Agric, telecoms sectors slow Nigeria’s economic growth — takeaways from Q2 2021 GDP report

Two key sectors of the Nigerian economy recorded sluggish growth in the second quarter of 2021 – all thanks to insecurity and regulatory policy on NIN/SIM linkage enrolment.

The agricultural sector – which is one of the key sub-sectors in the non-sector – recorded 1.30% (year-on-year) percent growth. This is a decrease of 0.28 percent points from the corresponding period of 2020. This is largely due to various security issues in the country, such as the Jos north crisis, Zamfara humanitarian crisis, farmers/herders and bandit attacks.

The second sector – the information and communication (Telecommunications) – also slowed down performance within the period. The sub-sector continued on a single-digit growth rate at 5.55 percent lower than 6.47 percent (Q1).

TheCable had reported how the ban on sales of SIM cards and NIN/SIM linkages stifled the growth of the telecoms sector in Q1 2021. The singular policy cost four major mobile telecom firms over 12 million subscribers.

The effect of the policy is still in place, and the suspension of Twitter, a micro-blogging site, in June, is expected to have effect on the sector in the coming quarter.

FIRST STRONG PERFORMANCE IN 6 YRS OF BUHARI GOVT

Nigerian economy recorded strong growth in the second quarter of 2021 for the first time since the inception of President Muhammadu Buhari-led government.

According to the National Bureau of Statistics (NBS), the economy advanced by 5 percent year-on-year in the Q2 of 2021, faster than a 0.51% rise in the prior period.

The last time the economy recorded a strong performance was in 2014 towards the end of the government of former President Goodluck Jonathan.

The steady recovery observed since the end of 2020, with the gradual return of commercial activity as well as local and international travel, accounted for the significant increase in growth performance relative to the second quarter of 2020 when nationwide restrictions took effect.

The growth is also supported by a base-year effect of Q2 2020 when GDP contracted by 6.1 percent due to COVID-19 pandemic.

On a quarter-on-quarter basis, the economy contracted by 0.8 percent.

In monetary terms, the real GDP stood at N16.90 trillion in the second quarter, lower than the N16.96 trillion recorded in the first quarter. The real GDP is also yet to recover from the pre-pandemic level of N17.08 trillion in Q2 2019.

OIL ECONOMY CONTRACTS – contributed 7.42% to the economy

The oil economy continues to contracts in 2021, recording a 12.65 percent dip (year-on-year) in the second quarter – indicating a decrease of –6.02% points relative to the growth rate recorded in the corresponding quarter of 2020.

In the last quarter of 2020, the oil sector posted a 5.06 percent growth. This is not far fetched as oil production slowed to the lowest since Q3 of 2016, with average daily oil production at 1.61 million barrels per day (mbpd) in Q2 2021.

The figure is 0.19mbpd lower than the average daily production of 1.81mbpd recorded in the same quarter of 2020 and 0.10mbpd lower than the 1.72mbpd recorded in the first quarter of 2021.

Globally, the price of crude is also waving around $60 per barrel even as OPEC+ decided to increase production quota for members.

The oil sector contributed 7.42 percent to total GDP during the review period, down from 9.25 percent Q1 2021.

NON-OIL ECONOMY GREW 6.74% – contributed 92.58% to the economy

The non-oil sector grew by 6.74 percent in the second quarter driven by growth in trade, information and communication (Telecommunication), transportation (Road Transport), electricity, agriculture (Crop Production) and manufacturing (Food, Beverage & Tobacco). This speaks to the ease in movement and recovery business and economic activity after COVID-19 social distancing and induced lockdown in 2020.

The Q2 2021 growth rate was higher by 12.80 percent points compared to the rate recorded in the same quarter of 2020 and 5.95 percent points higher than the first quarter of 2021, the NBS said.

According to NBS, the non-oil sector accounted for 92.58 percent of aggregate GDP in the second quarter of 2021, higher than its share in the first quarter of 2021 at 90.75 percent.

It was lower than 94.13 percent recorded in the fourth quarter of 2020.

SERVICES PULLED SURPRISE

The services sector recorded its strongest performance in more than a decade. It grew faster by 9.27 percent year-on-year basis from contradictions of 0.39 percent in the first quarter and 6.78 percent in Q2 2020.