Nigeria, Africa’s largest economy is going through some rough times as the economy shrank in the first quarter of 2016 due to fall in oil price and lack of growth in the manufacturing sector caused by major drop in power supply.
Report on the economy released by National Bureau of Statistics (NBS) last week indicated that Nigeria’s GDP contracted by -0.36% from 2015 suggests that the economy is headed for recession and at the moment, projections for the second quarter looks gloomy. This has recently been echoed by Nigeria’s apex bank, the CBN, after its Monetary Policy Committee meeting in Abuja on Tuesday, the 24th of May 2016.
Nigeria’s GDP has continued a downward spiral since ending 2015 with a fourth quarter growth rate of 2.11 per cent. Data on CBN website has shown that the last time Nigeria’s economy contracted was 12 years ago (2004).
According to NBS, ‘’in the First Quarter (Q1) of 2016, Oil production stood at 2.11million barrels per day (mbpd) 0.05 mbpd lower from production in Q4 of 2015. Oil production was also lower relative to the corresponding quarter in 2015 by 0.07mbpd when output was recorded at 2.18mbpd’’. The recent upsurge militancy activities in the oil rich Niger Delta region has forced down oil production to 1.4 mbpd, according to the Minister of State for petroleum Resources, Dr Ibe Kachikwu. This has worsened the already very bad situation.
In non-oil sector, NBS stated that ‘’while activities such as Crop production, Trade and Telecommunications & Information Services supported growth of the sector, growth in overall was weighed down by declines in Manufacturing, Financial Institutions, and Real Estate’’.
The troubling economic situation in the country has reflected in the labour market as unemployment rate rose to 12.1% first quarter of this year. Unemployment rate has been on a steady rise since second quarter of 2015 when it stood at 8.2% before rising to 9.9% and 10.4% in third and fourth quarters of last year respectively.
Labour market report released by the NBS, showed that the number of unemployed in the labour force, increased by 1,449,18 persons as against increase of 518,000 recorded in the previous quarter. The report also indicated that, there were a total of 24.5 million persons between the ages of 15-64 who were able and willing to work.
These categories of people were either unemployed or underemployed compared to 22.45 million in the fourth quarter of 2015 and 20.73 million in the third quarter of 2015. Also within the same period in 2016, the total number in full time employment decreased by 528,148 persons or 0.97%.
As africa’s largest economy stares recession in the face, experts are calling for a concerted effort to save the Nigerian economy before it is too late. In a desperate move to save the ailing economy, Central Bank of Nigeria on Tuesday announced a new policy that would encourage flexibility in the management of foreign exchange market but analysts are already speculating that this might be a way of devaluing the Naira which is currently standing at 197 to the Dollar at official rate but go as high as 300 at the parallel market.
Whatever needs to be done, should be done now to steer the nation off this rocky path and to progress.