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Non-oil sector still undermined by lingering concerns

By Femi Adekoya
24 November 2021   |   3:09 am
Despite some level of growth recorded in the third quarter, the organised private sector has warned that the non-oil sector remains undermined by multi-faceted challenges despite various intervention by the government.

Muda Yusuf

Despite some level of growth recorded in the third quarter, the organised private sector has warned that the non-oil sector remains undermined by multi-faceted challenges despite various intervention by the government.

According to the Centre for the Promotion of Private Enterprise, (CPPE), the sector is significantly challenged by macroeconomic instability, currency depreciation, forex liquidity and regulatory constraints.

The report also identified policy inconsistency, security of life and property, structural bottlenecks and barriers to import and export trade and burdensome bureaucracy as other challenges of the sector.

Chief Executive Officer of CPPE, Dr. Muda Yusuf however attributed the recent positive growth trend in the GDP to rebound of domestic economic activities following the relaxation of restrictions on economic activities and movement within the country.

He also said revitalization of sectors that were earlier on lockdown phase following the onset of the COVID-19 pandemic such as the hospitality, entertainment, aviation, road transportation, tourism, among others helped in the rebound of the sector.

Yusuf, in addition noted that the positive trend could be traced to the restoration of supply chains that were disrupted at the inception of the pandemic, recovery of the global economy following improvements in investors sentiments as a result of improved vaccination in many parts of the world, rebound of commodity prices which had a positive impact on macro-economic outlook and crude oil price that has recorded an impressive recovery in last couple of months.

Nigeria’s manufacturing sector recorded a real GDP growth of 4.29% (year-on-year), an improvement from the corresponding quarter of 2020 and the preceding quarter of Q2 2021 by 5.80 per cent and 0.80 per cent, respectively.

The contribution of Manufacturing to the Nominal GDP in the third quarter 2021 was 15.59 per cent, higher than its contribution to the Nominal GDP in the corresponding period of 2020 at 13.56 per cent and higher than the contribution in Q2 2021 at 14.18 per cent.

According to Yusuf, the 59.93 per cent growth performance in the rail sector was the highest sectoral performance during the period under review and this was driven largely by high passenger traffic in the rail sector, especially along the Kaduna-Abuja axis and Warri-Ajaokuta axis, safety concerns as the rail system is considered safer than the roads, quality of the roads which often results in long travel time and risk of road accident and incidents of banditry and kidnapping on the highways.

The Metal Ores sub-sectors also recorded 54.92 per cent growth driven by local sourcing of minerals for manufacturing and other processes as a result of a depreciating exchange rate and the liquidity problems in the foreign exchange market. This has led to increased demand for domestic solid minerals.

There is an increase in investment in solid minerals as a result of the opportunities created by the scarcity of foreign exchange for the importation of some of these minerals, the report noted.

Also, the Electricity, Gas and Steam Air- conditioner recorded a growth of 14.36 per cent. This was possibly a result of market segmentation models used by the Discos, which have impacted positively on the liquidity of the electricity providers.

Economic activities have since resumed as a result of the relaxation in the Covid-19 protocols and the use of vaccines, thus leading to an increase in energy demand, especially for gas and electricity. There is an increase in the use of gas for industries and households, which has impacted on its demand.

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