Nairametrics has reviewed the opinion of experts as regards the sectors that would drive the growth of the Nigerian economy in 2021.
The year 2021 is fully stacked with plans and agreements for the full activation of the economic potential of the Nigerian economy, as the country heads into the new year with the heavy winds of recession.
In an effort to ward off the economic vulnerability prevalent in the year 2020, the Nigerian government, the private sector players and individuals have strategized for the challenge ahead, while preparing for the opportunities expected in the year 2021.
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What you should know
- In a bid to reduce headwinds in the new year, and create an enabling atmosphere where business, industries, services and commerce would thrive, the Nigerian Government has embarked on key regulatory reforms, as captured in the provisions of the 2020 Finance Bill which proposes the amendment of 13 different laws with over seventy sections.
- However, 54 out of the 55 countries in the African Union (AU) have embarked on a multilateral arrangement to facilitate the growth of trade in the continent, by unlocking a market of 1.2 billion Africans with a combined GDP of $3 trillion through the AfCFTA (African Continental Free Trade Agreement).
- The AfCFTA is expected to create the largest market in Africa, and increase intra-African trade up to 52.3% by 2022. Experts have given their views on the sectors that would drive the growth of the Nigerian economy in 2021 post-AfCFTA, as all AU countries position to share in the welfare gains, which are estimated at around 2.64% of continental GDP – roughly $65 billion in 2018 terms.
- The synergy from trade by all countries under the AfCFTA, the largest trade bloc in the global economy since the 1995 WTO establishment, is expected to boost Africa’s cumulative GDP to $29trillion by 2050, as estimated by the United Nations Economic Commission for Africa.
What the experts are saying
In a bid to provide an unbiased view and form a rational expectation of what is to happen in 2021, Nairametrics reviewed the opinions of experts on sectors that will drive Nigeria’s growth in 2021, at the Nairametrics Regulatory Economic Outlook for 2021.
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According to Mrs. Ijeoma Uju, Partner, Corporate & Commercial at Templars, she believes the Service Sector will be one of the leading sectors to drive the Nigerian Economy towards the path of sustainable growth and development in 2021.
She agrees that the Agriculture sector still has the potentials to drive the Nigerian economy towards growth in 2021. However, for the manufacturing and industrial sector to perform during the year in view, the government has a key role to play in terms of infrastructure.
- “I believe the service, agriculture, industrial and manufacturing sector will do well post AfCFTA in 2021, but there is a caveat on the manufacturing and industrial sector, because Government needs to do more in terms of infrastructure support. In this regard, I will lean both ways because if you look at the ECOWAS treaty, Nigeria in terms of total trading volume, does 76%. So, if you juxtapose that against an agreement with 56 countries, I think we will do quite well, as we are really doing so well within the ECOWAS territory where there are just 15 countries. So, I believe all these sectors will do well.”
Dr. Israel Osidipe agreed with Ijeoma’s submissions and stressed the need for government’s support in the provision of key infrastructures. He disclosed that multilateral and bilateral trade agreements are made on the premise of getting goods and products to trade channels.
He reiterated the importance of Service in this stance as it is also equally as important as tangible goods, but revealed that the objective of the AfCFTA remains absolute in terms of driving trade through industrialization.
In this regard, he affirmed that the country needs to produce for Service and Agriculture sector to benefit, as the optimum productivity of the manufacturing and industrial sector will ensure other sectors reap optimal gains in 2021.
Hence in this stance, the Government needs to play a major role in driving the manufacturing and industrial sector, because their outputs are going to be beneficial to the African Continent.
- “Government needs to really support because when you are talking about international trade or any multilateral trade agreement, there must be goods that you need to trade. I’m not saying service is not essential and if you look at the main objective of AfCFTA itself, you will see that the intention is to drive trade through industrialization. So, if we don’t produce, what are we going to trade, and then we go on to emphasize service, growth won’t be optimal, and inclusive. All of them will drive growth in 2021, but there is a need for Government support, in terms of infrastructure to facilitate manufacturing, otherwise we would only create free meal for other member countries.”
Mr. Nnamdi Nwizu, Co-Managing Partner, Commercio Partners, revealed that the service and agricultural sector both have major parts to play in driving growth in the economy, while Manufacturing and Industrial sectors are expected to underperform in 2021.
Mr. Adetola Onayemi, Head, Trade Remedies, NOTN, said the services sector will drive growth in 2021, as companies in this space are expected to overperform. He, however, maintained a cautious view on the performance of the industrial and manufacturing sector in 2021, as the sector has a strong appeal, given the growth potentials in it.
He reiterated that AfCFTA will help create market and opportunities in a bid to reconstruct what trade has always looked like on the continent in the last few years.
- “AfCFTA is the most audacious agreement as a continent to trade amongst ourselves and to create prosperity and access for every person on the continent. What that looks like and what the future generation would say about it would depend on every African player, from the services person that would go out of their way to do services and to those that would use the opportunities to build infrastructures, set up logistics channels and down to manufacturers.”
The Nairametrics Economic Outlook was moderated by Nairametrics’ Founder, Ugochukwu “Ugodre” Obi-Chukwu. Other panelists at the webinar include; Taiwo Oyedele, Fiscal Policy Partner, PwC; Olufemi Babem, Partner KPMG; Adegun Adedamola, Energy Consultant; Yemisi Awonuga, Partner, Energy & Projects, Templars; and Aruoture Oddiri, Business TV Anchor and Radio Broadcaster.