Nigeria’s economy slows down as Buhari's diversification policy struggles
The struggling in the non-oil sector shows a greater concern for President Muhammadu Buhari's administration who has been trying to diversify the economy away from the oil sector.
The National Bureau of Statistics said on Monday, May 21, 2018, that the economy grew 1.95% in the first quarter of 2018, a slight downturn from 2.11% year-on-year in the fourth quarter of 2017.
For the first time since the country came out of recession in 2017, non-oil sector struggled as the economy grew by 1.95% in the first quarter lifted by the oil sector.
Peter Moses, research analyst at Cordros capital told Business Insider Sub-Saharan Africa that: “The quest for diversification has been more prominent on paper than in reality. “The data largely corroborates our view that recovery in the non-oil sector remains fragile, considering particularly that the continued rise in unemployment rate is yet to normalize. Plus, the vulnerability of the overall economy to external shocks and domestic crude oil production turbulence is further brought to the fore.”
“More so, the fixation on the agriculture sector as the principal engine of the diversification drive is concerning, considering (1) unresolved challenges, including herdsmen-farmers clashes and Boko Haram insurgents, in the sector, and (2) the lingering weakness of the agriculture value chain, particularly processing.”
Moses said the government should stop confusing intensified support for certain activities in the agriculture sector with economic diversification via the instrumentality of agricultural entrepreneurship – which can only survive on sound industrial development.
The oil sector
The sector recorded a real growth of 14.77% (year-on-year) in Q1 2018. This represents an increase of 30.37% points relative to rate recorded in the corresponding quarter of 2017.
The oil sector grew by 13.24% between January to March 2018, the Bureau said.
With the first three months of 2018, the nation recorded an average daily oil production of 2 million barrels per day (mbpd), higher than the daily average production recorded in the fourth quarter of 2017 by 0.05 mbpd and 0.25 mbpd higher than 2017 first quarter production which recorded an output of 1.75mbpd.
The oil sector contributed 9.61% to total real GDP in Q1 2018, up from 8.53% and 7.35% recorded in the Q1 2017 and Q4 2017, respectively.
The non-oil sector
The non-oil sector, driven mainly by agriculture (crop production); other drivers were financial institutions and insurance, manufacturing, transportation and storage and information and communication, grew by 0.76% in real terms in the first quarter of 2018, according to the latest figures.
This is higher by 0.04% point compared to the rate recorded same quarter of 2017 and 0.70% point lower than the fourth quarter of 2017.
In real terms, the non-oil sector contributed 90.39% to the nation’s GDP, lower than 91.47% recorded in the first quarter of 2017 and 92.65% recorded in the fourth quarter of 2017.
Last week, the Nigeria parliament passed a record budget of N9.120 trillion from N8.612 trillion submitted by the president.
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