponding quarter in 2021.

It stated that the growth rate decreased by 1.29 per cent points relative to the 3.54 per cent rate recorded in the second quarter of 2022.

Speaking at the Nigerian-British Chamber of Commerce (NBCC) 2023 Macroeconomic Outlook on Thursday in Lagos, Rewane said Nigeria would not likely slide into recession in 2023.

“As projected, one third of global economy will plunge into recession, which is unlikely for the Nigerian economy, but an economic slowdown is unavoidable,’’ he said.

According to him, the expected slow growth rate will take its toll on businesses and investors in 2023, particularly with heightened outcomes of the forthcoming general elections.

He added that aside the slow growth rate, key developments for the country in 2023 include rising sovereign debt, elevated interest rates, persisting exchange rate premium and worsening fiscal deficit.

He said also that inflationary rate was expected to moderate; still above the 9-13 per cent threshold while Gross Domestic Product performance for 2023 would hover around 3.03 per cent in the first quarter.

Rewane told the forum that Nigeria’s economy in the global context was more vulnerable in 2023 due to its unique challenges between 2003 and now.

He listed some of the persisting structural challenges to include low-value agricultural export commodities, problems of export diversification and worsening terms of trade.

Others, he said, were high income inequality, low market competitiveness, price distortion, and weak economic and political institutions among others.

He argued that while global economic headwinds such as the on-going Russia-Ukraine war, resurgence of COVID-19 infections, supply chain distortions and others persisted, several sectors of the Nigerian economy held promise.

“Key sectors to drive GDP growth in 2023 include financial services, Information and Communication Technology, trade, manufacturing, agriculture and real estate/construction.

“The inflation trajectory in 2023 will average 16.27 per cent.

“For the exchange rate, more aggressive must be taken to keep the Naira stable in 2023 and a unitary/floating exchange rate system is likely to be adopted in the later part of the year.

“Also, the country’s gross external reserve is expected to rise to 41 billion dollars on expected increase and sustained levels of oil output,’’ Rewane said.

In her opening remarks, NBCC’s president, Ms Bisi Adeyemi, said the event was in alignment with the chamber’s cardinal mandate and its commitment to continue to elevate value proposition to members and stakeholders.

Adeyemi said the annual event provides a comprehensive assessment of opportunities, challenges, and indeed, threats that businesses should expect to contend with in 2023, locally and globally.

“The forum also discusses policy approaches that could be used to improve economic growth and development.

“I certainly would like to know the effects of the forthcoming elections on the economic indices,’’ Adeyemi said.

recessionpix

Is Nigeria also bracing up for recession in 2023

,

By Ibrahim Apekhade Yusuf

There are widespread fears about the fate of the economy across the globe, Nigeria inclusive. The Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva raised the first alarm penultimate Sunday, first day of the New Year.

According to her, one-third of the global economy may slip into recession in 2023. The New Year, she said, is going to be “tougher than the year we leave behind.”

She made this known on the CBS Sunday morning news programme, Face the Nation, on Sunday. “We expect one-third of the world economy to be in recession. Even countries that are not in recession, it would feel like a recession for hundreds of millions of people,” she said.

The IMF boss argued that for the first time in 40 years, China’s growth in 2022 is likely to be at or below global growth.

 “For the next couple of months, it would be tough for China, and the impact on Chinese growth would be negative, the impact on the region will be negative, the impact on global growth will be negative,” she said.

The new year is going to be “tougher than the year we leave behind,” as the major economies of the world – the US, Europe and China – experience weakening activity, she said.

“Why? Because the three big economies – the US, EU and China – are all slowing down simultaneously,” she argued.

In October, the IMF cut its outlook for global economic growth in 2023, considering the ripple effect of the Russia-Ukraine war as well as inflation pressures and the high interest rates engineered by central banks across the world.

Ms Georgieva said that China, the world’s second-largest economy, is likely to grow at or below global growth for the first time in 40 years, amid uncertainties over the surge in Covid-19 cases.

She added, however, that the US economy is standing apart and may avoid the outright contraction that may hit a significant part of the global economy. “(The) US is most resilient…may avoid recession. We see the labour market remaining quite strong,” she said.

In October, the IMF predicted a slower growth for the Nigerian economy in 2022, changing its forecast from 3.2 per cent in July to 3.0 per cent.

In its World Economic Outlook for October 2022 titled, “Countering the Cost-of-Living Crisis”, it projected a growth contraction for sub-Saharan Africa from 3.8 per cent to 3.6 per cent.

The International Monetary Fund (IMF)’s Economic Counsellor, Pierre-Olivier Gourinchas was also on the same page with Ms Georgieva.

In a blog post accompanying the fund’s October World Economic Outlook, more than a third of the global economy is headed for contraction between 2022 and 2023.

