The Daily Trust Board of Economists said the recent Gross Domestic Product (GDP) growth recorded by the economy has been overshadowed by the high cost of energy which escalated production costs and eroded the purchasing power of average Nigerians.
The board stated this in a communique issued at the end of its second quarter 2024 hybrid meeting held at the weekend in Abuja.
The board, which is chaired by Prof. Binta Tijjani Jibril of the Department of Economics, Bayero University Kano, applauded Nigeria’s GDP growth of 2.98 percent year-on-year in real terms in Q1 2024, which is higher than the 2.31 percent recorded in Q1 2023 but lower than the 3.46 percent growth in Q4 2023.
The board observed that the GDP growth, though not significant, indicated a sign of recovery in the oil sector, which recorded a 5.7 percent growth and 6.38 percent contribution to the GDP.
While acknowledging the reduction in oil theft and pipeline vandalism, the board emphasised the need to attract more investments to develop the oil and gas infrastructure.
It urged the government to deploy technology to secure oil installations and enhance the operating environment to attract more investments in the sector.
The board expressed concern over the insignificant 0.18 percent contribution of the agricultural sector to the GDP, attributing it to the persistent challenges of insecurity and inadequate infrastructure in the sector, particularly across northern Nigeria.
It also decried the meagre 2.19 percent contribution of the industrial sector, indicating that the economy is yet to fully diversify.
The board noted the efforts of the Central Bank of Nigeria (CBN) to stem the tide of inflation, which rose to 33.95 percent in May 2024, the highest in three decades, with food inflation reaching 40.66 percent.
It acknowledged that while the inflation growth rate has been declining since February 2024, Nigeria’s inflation is more supply-driven and cost-push, requiring the alignment of monetary and fiscal policies to improve productivity, effective demand, and sustained growth.
The board cautioned the Tinubu-led administration against the abuse of ways and means by the previous administration, which had a direct relationship with elevated inflation and naira devaluation.
It advised the government to limit its borrowings within the limits of the CBN Act.
The board expressed concern over the abrupt and over 200 percent hike in electricity tariffs, which has placed an unbearable burden on the already strained populace and exacerbated economic hardships. It advised the government to consider a phased implementation of the hike and to provide an enabling environment for massive investments in renewable energy.
The board noted that while the government has consistently supported the distribution companies (Discos) through various intervention funds, there has been no relative improvement in the quality of services, and the Discos have not invested in improving their infrastructure. The Board called for a thorough audit of the claimed level of indebtedness to the Discos and Gencos, and urged the government to open up its remaining 49 percent stake in the Discos for new investors.
Regarding the delayed planting in the 2024 farming season, the Board emphasized the urgent need to take the Nigerian Meteorological Agency’s (NiMet) Seasonal Climate Prediction seriously, as it details expected rainfall patterns, temperature variations, and potential drought or flood risks. The board called for specific attention to aspects of NiMet’s report that predicted the onset of the growing season is likely to vary from normal to delayed in most parts of the country.
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