Re­ces­sion, Sta­tis­tics and Or­di­nary Nige­ri­ans

Sunday Trust - - PAGE 3 COMMENT -

Last week, the Na­tional Bu­reau of Sta­tis­tics (NBS) de­liv­ered the coun­try from a year-long hi­ber­na­tion when it de­clared that the omi­nous word ‘re­ces­sion’ has been deleted from our eco­nomic predica­ment. Dr Yemi Kale, the Statis­ti­cian-Gen­eral of the Fed­er­a­tion and Chief Ex­ec­u­tive of NBS, gave the sooth­ing news when he said Nige­ria’s Gross Do­mes­tic Prod­uct (GDP) had grown by 0.55% in the sec­ond quar­ter of 2017, com­ing out of the neg­a­tive ag­gre­gate out­put that per­vaded the econ­omy in 2016 and crawled into the first quar­ter of 2017. The GDP is ar­rived at by cal­cu­lat­ing the ag­gre­gate out­put of the coun­try’s goods and ser­vices, di­vided by pop­u­la­tion over a pe­riod of time, in this case, on a quar­terly ba­sis.

Dr Kale stated that in ar­riv­ing at the cur­rent out-of-the-woods GDP, the NBS took into ac­count the prod­ucts and ser­vices of 42 eco­nomic ac­tiv­i­ties. He added that growth in the pe­tro­leum, agri­cul­ture, bank­ing and in­sur­ance, elec­tric­ity, gas, steam, and air con­di­tion­ing sup­ply and other ser­vices, which on the ag­gre­gate grew by 0.45 per­cent, helped to drag the econ­omy out of re­ces­sion.

Ap­par­ently, im­proved crude oil ex­port and the rel­a­tively higher oil prices in the in­ter­na­tional mar­ket were the ve­hi­cles that trans­ported the econ­omy out of the dan­ger­ous ter­rain. In the quar­ter con­sid­ered for the sta­tis­ti­cal anal­y­sis, crude oil ex­port av­er­aged 1.84mil­lion bar­rels per day, which is put at 0.15 mil­lion bar­rels per day higher than the daily av­er­age pro­duc­tion recorded in the first quar­ter. Also, the re­duc­tion in the ac­tiv­i­ties of van­dals in the Niger Delta has made it pos­si­ble for Nige­ria to im­prove its ef­forts to meet its OPEC crude oil ex­port quota. No doubt, this has been achieved due to on­go­ing en­gage­ments be­tween gov­ern­ment and stake­hold­ers in the Niger Delta re­gion. We, there­fore, com­mend gov­ern­ment for en­gag­ing in mea­sures that have calmed frayed nerves and curbed, to some ex­tent, the crim­i­nal sab­o­tage of our oil pipe­lines.

The Statis­ti­cian-Gen­eral was quite frank about the in­ter­pre­ta­tion of the fig­ures reeled out by the NBS. Dr Kale ad­mit­ted that it was an av­er­age of the per­for­mances of the 42 eco­nomic ac­tiv­i­ties. The na­ture of sta­tis­tics is that it could sum­mar­ily present the global pic­ture of eco­nomic ac­tiv­i­ties, but the true pic­ture - beau­ti­ful or ugly - is ap­pre­ci­ated by look­ing closely at the rel­a­tive per­for­mance of each of the eco­nomic ac­tiv­i­ties. He re­vealed that while the agri­cul­ture sec­tor grew, the man­u­fac­tur­ing sec­tor con­tracted by -10.88 per cent, mo­tor ve­hi­cle (-19.72 per cent), elec­tri­cal and elec­tron­ics (-1.7 per cent) and chem­i­cal and phar­ma­ceu­ti­cal prod­ucts de­clined by 0.98 per cent.

It is for this rea­son that many Nige­ri­ans would not feel the im­pact of the eco­nomic growth. As Kale ex­plained, the GDP growth will be ap­pre­ci­ated by those in the sec­tors that did very well, es­pe­cially the pe­tro­leum and agri­cul­tural sec­tors. It is note­wor­thy that the bumper har­vest in the agri­cul­ture sec­tor was at­tained due to the whole-hearted at­ten­tion gov­ern­ment gave to it. Rice pro­duc­tion, es­pe­cially, was pow­ered by di­verse in­cen­tives, in­clud­ing the An­chor Bor­row­ers Scheme (ABS). Gov­ern­ment would have to build a more solid struc­ture on the foun­da­tion it has laid in the past year if this kind of cheer­ing re­sult is to be posted in sub­se­quent quar­ters.