 “This year’s shocks will re-open economic wounds that were only partially healed post-pandemic. The worst is yet to come and, for many people 2023 will feel like a recession,” Gourinchas said.

In its report, the IMF trimmed its 2023 global GDP forecast to 2.7 per cent, 0.2 points down from July expectations as Gourinchas warned that misjudging the persistence of inflation could prove detrimental to future macroeconomic stability ‘by gravely undermining the hard-won credibility of central banks.’

At the start of the year, the global economy was projected to extend the strong post-pandemic recovery of 6.1 per cent in 2021 with a baseline growth rate of 3.6 per cent in 2022.

However, this bullish outlook was dented by the multifaceted negative spillovers from the ongoing war in Ukraine and aggressive monetary policy tightening by global systemic central banks targeted at curbing the runaway inflation.

On the back of these developments, the IMF in its October 2022 World Economic Outlook (WEO) report downgraded its global growth projection for 2022 to 3.2 per cent, its third downgrade since the war in Ukraine began in February.

In their outlook for 2023, Proshare in its global macroeconomic review and outlook, revealed that things looked pervasively slow.

In their analysis, Proshare stated that global GDP growth remains fragile following the impact of the war in Ukraine, noting that both advanced and developing economies are being affected by the impact of the war.

In addition, China’s zero COVID-19 policy, if sustained, will slow the country’s growth and therefore have a ripple effect on consumer demand and exports, especially in view of China’s contribution to global output and trade.

“With inflation already causing a cost-of-living crisis in several countries, a recession could trigger protests and unrests among poor and low-income earners. Central Banks will therefore need to tread cautiously in implementing a tight monetary policy stance to minimise the likelihood of a recession.”

The performance of the global economy will be hinged on the war in Ukraine and its continued impact on global commodity prices and trade. Oil producers may continue to benefit from high commodity prices in 2023, while oil importers will bear much of the cost of energy inflation, which could further slow economic growth and recovery.

Inflation has become a major source of concern for many countries. The war in Ukraine triggered a sharp increase in crude oil and gas prices, which led to high food prices and energy costs across countries. In the United Kingdom, the inflation rate rose to a 40-year high of 10.1% in July 2022. In Germany, inflation rate rose to 10% in September 2022, reaching an all- time high since German reunification.

While government’s across countries are implementing fiscal support and subsidies to ameliorate the situation for businesses and citizens, these measures do not appear sufficient in taming inflation. Monetary authorities have also raised interest rates to tackle rising prices, and this raises the possibility of constraining aggregate demand growth, and therefore could trigger a recession in some countries.

The chief executive officer, Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, said he expects Nigeria’s debt profile to hit N70 trillion this year.

Dr Yusuf, a former director general of Lagos Chamber of Commerce and Industry (LCCI), explained that, “in all probability, the deficit will be much bigger by year end because of the track record of revenue under performance over the last couple of years.

 “We are also likely to see an acceleration of Central Bank of Nigeria (CBN) financing of the fiscal deficit given the revenue performance trajectory. The public debt stock is growing and currently at N42 trillion.

He noted that a number of issues need to be addressed to achieve the nation’s fiscal sustainability aspiration, saying, government owned enterprises managing huge economic assets need to justify the value of assets at their disposal; and oil revenue performance should be much better given the prevailing global oil price.

He pointed out that the foreign exchange policy regime is adversely impacting the business environment and needs to be urgently addressed, saying weak private sector performance would naturally affect non-oil tax revenues.

He also said there is a need for budget reforms, adding that the budgetary appropriations must reflect urgent national economic priorities.

According to World Bank Lead Economist for Nigeria, Alex Sienaert, Nigeria’s debt servicing is expected to gulp 123.4 per cent of the federal government’s revenue in 2023.

“Debt servicing has surged over the past decade and is expected to continue increasing over the medium-term, crowding out productive spending” he stated noting that the size of public debt in Nigeria will continue to be of concern due to the rising debt service-to-revenue ratio with the situation expected to be dire in 2023.

Inflation in Nigeria rose to a 17-year high at over 21 per cent with global inflation expected to peak at 9.5 per cent in 2022 before dropping to 4.1 per cent by 2024. However as central banks across the world have adopted a tightening stance, hiking benchmark interest rates across board, it is expected that global growth will slow down in 2023.

Back home in Nigeria, the combined effect of the year-long structural challenges, policy mismatch, and negative externalities have begun to taper the recovery momentum recorded in 2021. In the third quarter of 2022, Nigeria’s GDP growth slowed to 2.3 per cent from 3.1 per cent and 3.5 per cent in the first and second quarter of 2022, respectively.

Asides global developments, Nigeria’s economy had slowed as public debt piled up amidst the exchange rates crisis.

