By Uddin Ifeanyi
Unfortunately, over the years, the federal government’s guidance on the economy’s outlook has diverged from eventual outcomes in ways that have turned the former into an exercise in creative writing. The eventual outcome, as in the numbers for last year’s budget, is not so much stranger than fiction. But undiluted magical realism.
How well did the Nigerian economy do last year? Ahead of the (now-postponed) general elections this month, there might be some value to finding answers to this question; and, hopefully, enough compensation for dredging through numbers on the economy’s output performance recently, put out by the National Bureau of Statistics (NBS). In terms, too, of the discourse around the economy’s optimal growth and development route/pace, a sense of how well we’ve fared to date is useful. At 1.93 per cent annual growth, the economy’s performance last year was nowhere near the guidance put out by official estimates. Although it is far better than the 0.83 per cent recorded in 2017. The 2018 growth number is, however, far closer to numbers put out by the International Monetary Fund (IMF). How does this matter? The further actual performance is from official estimates, the more unbelievable (and useless) the latter are. Unfortunately, over the years, the federal government’s guidance on the economy’s outlook has diverged from eventual outcomes in ways that have turned the former into an exercise in creative writing. The eventual outcome, as in the numbers for last year’s budget, is not so much stranger than fiction. But undiluted magical realism.
Nonetheless, the disaggregated output numbers for last year tell a useful story. The 2.83 per cent growth rate recorded in the three months to end-December is particularly loud. It not just speaks to the possibility of stronger domestic output performance in the near-term, it’s the strongest shift that the economy has put in since the April to June 2017 period. Just as important, the economy’s growth base in the final quarter of 2018 is the broadest in almost three years. Over the last three years, of the economy’s 46 activity sectors measured by the NBS, growth has usually fallen (quarter-on-quarter) in at least 10 sectors. Much of the sub-2 per cent growth since the economy emerged from its last recession have, thus, been due to a handful of economic sectors carrying the growth burden.
In the October-December 2018 period, however, only seven of these quarters saw growth come in below their performance in the previous quarter. Thus, on an annual basis, crop production (accounting for 22.61 per cent of the economy’s size); telecommunications (9.46 per cent); crude petroleum and natural gas (8.60 per cent); food, beverage and tobacco (4.15 per cent); construction (3.73 per cent); and professional, scientific and technical services (3.64 per cent), all turned in growth. Important sectors all. And big contributors to domestic output. The telecommunications sector, especially, turned in decent growth last year (11.33 per cent), after a dismal performance in 2017. Given how poorly average revenue per user on voice calls have performed, the hope is that the sector’s pivot to data as a revenue source is complete and sustainable over the medium-term. The investment in 5G networks that will eventually support the internet of things will both test the sectors capacity over the medium-term, while opening strong revenue sources for successful telcos.
Growth in crop production was middling last year. At 2.26 per cent, it was the slowest in 30 years. Now, this is not just the biggest contributor to gross domestic product, it is the biggest employer of labour in the economy. Within the context, then, of the Buhari administration’s insistence that the sector accounted for more informal jobs in 2018 than the official bean crunchers captured, this soft growth number can only mean one thing. A rain-fed, subsistence sector of the economy has reached the frontiers of its production possibilities. Without root-and-branch reforms to the sector, falling productivity will become an even bigger threat to income inequality and social cohesion.
The numbers for trade also matter. As proxy for household spending, a recovery in output growth in the trade sector should foreshadow stronger consumer sentiments. Alas, for three years running, the trade sector has contracted. Not surprising giving how much the last recession, and the central bank’s failure to address rising domestic prices have hurt disposable incomes — especially at the famed bottom of the pyramid. Without improvements in consumer spending, businesses will continue to flounder. By how much this year? Not nearly as much as has been suggested by the percentage increase in the minimum wage. And if households, even at the lower end of the pyramid, elect first to fix their balance sheets ahead of spending, then, not by much. In addition to which, there is always the inflation bogey to worry about.
There are bigger worries even then. Whether the preferred measure is nominal or real output growth, neither has kept pace with the needs of the economy — especially the needs of a young, rapidly growing population. And this is the nub of our development challenge. For as long as our population continues to grow faster than domestic output, the pressures that we’ve become familiar with, and under which the larger number of our compatriots chafe, will remain unrelenting. All of which create additional pressure to re-examine from first principles the domestic opposition to the market as a solution to our problems.
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Uddin Ifeanyi, journalist manqué and retired civil servant, can be reached @IfeanyiUddin