For gov­ern­ment to claim a break­through in agri­cul­tural pro­duc­tion, the cur­rent per­for­mance should be sus­tained, and even sur­passed, over a pe­riod of five years, re­gard­less of the va­garies in the sec­tor. We should not beat our ch­est for a two-quar­ter growth in agri­cul­ture, be­cause un­less we con­sol­i­date, the hope raised in the out­go­ing year would be re­placed by a dev­as­tat­ing dis­ap­point­ment in un­em­ploy­ment, poverty and gen­eral re­ver­sal of for­tune for those who have heav­ily in­vested in agri­cul­ture. For in­stance, the pric­ing pol­icy on rice and rice farm­ers’ ex­po­sure to com­pe­ti­tion from Asia ren­der vul­ner­a­ble the achieve­ments recorded in the sec­tor. We need an ef­fi­cient pric­ing pol­icy, a pro­duce mar­ket­ing board where farm­ers could sell their crops at prof­itably. A sit­u­a­tion in which farm­ers are aban­doned with their gluts in har­vest, such that shy­lock mid­dle­men mop them up at less-than-pro­duc­tion-cost, is dis­as­trous and dis­cour­ag­ing. For the sec­tor to grow, more hands must re­turn to farm, and for them to do so, gov­ern­ment should pro­tect farm­ers from avoid­able losses.

Fur­ther­more, gov­ern­ment should en­gage in strate­gic ef­forts to re­vive mori­bund com­pa­nies and to boost epilep­tic ones in the man­u­fac­tur­ing sec­tor. This could be achieved, first, by sta­bi­liz­ing the power sec­tor. It is very ap­par­ent that gov­ern­ment has not got the right ap­proach to sta­ble elec­tric­ity in Nige­ria as all agen­cies set up to mod­ify and raise it from col­lapse churn out a litany of ex­cuses to jus­tify the frus­trat­ing state of the power sec­tor. With­out ef­fec­tive and ef­fi­cient sup­ply of elec­tric­ity, man­u­fac­tur­ing com­pa­nies would pro­duce their goods at a very high cost, and pass same down to the un­for­tu­nate fi­nal con­sumers. That is why, faced with cheaper Chi­nese prod­ucts, lo­cally man­u­fac­tured goods fail to win the Naira war in the Nige­rian mar­ket.

Re­lated to the power sit­u­a­tion is the in­ter­est rate on loans, which has re­mained very pro­hib­i­tive. The two-digit in­ter­est rate on loans is not good for busi­ness, es­pe­cially for those that re­quire a long ges­ta­tion pe­riod be­fore costs are re­couped. No doubt, gov­ern­ment has to re­view the cur­rent mon­e­tary pol­icy to en­sure that the man­u­fac­tur­ing sec­tor is given the kind of sup­port that would en­cour­age higher pro­duc­tiv­ity and their ca­pac­ity to com­pete, even in our lo­cal mar­kets. As Pres­i­dent Muham­madu Buhari has noted per­son­ally, the GDP growth would make sense to the or­di­nary Nige­rian if his liv­ing stan­dard grows. It is not so at the mo­ment. There is gru­el­ing poverty and fright­en­ing rate of un­em­ploy­ment, put at about 15 per cent of the Nige­rian pop­u­la­tion. As we rel­ish in the eu­pho­ria of our exit from re­ces­sion, gov­ern­ment must em­bark of prag­matic mea­sures to redeem the ma­jor­ity of Nige­ri­ans from this cul-de-sac. The growth in the oil sec­tor can im­pact on the down­trod­den only when the earn­ings from pe­tro­leum are dis­trib­uted with a for­mula that tar­gets the down­trod­den. With­out such mea­sure our exit from re­ces­sion will be mere sta­tis­ti­cal talks.

Dr. Yemi Kale, CEO NBS

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