According to analysts at Afrinvest West Africa, Nigeria’s economic managers failed to optimise its human capital potential and favorable oil prices. We expect the factors to drag because of the political transition and the time it would take policy reforms (if any) by the incoming administration to manifest gains. Hence, we estimate a 3.3 per cent. GDP growth for 2022 and project a 3.0 per cent growth for 2023.

Although fundamentals have been resilient throughout these shocks, this year’s constructive growth backdrop is not expected to persist in 2023. Fundamentals will likely deteriorate as financial conditions continue to tighten and monetary policy turns even more restrictive. The economy is also likely to enter a mild recession, with the labor market contracting and unemployment rate rising to around 5%.

“Consumers with a cushion of savings from lockdown have mostly exhausted their post-COVID excess cash and for the first time are getting hit by a broadening negative wealth effect from all assets simultaneously — whether that’s housing, bonds, equities, alternative/private investments or crypto,” said Dubravko Lakos-Bujas, Global Head of Equity Macro Research at J.P. Morgan.

“This proverbial snowball should continue to gain momentum next year as consumers and corporates more meaningfully cut discretionary spending and capital investments.”

The Nation

recessionpix

Experts seek effective fiscal-monetary policy to tackle recession

Some economists in the North-East have urged the Federal Government to formulate effective fiscal and monetary policies to prevent Nigeria from sliding into recession.

The experts including academics and financial analysts said the measure was imperative towards building a vibrant economy and sustain the gains recorded in the agriculture sector which enabled the country to withstand current global recession.

The experts spoke on global economic recession in Bauchi, Damaturu, Gombe, Maiduguri and Yola.

Recession is a period of persistent economic downturn or low level of productivity.

Dr Binta Yahaya, an economist in Damaturu, Yobe, said several factors indicated that the world is sliding into recession.

She said, “in the UK and the U.S., rapid decline in productivity and high inflation rates have been reported.

“In Nigerian, there is too much money in circulation with low productivity level.

“Inflation is characterised by low per capita Gross Domestic Product (GDP). The GDP drops for two consecutive quarters and may last for about 10 months”.

She suggested that fiscal and monetary policies which might not have immediate benefits must be formulated to control recession.

The expert said such policies and plans must envisage natural disasters such as floods and pandemics, adding that over reliance on importation must be checked.

Yahaya noted that failure to properly manage recession would lead to low wages, high unemployment rate and borrowing.

“If you look at the current debt profile and ratio in the country, it is alarming and can lead to more recessions in the future,” she warned.

Yahaya, however, noted that all economies experience recession from time to time, but what matters is the ability to adapt through effective plans and policies.

Prof. Ibrahim Hassan, Department of Economics, Modibbo Adama University (MAU), said the Russia-Ukraine war subjected many countries to recession.

According to him, the disruption in the global food and energy supply chain, low production and the loss of investors’ confidence exposed many economies to recession.

He noted that investors were withdrawing their potfolios due to the crisis which negatively  affected world economy.

“In this country; we are battling with inflation which has to do with dwindling oil revenue and lack of stable prices in the international oil market.

“Presently; there is crisis in currency market and it is responsible for the hike in prices of food commodities,” he said, stressing that proactive measures are necessary to guard against plunging the country into recession.

He urged government to improve oil and energy supply to meet increasing demands, encourage productivity and boost its revenue base.

Also, Jorome Jaimu, a lecturer, Department of Economy, Adamawa State Polytechnic, Yola, said the redesigning of the Naira note would affect the economy and escalate pressure on the Foreign Exchange (FOREX) in the country.

“This will not be good for the economy of the country at the moment.

“However, people are bringing out hoarded Naira notes printed since 2015. So, in other away it is going to help the economy,”

Similarly, Alhaji Babagana, a Senior Lecturer, Borno State University, Maiduguri, opined that insecurity and oil vandalism posed serious threat to sustainable economic growth in the country.

The trend, he said, resulted to comatose economy and investment constrained, low productivity   unemployment and poverty.

The don listed inflation; rising energy costs, FOREX scarcity, and Naira

depreciation as factors bleeding the Nigerian economy.

In the same vein, Mr Usman Dutse, Dean, School of Business, Federal Polytechnic, Bauchi, said the trend exposed Nigeria’s economy to frigile condition as major economic indicators showed negative signs.

“Unemployment rate has increased to about 33.3 per cent and inflationary rate 20.7 per cent with N41 trillion debt profile.

“Poverty level has increased between 43 and 46 per cent and Naira is trading N850 to a dollar at parallel market.

“The cost of living has gone up and cost of production is also high,” he said.

To salvage the situation, Dutse advocated a consistent economic policies, reforms and plans by the government.

“All these things are happening because of the persistent neglect or lack of consistency in implementation of policies.

“There should be serious reform and attitudinal change from individuals, organisations and government agencies,” he said.

