GDP growth should reflect on welfare, purchasing power of Nigerians ― CPPE boss

The Chief Executive Officer, Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, has said that growth in Nigeria’s Gross Domestic Product (GDP) would better be felt if it translates to direct impact on the lives, welfare and purchasing power of Nigerians.

Dr Yusuf, while commenting on Nigeria’s GDP performance for full-year 2021, said beyond economic indices, the government should measure and evaluate other developmental metrics to ascertain the growth of the country’s GDP.

“Laudable growth performance is one thing, translating the growth to improved welfare, job creation, poverty reduction and economic inclusion is a completely different matter.

“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, policymakers should prioritise these key development indicators. Citizens’ welfare and investment products in the economy matter even more than the GDP numbers,” Yusuf said.

The National Bureau of Statistics (NBS) had reported that the GDP grew by 3.40 per cent in 2021, year-on-year, the highest growth rate since 2015 and higher than the projections by the International Monetary Fund of 2.6 per cent and the World Bank of 2.7 per cent.

On a sectoral and sub-sectoral basis, those that recorded positive growth include rail transport (36.95 per cent), air transport (19.70 per cent), road transport (17.13 per cent), financial institution (10.53 per cent), insurance (6.24 per cent), trade (8.62 per cent), cement production (6.64 per cent), chemical and pharmaceuticals (8.13 per cent), food and beverage (5.73 per cent), motor vehicles and assembly (4.23 per cent), construction (3.09 per cent), ICT (7.28 per cent), real estate (2.26 per cent).

On the other hand, some sectors witnessed contractions. They include oil refining (47.94 per cent), crude oil production (8.3 per cent), textiles and apparel (1.27 per cent), wood and wood products (1.54 per cent), pulp and paper industry (0.32 per cent), accommodation and food services (0.45 per cent).

Commenting on this, Yusuf said, “These growth performances were a reflection of the progressive recovery from the shocks of the pandemic and the rebound of economic activities in these sectors.

“It is instructive that the biggest contraction was in the oil and gas sector. These figures are indicative of the weak sectoral performance on account of the collapse of domestic petroleum refineries, crude oil theft, inappropriate policy environment, stifling regulatory environment and dwindling investors’ confidence.”

The CEO of the economic and business advisory think tank also noted that roll out of vaccines against COVID-19 in 2021, a rebound of economic activities following the disruptions of 2020 by the COVID-19 pandemic, increase in crude oil prices and economic policies of the government were key drivers of the positive performance of the GDP.

“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 pandemic and the associated disruptions in the economy. The year ended with an output contraction of 1.8 per cent.

“There was a relaxation of restrictions, lockdowns and reduction in the supply chain disruptions. These naturally impacted 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.

“Being an oil-producing country the rebound of crude oil price in 2021 impacted positively on growth performance. The average crude oil price was $70/barrel in 2021 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.

“The 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 that impacted positively on those who benefitted from those interventions. Projected spending under the stimulus plan was N2.3 trillion,” he said.

On a sectoral analysis, Yusuf said the though agriculture sector witnessed positive growth, it was largely impacted by the rising insecurity in many parts of the country, especially in farming communities and the slow integration of technology in farming and agricultural processes.

For the food, beverage and cement sectors, Yusuf said they benefitted largely from backward integration strategy as most of their raw materials are locally sourced. He said the chemicals and pharmaceuticals subsector as well as vehicle assembly leveraged on the country’s robust fiscal measures, tariff protection while grappling with access to foreign exchange.

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