According to the NBS gross domestic product (GDP) report for the second quarter of 2016, Nigeria’s economy contracted by 2.06 percent to record its lowest growth rate in three decades.
In the first quarter of 2016, the NBS said the economy shrank by 0.36 percent to hit its lowest point in 25 years.
According to World Bank data, the last time Nigeria had this magnitude of economic decline was under the regime of Ibrahim Babangida, when the economy recorded consecutive decline of 0.51 percent and 0.82 percent in first and second quarters of 1987.
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“In the Second Quarter of 2016, the nation’s Gross Domestic Product (GDP) declined by -2.06% (year-onyear) in real terms. This was lower by 1.70% points from the growth rate of –0.36% recorded in the preceding quarter, and also lower by 4.41% points from the growth rate of 2.35% recorded in the corresponding quarter of 2015. Quarter on quarter, real GDP increased by 0.82% During the quarter, nominal GDP was N23,483,954.78 million (in nominal terms) at basic prices. This was 2.73% higher than the Second Quarter 2015 value of N22,859,153.01 million. This growth was lower than the rate recorded in the Second Quarter of 2015 by 2.44% points,” the NBS revealed.
Nigeria’s exports of oil and natural gas—at a time of peak prices—have enabled the country to post merchandise trade and current account surpluses in recent years. Reportedly, 80% of Nigeria’s energy revenues flow to the government, 16% cover operational costs, and the remaining 4% go to investors.
Agriculture has however, suffered from years of mismanagement, inconsistent and poorly conceived government policies, neglect and the lack of basic infrastructure. Still, the sector accounts for over 26.8% of GDP and two-thirds of employment. Nigeria has 19 million head of cattle, the largest in Africa. Nigeria is no longer a major exporter of cocoa, groundnuts (peanuts), rubber, and palm oil. Cocoa production, mostly from obsolete varieties and overage trees, has nevertheless increased from around 180,000 tons annually to 350,000 tons.
The country has a lot of unexploited potential in agriculture but has not paid much attention to diversifying the economy, leaving it at the mercy of the rise and fall of global oil prices.
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A dramatic decline in groundnut and palm oil production also has taken place. Once the biggest poultry producer in Africa, corporate poultry output was had been slashed from 40 million birds annually to about 18 million by 2014.
Agricultural products include cassava, corn, cocoa, millet, palm oil, peanuts, rice, rubber, sorghum, and yams. In 2003 livestock production, in order of metric tonnage, featured eggs, milk, beef and veal, poultry, and pork, respectively.
The agricultural sector suffers from extremely low productivity, reflecting reliance on antiquated methods. Although overall agricultural production rose by 28% during the 1990s, per capita output rose by only 8.5% during the same decade. Nigeria’s which once exported food, now relies on imports to sustain itself.
Current data from NBS revealed that the oil sector experienced a decline of 17.48 percent, while the agricultural sector grew by 13.24 percent within the quarter of this year. With the mining sector shrinking by 47.9 percent and manufacturing falling by 1.02 percent, the general non-oil sector declined by 0.38 percent.
The International Monetary Fund (IMF) had initially predicted that the Nigerian economy will shrink by 1.8 percent in 2016. With the current results from the NBS, Nigeria is beating the IMF set bar at an aggregate GDP of 1.21 percent.
The dip in the economy has seen the country try to refocus on agriculture. It seems that the mistake that Nigeria made was to divert too much attention to oil and natural gas at the expense of growing the agricultural sector. Having been rated Africa’s largest economy in past years, growing both industries (oil and agriculture) was not an impossible quest.