Corroborating the stance, Dr Mustapha Kabara, a Lecturer, Department of Economics and Development Studies, Federal University Kashere (FUK), Gombe, advocated austerity measures to cut domestic spending and ensure policy continuity to avert recession in the country.

This, he said, are part of the short term measures to improve the economy by ensuring effective control of the government’s spending.

According to him, with the dwindling income as a result of the different factors affecting oil production, it became imperative for the government to take adequate financial measures to avert recession.

“It is also imperative for the government to ensure harmonisation of fiscal and monetary policies.

“Unfortunately, what we have is a vibrant and strong monetary policy but the fiscal policy is not working.

“Government should come up with a good synergy between monetary and fiscal policy so that the policy will be able to touch positively the demand and the supply side,” he said.

In the long run, Kabara said as the country prepares for election, it was desirable to ensure continuation of good policies of the incumbent administration for sustainable social and economic development.

“Inherited policy that are good can be fine-tune but not to be discarded as creating new ones is not healthy for the country, especially in an emerging economy like ours”.

He, therefore, suggested implementation of consistent policies, reforms and plans by the government.

For his part, Dr Abdulmajid Jamal, observed that Nigeria is moving towards self sustained economy in terms of food production.

According to him, with the country moving towards self-sufficiency in food production, it wasn’t going into recession anytime soon.

Jamal, who is a Chief Lecturer, Economic Department, School of General Studies, Abubakar Tatari Ali Polytechnic (ATAP), Bauchi, decried heavy dependence of the country on importation of many items.

He said: “We are lucky becasue food is excluded from our importation. In most cases, we only import few things in food items.

“The major import that consumes our money was rice and now the economy is producing enough for local consumption. The import is far less even though it’s through smuggling.

“So, the country is moving towards self-sustained economy in terms of food production but in terms of other things, we are not.

“We are moving towards food sufficiency but if care is not taken, we will lose that because the farmers are now heavily in use of herbicides, insecticides and chemicals”.

He noted that heavy application of chemicals would deteriorate soil fertility and make it barren not to produce effectively.

The practice, he said, contributed to global warming, devastating effects on the ecosystem and low production output.

He further attributed the inflation in the country to importation of raw materials for manufacturing industries due to high FOREX.

recessionpix

Experts debate probability of recession in Nigeria as global economy deteriorates

Some economic experts in Kaduna on Friday expressed divergent views about the probability of Nigeria sliding into recession.

The experts spoke against the backdrop of current global economic challenges occasioned by various factors.

Although arguing along parallel lines, the analysts, however, concurred that the state of health of the Nigerian economy was not too exciting.

They therefore urged the Federal Government and all stakeholders to redouble efforts in the struggle to move the country from its present position, to the type dreamt of by all Nigerians.

One of the respondents, Mr Yusuf Goje, a Finance Analyst, said even if there was a faint light of hope down the tunnel, there was an overriding probability of the country sliding into recession.

Goje enumerated the danger signals that influenced his stand on the matter, to include the fall in the country’s oil production, its price, and inflation.

He also observed that insecurity, natural disasters like flood, depleting foreign reserves and high debt servicing, among others, were further straining the nation’s economy and slowing down growth.

He pointed out that the country’s crude oil production had dropped from 1.24 million barrels per day in July, to 937,766 barrels per day, as at Oct. 10.

He added that the dwindling prices of oil internationally had further weakened the nation’s economic status, thereby making it highly volatile to economic shocks.

He described the development as a very serious issue considering that oil was the major source of revenue for the country.

According to him, as it is now, Nigeria does not have any form of immunity garb to economic shocks, adding that any such shocks, no matter how slight, can easily push the country into recession.

“Apart from the fall in the production and the dwindling price of oil, there is also the problem of depleting foreign reserves, with high exchange rate, in relation to the Dollar.

“Not only that, a substantial amount of our budget is going to debt servicing, just as the country is experiencing a disturbing spiral inflation.

“All these are signs that recession is imminent in Nigeria, as such the authorities concerned must fast-track remedial efforts to avert the looming danger”, he warned.

On the contrary, Dr Peter Adamu, an Economist with the Kaduna State University (KASU), said that considering the nation’s GDP growth rate, recession was not likely anytime soon.

Adamu explained that a country would have to experience negative growth for six months before it would be considered to be in recession.

“The recent data by the Nigeria Bureau of Statistics (NBS) shows a positive side of growth, which suggests that recession is not likely going to happen anytime soon”, he insisted.

Adamu, however, aligned himself with Goje’s argument on the high inflation rate of above 20 per cent, which he said had eroded the purchasing power of average Nigerians.

“This is bad because there is no deliberate fiscal policy in the country’s budget to increase the purchasing power of the people”, he added.

He equally said that flooding and insecurity were also taking their toll on the economy, stressing that the government must do something to address those challenges to avert further weakening of the economy.

