BUSINESS DAY
Nigeria’s growth rate slowed to 2.51 percent in the second quarter of 2023 compared to the same period of last year as job-creating sectors struggled with headwinds, adding to the pressure on President Bola Tinubu to reform the economy.
The economic growth data, which marks the 11th consecutive quarter of growth, is the first release since Tinubu embarked on reforms aimed at boosting output, which has been sluggish for several years.
“This growth rate is lower than the 3.54 percent recorded in the second quarter of 2022 and may be attributed to the challenging economic conditions being experienced,” the National Bureau of Statistics (NBS) said on Friday.
The Q2 growth rate is however higher than the 2.31 percent recorded in the previous quarter, when the country experienced an unprecedented cash crunch that dampened business activity.
“An all-out effort is needed to diversify Nigeria’s fiscal base away from oil. In the context of an economic downturn, raising revenue will be difficult. But fiscal reforms, especially creating a more stable revenue base, will be necessary for long-term sustainability,” a senior chief economist said in response to questions.
“Priority expenditure will need to be protected. While capital expenditure boosts growth, it is necessary to reduce the amount of recurrent expenditure,” he added.
Analysts at CardinalStone, a multi-asset investment management firm, said the Q2 GDP outturn was lower than the consensus estimates of 2.8 percent year on year due to a faster-than-expected contraction in the oil sector.
The country’s oil activities dipped by 13.4 percent year on year, as oil production of 1.22 million barrels per day touched the second-lowest level since 2013.
Further findings showed Nigeria’s oil sector contributed 5.34 percent to the total real GDP in Q2, down from 6.33 percent in the corresponding period of 2022 and 6.21 percent in the preceding quarter.
Niyi Awodeyi, CEO of Subterra Energy Resources Limited, cited the lack of strategy on the part of politicians as a crucial element for “this desolate economic situation”.
“It’s a fact that the government itself has not developed a vision for energy security,” Awodeyi said.
Tinubu, like his predecessor Muhammadu Buhari, appears poised to head the Ministry of Petroleum Resources.
“The last eight years under Buhari as the Minister of Petroleum left much to be desired. The mandates in the PIA for the Minister of Petroleum are very tasking and the responsibilities are daunting,” Wunmi Iledare, a renowned energy expert, said.
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