The World yesterday issued its “Economic Update” in which it states that Nigeria’s Gross Domestic Product (GDP) is set to drop just below two per cent in 2018 due to an underinvestment in human capital a situation faced by many other countries.
The report implies that the country’s GDP was largely driven by non-oil industry and services. It also urged stakeholders to join government in addressing the country’s alarming human outcomes, noting: “As a member of the Human Capital Working Group, the World Bank stands ready to support the Nigerian government in its bold steps to improve the lives of its citizens.”
The report further stated, “In the second quarter of 2018, the oil sector contracted by 4.0 per cent. The usually resilient agricultural growth slowed significantly to 1.2 per cent, impacted by the security challenges in the northeast and Middle Belt regions.
“The non-oil industry and services, which constitute over half of Nigeria’s economy, picked up to 3.1 per cent and 2.1 per cent, driven by growth in construction, transport and ICT,” it said.
Also, the report notes that the Nigerian economy remains dependent on the small oil sector (under 10 per cent of GDP) for the bulk of its fiscal revenues and foreign exchange earnings.
“Although oil revenues are increasing with recovering oil prices in 2018, distributions to the three tiers of government are constrained by the petrol subsidy and other prior deductions. In the first half of 2018, the current account surplus surpassed 4 per cent of GDP, driven largely by higher oil exports, while non-oil revenue collections have come in lower than envisaged.”
It’s been considered that like in 2015, next year’s elections may negatively affect Nigeria’s growth. Insecurity and politics could overshadow governance, leading to a reduced capital expenditure especially if there’s a lack of Implementation of proofs.
With the economy having faced obstacles for long, and now renewed pressure from oil prices, sliding reserves, geopolitical risk factors and an appreciating dollar, it is better to act wisely and avoid post-election crisis.