“Flooding and insecurity have negatively impacted on the agriculture sector at the moment, and analysts are already predicting that there will be food insecurity, but we hope not,” he said.

On his part, Terhemba Wuam, a Professor of Economic History, KASU, pointed out that anticipated paucity of financial resources would affect the functioning of key economic sectors.

According to him, the development will expose the country to economic shocks, thereby creating a scenario of negative economic growth that may expose the country to recession.

Wuam said another serious challenge, was inflation, which had continued to escalate from year to year, thereby, diminishing the purchasing power of the Naira, and slowing down economic growth.

“It is very clear that any failure to raise the needed revenues to fully implement economic and social sector programmes will negatively affect the welfare and prosperity of Nigerians,” he said.

recessionpix

One-third of global Economy in recession says Emefiele

Governor of the Central Bank of Nigeria (CBN), Mr Godwin Emefiele, says about one-third of the world economy is currently in recession due to the damaging effects of COVID-19 pandemic and the ongoing war between Russia and Ukraine.

Emefiele made this known in Abuja on Monday while addressing Foreign Affairs and Aviation stakeholders at a meeting with the House of Representatives Speaker, Femi Gbajabiamila.

He said CBN was working outside the box to mop up foreign exchange and strengthen the Naira and by extension the economy through what he called the RT 200 policy.

According to him, the RT 200 is the policy focusing on the repatriation rates of non-oil exports proceeds into the Nigerian economy, which is almost a billion dollar in the 3rd quarter of 2022.

“What is happening is a global challenge, as I speak, I can say that the global outlook today is darkening due to deepening global slowdown.”

He said the global community was facing rising incidents of unemployment, adding that most of the countries of the world are facing rising inflation.

He said in 2022 alone, the USA happened to raise rates almost by 3.75 per cent, saying it had created some serious inflation pressures and depreciation on the currencies of other countries.

“From the CBN since February this year, we introduced the RT 200 programme in order to encourage repatriation of Forex proceeds from exporters of non-oil export products.

“We are gratified that the programme is doing well. When we started it, the first six weeks in February and March, we were only able to see repatriation, we paid rebates on repatriation of about $62 million.

He said “in the second quarter, we saw an astronomical improvement to $622 million in exports proceeds of non-oil. For the third quarter, we have seen almost close to a billion dollars,” Emefiele said.

Responding to the issue of $700 million trapped funds of foreign airlines, Emefiele said $265 million had been earmarked for disbursement to the foreign airlines through their various banks.

The Speaker, however, said the trapped funds of foreign airlines were giving the House a great course for concern, hence the need for the forum to find lasting solutions bearing in mind the prevailing economic imperatives.

Gbajabiamila said the principle of reciprocity required that Nigerian carriers were also allowed to fly Into countries whose airlines had a huge market in Nigeria.

He appealed to the CBN governor to seek ways of raising Forex for the airlines, saying that allowing Nigerian Airlines to operate many of the international routes will reduce the incident of trapped funds in the future.

NACCIMA meaning - what does NACCIMA stand for?

NACCIMA tasks Nigeria on urgent actions to avoid recession

,

The Nigerian Association of Chamber of Commerce, Industry, Mines and Agriculture (NACCIMA) has urged the Federal Government to address the necessary economic parameters to prevent Nigeria from slipping into recession.

Mr John Udeagbala, National President, NACCIMA, gave the charge on Friday in Lagos, via a report from the association’s third quarter economic briefing.

Udeagbala said the advice was imperative, following the possible false sense of security from the 3.11 per cent economic growth recorded in this year’s first quarter.

He said that the statistics might not have fully captured the supply and value chain disruptions brought about by the COVID-19 pandemic and the Russia-Ukraine conflict.

“While other stakeholders might see this as the leveling out of economic growth from the COVID-19 pandemic, the private sector is concerned that external shocks brought about by the Russia-Ukraine conflict, have put immense pressure on the productive capacity of our economy.

“We therefore, urge once again, the implementation of government policy that places priority on improving domestic production, otherwise face a likely state of economic recession by the end of 2022,” he said.

On inflation, the NACCIMA president said that the decision of the Monetary Policy Committee of the Central Bank of Nigeria (CBN) to raise the Monetary Policy Rate from 13 to 14 per cent was welcomed.

He, however, stated that the move was majorly an inflation management measure, and did not address the root cause of the inflation such as rising food prices, devaluation of the Naira, and high cost of energy and transportation.

“Nevertheless, we look forward to the continued implementation of the Central Bank’s intervention in the agriculture, manufacturing, energy, healthcare and export sectors, which will ensure some improvement in food and energy supply,” he said.

Addressing the country’s power situation, Udeagbala called on the government to renew its focus on implementing policies to ensure Nigeria’s energy sufficiency to become a net exporter of petroleum products and eventually, electricity.

