By Adefolarin A. Olamilekan
Successive Nigerian governments over the years have always considered economic diversification with all formal and informal action plans, but with little impacts on the overall economy.
Regrettably, government poor proactiveness, not matching words with action and abandoning of the none oil sector to depend on crude oil for its revenue. Even when the Nigeria’s revenue from the so called oil sector is tragically embattled in a nose dive rate. From the incidences of price shock on the crude oil in the international market, all but depicts a situation in a steady and seemingly inexorable drift into a revenue challenge for the Nigerian state.
Interestingly, the Nigerian state is struggling to get it revenues improved, meanwhile, Nigerians are contending with cost push inflation leading to sky rocket foods, transportation, fuel, rents and service charges. The Current economy reality of present day Nigeria depict a phenomenon that has fast degenerated into widening inequality, widespread poverty, unemployment and underemployment. To say the least, contemporary trajectories and dynamics of crimes and criminality in Nigeria reveal that the poor state of the economy has a lot to do with afore mention challenges.
On Sunday, 22nd of May, 2021 the National Bureau of Statistics (NBS), released the Gross Domestic Product report for the first quarter 2021.According to the statistics bureau in the report, Nigeria’s Gross Domestic Product (GDP) grew by 0.51% (year-on-year) in real terms in the first quarter of 2021, marking two consecutive quarters of growth following the negative growth rates recorded in the second and third quarters of 2020.
The Bureau also noted that the “growth in the non-oil sector that was driven mainly by the none oil sector that includes Information and Communication (Telecommunication),Agriculture (Crop Production); Manufacturing (Food, Beverage & Tobacco); Real Estate; Construction and Human Health & Social Services.
Convincingly, the Non-oil sector accounted for 90.75% of aggregate GDP in the first quarter of 2021, higher than its share in the first quarter of 2020 which was 90.50%, but lower than 94.13% recorded in the fourth quarter of 2020. Agriculture grew at 2.28% y/y in Q1 2021, which is close to its trend growth rate, but lower than the 3.42% y/y recorded in Q4 2020. Trade contracted at 2.43% y/y in Q1 2021, but this is better than the 3.20% y/y/ contraction in Q4 2020. Telecoms grew at 7.69% y/y in Q1 2021, but this was much lower than the 17.64% y/y growth in Q4 2020. Manufacturing grew at 3.40% y/y in Q1 2021 which is much better than the 1.51% contraction in Q4 2020.
Real Estate grew at 1.77% which is not quite as good at the 2.81% y/y growth recorded in Q4 2020.
Furthermore, the NBS stated that the Q1 2021 growth rate was slower than the 1.87 per cent growth rate recorded in Q1 2020 but higher than 0.11 per cent recorded in Q4 2020, indicative of a slow, but continuous recovery. Nevertheless, quarter on quarter, real GDP grew at -13.93 per cent in Q1 2021 compared to Q4 2020, reflecting a generally slower pace of economic activities at the start of the year. It is worthy of note that the ICT sector grew by 6.47 per cent in Q1 2021, making it the fastest-growing significant sector of the Nigerian economy amongst others.
However, the report stated that the oil sector recorded a real GDP growth rate of –2.21 per cent (year-on-year) in Q1 2021 indicating a decrease of –7.27 per cent points relative to the growth rate recorded in the corresponding quarter of 2020 (5.06%). Compared to Q4 2020 which recorded –19.76% growth rates, growth in Q1 2021 was higher by 17.55% points. Quarter-on-quarter, the oil sector recorded a growth rate of 35.65 per cent in Q1 2021. In real terms of contribution to aggregate GDP, the report noted that the Oil sector accounted for 9.25 per cent of aggregate real GDP in Q1 2021, slightly lower than 9.5 per cent recorded in the corresponding period of 2020 but higher than in the preceding quarter, where it contributed 5.87 per cent.
From the GDP Q1 2021 data, it shows that if more effort is channelled towards non-oil revenue we will be able to get maximum returns. The country needs to start shifting to none oil sector in line with national aspirations to diversify its economy.
Moreso, we must strive to reduce our dependence on oil for the overall national revenue as it stands today. Nigeria presently is facing decline in oil revenues and we must faster away from the mono-culture economy by the more reason to develop capability in none oil sectors.
It is a wake-up call for the Nigerian state to do the needful. Because there are ominous signs of unsustainability or heavily depending on the crude oil dollar revenue.
So, it stands a reason that the national assembly and state houses of assembly task themselves on this imperative national economy agenda. Critically, the principal practical solution that flows from economy diversification must go beyond policy statement and rhetoric coming from government officials, conferences and summits.
Arguably, it is important and a requirement that economy diversification must be gender sensitive and inclusive.
Adefolarin A. Olamilekan
Political Economist and Development Researcher
Email: adefolarin77@gmail.com
Tel: 08073814436, 08107407870
