The Centre for Promotion of Private Enterprises (CPPE), has ascribed the 3.40 per cent economic growth rate recorded by Nigeria in 2021 to factors such as the N2.3 trillion Economic Stimulus Programme of the federal government.
Recall that following economic recession that emerged from the devastating impacts of Coronavirus pandemic on the economy the previous year, the stimulus package was targeted at containing the impact of the COVID-19 on the economy.
The CPPE further attributed the economic growth recorded in 2021 to the strong base effect resulting from the fact that 2020 (the reference year) was a year of recession when the economy contracted by -1.92 per cent.
Other factors identified by CPPE in a note signed by Muda Yusuf, its chief executive officer, were the rebound in economic activities across all the sectors of the following the lifting of lockdown imposed in 2020, aggressive roll out of vaccines in 2021 and rebound in crude oil prices.
Yusuf, in the statement, also advised the government to prioritise key development indicators that impacts positively on citizens’ welfare productivity in the economy in order to accelerate employment and reduce poverty.
Yusuf said: “According to the National Bureau of Statistics (NBS), Nigeria’s GDP grew by 3.40 per cent in 2021, year on year. This marks the highest GDP growth rate since 2015. This growth performance is higher than projections by the IMF (2.6) and the World Bank (2.7).
“The quarterly GDP figures indicated that the economy grew by 3.98 per cent in the fourth quarter of 2021. This was also the fifth consecutive quarterly GDP growth recorded in the economy.
“Economic Stimulus Programme of the government, encapsulated in the Economic Sustainability Plan also played a role in accelerating the recovery of the economy in 2021. The government introduced quite a number of interventions which impacted positively on those who benefitted from those interventions. Projected spending under the stimulus plan was N2.3 trillion.
“In other words, being a year and year comparative analysis, comparing 2021 with 2020 naturally resulted in a strong improvement in comparative performance. 2020 was the peak of the COVID-19 pandemic and the associated disruptions in the economy. The year ended with an output contraction of 1.8 per cent.”
The report added: “The rebound of economic and business activities across all sectors of the economy as the pandemic effects progressively dissipates. There was a relaxation of restrictions, lockdowns and reduction in the supply chain disruptions. These naturally impacted on domestic economic activities and global economic recovery.
“There was an aggressive rollout of vaccines in 2021 especially in the advanced economies which significantly boosted the sentiments of investors globally. This of course boosted investment and consequential growth both domestically and globally.
“Rebound in crude oil price: being an oil producing country the rebound of crude oil price in 2021 impacted positively on growth performance. Average crude oil price was $70/barrel in 2021 as against $42/barrel in 2020. Historically, there is a strong and positive correlation between oil price and economic growth in the Nigerian economy. The rebound of oil price was a key driver of 2021 growth.”
He, however, observed that recording laudable growth performance was one thing while translating the growth to improved welfare, job creation, poverty reduction and economic inclusion is a completely different matter.
He said: “The last few years was characterised by worsening poverty situation, high inflationary pressures, massive erosion of purchasing power, high energy prices, escalating production cost, sharp currency depreciation and many more. These are critical developmental metrics on the basis of which the performance of the economy should also be measured. Therefore, going forward, policy makers should prioritise these key development indicators. Citizens’ welfare and investment productivity in the economy matter even more than the GDP numbers.”
Yusuf also highlighted the sectors that recorded positive growth rate during the period under review, which included agriculture, food and beverage, cement and chemical and pharmaceutical and the vehicle assembly subsectors at 2.13, 5.73, 6.6, 8.13 and 2.3 per cents respectively while trade and rail transport and pipelines grew at 8.0 and 36.95 per cents respectively.
Sectors and sub-sectors that experienced decreased economic growth rate were crude oil production, 8.30; oil refining, 47.94; textile and apparel, 1.27; wood and wood products, 1.54 and puld and paper industry, 0.32 per cents.
He attributed the decline in crude oil production to, “intractable oil theft and vandalisation of pipelines; divestment by oil majors from the upstream oil sector; lack of political will on the implementation of the Petroleum Industry Act, which weakened investors’ confidence and rapidly evolving global energy transition, making it difficult for fossil fuel investments to attract funding.”