He also called for urgent action in fixing domestic refineries, or the implementation of the Petroleum Industry Act, which is currently hobbled by the petroleum subsidy regime.

“If we estimate that Nigeria has spent an average of N2trillion a year for the past 16 years on petroleum subsidy, it is time to ask ourselves, how many refineries could we have built in that time?

“As we acknowledge the economic impact of the sudden removal of petroleum subsidy, we advocate a gradual removal with attendant policy initiatives to cushion the effect on the economy.

“We can start by taking a look at other developing countries in this space, such as Trinidad and Tobago, who never had to carry out Turn Around Maintenance on their only refinery, or revisit crude oil to petroleum product swap arrangements,” he said.

Addressing unemployment, Udeagbala lauded the government’s innovative policies such as, approved tax reliefs and other incentives for startups to harness Nigeria’s digital innovation and entrepreneurship ecosystem.

He urged the government to further consider the security implications of the high unemployment rate of 33 per cent, and do more to address the regular faceoff with the Academic Staff Union of Universities (ASUU).

He emphasised the need for a foundation of quality education as a basis to ensure the employability of the Nigerian youth.

“The regular face-off between the Federal Government and ASUU, leading to incessant strikes, has gradually altered the educational systems in the country, limiting the number of productive graduates available.

“NACCIMA calls on the Federal Government to resolve such pending issues with a sense of urgency, even as we hope that the two-week ultimatum given to the Minister of Education by President Muhammadu Buhari will yield a lasting result,” he said.

On the country’s public debt, Udeagbala counselled all levels of government to consider other sources of funding, such as leveraging on public-private partnerships for tax credits spread over time.

He said the advice was very necessary because Nigeria’s current debt levels were unsustainable, as the International Monetary Fund (IMF), projects that by 2026, all of Nigeria’s revenue would go to servicing debt.

“The economy cannot run based on increasing the number of taxes borne by the private sector, as we have witnessed by recent laws passed by the National Assembly.

“We advocate policies that systematically and consistently increase the tax base in terms of the volume of production or the number of taxpayers.

“We also counsel that the executive and legislature make concerted efforts to reduce the cost of governance as a way to reduce the pressure to run a government based on debt,” he said.

telecoms-master

Telecom, others take Nigeria out of recession

0

Tanko Mohammed

The impressive performance of telecommunications industry lifted Nigeria out of recession in the fourth quarter (Q4) of 2020.

The industry, regulated by the Nigerian Communications Commission (NCC), contributed 12.45 per cent to the country’s Gross Domestic Product (GDP).

The Director of Public Affairs (DPA), NCC, Dr Ikechukwu Adinde, made this known in Abuja and said the latest data released by the National Bureau of Statistics (NBS) indicated telecommunications and Information Services under Information and Communication grew by 17.64 per cent in Q4 2020 from 17.36 per cent in Q3 2020 and 10.26 per cent in Q4 2019.

He said that in the latest NBS report, agriculture, industries, and services sector, under which telecommunications is categorised, contributed 26.95 per cent, 18.77 per cent, and 54.28 per cent respectively.

“This is a pointer to the fact that telecommunications, trade, services and crop production are the main drivers of Nigeria’s exit from recession.

“In specific terms, NBS report showed that largest sub-sectors in Q4 2020 are crop production at 3.68 per cent, crude petroleum and natural gas at 8.2 percent, trade at 14.9 per cent,

“Telecommunications and information services at 12.45 per cent, and real estate at 5.7 per cent, the report says.

He said that the telecommunications sector had, in the last five years been a major driver of the digital economy agenda of the Federal Government.

The DPA said that it had continued to provide the needed digital sinews that support the economy, especially during the COVID-19 pandemic and its attendant restriction period.

He explained that since the outbreak of the pandemic, government institutions, businesses and individuals had relied heavily on telecoms services to carry out their daily operations and official routines.

He said that in response to the increased demand, the Commission put a number of regulatory measures in place to ensure seamless access by Nigerians to telecommunication services.

He, however, said that it would also protect against any adverse impact on the quality of service enjoyed by consumers.

“The steady growth of the telecoms sector over the years with its pervasive positive impact on all other sectors of the economy in terms of increased automation of processes and digital transformation in service delivery has been remarkable.

“The growth trend since 2015 has reawakened hope that the economic diversification dreams of the country may finally be a reality.

“The sector will continues to energise significant economic activities in the services sector of the economy.

He also explained that telecoms investment grew from about $38 billion in 2015 to over $70 billion currently, under the leadership of its Executive Vice-Chairman, Prof. Umar Danbatta

Adinde informed that broadband penetration increased from 6 per cent in 2015 to 45.02 per cent at December, 2020, indicating that 85.9 million Nigerians were now connected on 3G and 4G networks.

He said that it provides enhanced high-speed Internet that had continued to boost efficiency and increase productivity across the economic spectrum.

According to him, recent statistics also indicate that between 2015 and December, 2020, active voice subscriptions have increased from 151 million to 204.6 million, with teledensity standing at 107.18 per cent.

“Basic active internet subscriptions grew from 90 million to 154.3 million during the period,” he said.

He assured that the commission was committed to its culture of quality regulation of the telecommunications industry that ensures a stable and robust sector.

It also drives the digital economy agenda of the Federal Government and ultimately leads in the growth of the country’s GDP.

recessionpix

Hard work, planning exit Nigeria from recession

0

Anthony Areh

The Minister of Information and Culture, Alhaji Lai Mohammed, has Nigeria did not exit the latest recession by accident, but with “hardwork, foresight and deliberate planning by government’’.

Nigeria slipped into recession for the second time in four years in the midst of COVID-19 after the country’s Gross Domestic Product (GDP) declined for the second consecutive quarter in 2020 (Q2 and Q3)

The economy, however, came out of the recession in the fourth quarter as growth in agriculture and telecommunications offset a sharp drop in oil production.

The GDP grew 0.11 per cent in the three months through December from a year earlier, compared with a decline of 3.6 per cent in the third quarter as announced by the National Bureau of Statistics.

The minister stated this on Saturday in Abuja that exiting the recession occasioned by COVID-19 pandemic was not accidental.

He recalled that President Muhammadu Buhari, last year, set up the Economic Sustainability Committee, which came up with Economic Sustainability Plans to mitigate the effects of the COVID-19.

“When you talk of GDP, it is the total sum of the value of your services and goods. Clearly if there is a lockdown, you cannot go to work, and there is bound to be a recession.

“What we did was that, we pumped money into the system by creating jobs.

“The first is the1000 jobs through public works given to each local government and we have 774 Local Government Councils.

“So, we have 774,000 workforce engaged on public works like road and this goes a lot in boosting the economy,’’ he said.

Mohammed said government equally introduced the Survival Fund which the Federal Ministry of Industry, Trade and Investment supervised to prevent loss of jobs and create new ones.

The Survival Fund according to the minister was to ensure that the Small and Medium Scale Enterprises did not collapse.

“With Survival Fund, we asked companies that employ between five and fifty people and we gave them payroll support for about three months.

“About 500,000 MSMEs benefitted from this programme,’’ he said.

The minister said the government also gave One-Off-Grant whereby N10,000 was given each to 233,000 artisans, hairdressers, mechanics and so on.

He said some other programmes introduced by government included Conditional Cash Transfer with 3.6 million beneficiaries as well as N-POWER, TRADERMONI, FARMERMONI, MARKETMONI which reaches millions of people.

Besides the survival plans and economic sustainability plans, he said the government is investing heavily on infrastructure and employing more people.

The minister said that the government is doing more with less resources adding that the effects of the pandemic was not peculiar to the country but a global affair.

He said no fewer than 40 million Americans are out jobs and some cannot pay their mortgage due to the pandemic.

“In Nigeria, our major sources of revenue are crude oil and taxation.

“Crude oil is just inching up but we also suffered a decrease in production from 1.72 million barrel a day to 1.67 million barrel daily losing about half a million barrel daily.

“In the last 12 months, officers from grade level 12 and below are working from home and this has a significant effect on the economy.

“In spite of these, we still have to contend with other major challenges like insurgency, banditry, kidnapping therefore we must understand and admit that the country is going through a lot,’’ he said.

The minister also identified the challenge of population explosion explaining that being a delicate issue to legislate on, government can only deploy advocacy for its control.

Nigeria’s recovery from recession good for West Africa

Nigeria recovers from recession as GDP grows by 0.11%

, 0

By Tanko Mohammed

The National Bureau of Statistics (NBS), says Nigeria’s GDP grew by 0.11 per cent in Quarter Four (Q4) 2020, from the 6.11 per cent contraction in Q3, signaling a gradual recovery from recession.

The NBS said this in the Nigerian Gross Domestic Product (GDP) Report (Q4 and Full Year 2020) released on its website on Thursday in Abuja.

The bureau said this represented the first positive quarterly growth in the last three quarters.

“Though weak, the positive growth reflects the gradual return of economic activities following the easing of restricted movements and limited local and international commercial activities in the preceding quarters.

“As a result, while the Q4 2020 growth rate was lower than growth rate recorded the previous year by –2.44 per cent, it was higher by 3.74 per cent compared to Q3 2020.

“On a quarter-on-quarter basis, real GDP growth was 9.68 per cent indicating a second positive consecutive quarter-on-quarter real growth rate in 2020, after two negative quarters,” the report noted.

The NBS said overall, in 2020, the annual growth of real GDP was estimated at –1.92 per cent, a decline of –4.20 per cent when compared to the 2.27 per cent recorded in 2019.

It said in the quarter under review, aggregate GDP stood at N43.564 billion in nominal terms.

This performance, the bureau said was higher when compared to Q4 2019, which recorded a GDP aggregate of N39.577 billion, representing a year-on-year nominal growth rate of 10.07 per cent.

The NBS classified the Nigerian economy into the oil and non-oil sectors.

For the oil sector, in Q4, an average daily oil production of 1.56 million barrels per day (mbpd) was recorded.

This was lower than the daily average production of 2.00 mbpd recorded in the same quarter of 2019 by -0.44 mbpd and Q3 2020 by –0.11 mbpd.

It added that real growth of the oil sector was –19.76 per cent (year-on-year) in Q4 indicating a decrease by –26.12 per cent relative to the rate recorded in the corresponding quarter of 2019.

“Growth decreased by –5.87 per cent when compared to Q3 2020, while quarter-on-quarter, the oil sector recorded a growth rate of –26.27 per cent in Q4.

“For 2020, the oil sector grew at –8.89 per cent compared to 4.59 per cent in 2019,” the report stated.

It added that the oil sector contributed 5.87 per cent to total real GDP in Q4, down from the corresponding period of 2019 and the preceding quarter, where it contributed 7.32 per cent and 8.73 per cent respectively.

The nation’s non-oil sector grew by 1.69 per cent in real terms in Q4 2020, slower than the 2.26 per cent recorded in the corresponding quarter of 2019, the NBS said.

It, however, said it was better than the –2.51 per cent growth rate recorded in the preceding quarter.

The NBS added that for the full year of 2020, the non-oil sector grew by –1.25 per cent compared to 2.06 per cent in 2019.

It said said growth in the sector was driven by information and communication (Telecommunications and Broadcasting).

Other drivers were agriculture (crop production), real estate, manufacturing (food, beverage and tobacco), mining and quarrying (quarrying and other minerals) and construction, accounting for positive GDP.

“In real terms, the non-oil sector contributed 94.13 per cent to the nation’s GDP in Q4 2020, higher than the share recorded in Q4 2019 (92.68 per cent) and Q3 2020 (91.27 per cent).

“For 2020, the non-oil sector contributed 91.84 per cent to real GDP, higher than 91.22 per cent recorded in 2019,” the NBS report said.

The bureau explained that Quarterly National Accounts (QNA) were 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 an economy on a more frequent basis than Annual National Accounts (ANA).

In providing a reasonable level of detailed information of the economy, QNA allows the government to regularly access, analyse and monitor economic developments.

recessionpix

UK’s economy shrinks but might avoid double-dip recession

, 0

By Reuters

Britain’s economy shrank in November as it went into a new lockdown.

But the decline was smaller than expected as businesses adjusted to social distancing and schools remained open, making a double-dip recession less likely.

The 2.6 per cent monthly decline in Friday’s official data was the first since April but less than half the average contraction forecast in a Reuters poll of economists.

The scale was also far smaller than April’s 18.8 per cent collapse during Britain’s first lockdown.

“Overall, the growing immunity to lockdowns suggests that the economy is not quite as sick as we thought,’’ said Paul Dales, chief UK economist at Capital Economics.

The world’s sixth-biggest economy shrank more than its peers in the first half of 2020 and is now 8.5 per cent smaller than it was in February, before the start of the pandemic.

A third, stricter lockdown that began this month is likely to cause Britain’s economy to contract in the first quarter of 2021 when many businesses are facing post-Brexit barriers to trade with the European Union.

“Its clear things will get harder before they get better and today’s figures highlight the scale of the challenge we face,’’ Finance Minister Rishi Sunak said.

But Britain’s roll-out of vaccines – which has been faster than elsewhere in Europe – was a reason to be hopeful, he added.

Several economists warned that Britain remained at risk of a renewed recession, with the economy likely to shrink in both the final quarter of 2020 and the first three months of 2021.

But others thought a contraction might be avoided in the fourth quarter because November’s restrictions were lifted in December.

BoE Governor Andrew Bailey said this week that it was too soon to say if further stimulus would be needed after the central bank ramped up its bond-buying programme to almost 900 billion pounds ($1.23 trillion) in November.

Friday’s data showed Britain’s economy in November was 8.9 per cent smaller than a year earlier, compared with 6.8 per cent smaller in October.

In April, when many businesses closed temporarily, output was a record 25 per cent below its year-ago level.

November’s downturn was led by services, where output fell 3.4 per cent from October as pubs, restaurants, non-essential shops and many other consumer services had to shut.

Manufacturing grew by 0.7 per cent and construction by 1.9 per cent.

Part of the scale of the damage to Britain’s economy in 2020 reflects a decision by the ONS to take account of disruption to routine medical care and schooling caused by COVID-19, an approach which not all countries’ statistics agencies have taken.

The ONS said this was less of a drag on GDP in November.

Load More