Nigeria’s Gross Domestic Product (GDP) contracts by 1.92% in real terms in 2020 from N71.39 trillion recorded in 2019 to N70.01 trillion.
This is according to the Gross Domestic Product Report, released by the National Bureau of Statistics (NBS) on Thursday.
However, the economy posted real GDP growth of 0.11% in the fourth quarter of the year, suggesting that the economy is exiting the covid induced recession.
Checks by Nairametrics also showed that the 2020 aggregate GDP represents a 0.29% increase when compared to N69.81 trillion recorded in 2018.
- The oil sector contracted by 8.89% in 2020 compared to 4.59% recorded in 2019 and 0.97% in 2018.
- Non-oil sector however also contracted by 1.25% as against 2.06% growth recorded in the previous year.
- Meanwhile, the agricultural sector grew by 2.17% in real terms in 2020, slightly below the 2.36% growth recorded in 2019.
- The manufacturing sector also recorded a decline of 2.75% in its annual GDP compared 0.77% growth recorded in 2019, information and communication grew by 12.9% while the financial and insurance sector recorded growth of 9.37% in 2020.
- Others include; trade (-8.49%), transportation and storage (-22.26%), real estate (-9.22%), education (-13.57%), public administration (0.1%).
Why the contraction
The negative growth can be attributed to the downturn caused by covid-19 pandemic, which necessitated lockdown actions across the country as a measure to curb the spread of the pandemic.
- The implementation of the lockdown, caused significant disruptions in the value chain, halt in most aspects of the economy, disruption in the manufacturing sector, and many more. Specifically, many Nigerian lost their jobs during this period, and those who had their jobs had to work remotely from their various homes.
- The EndSARS protest that turned violent was also a significant event that caused disruption in normal business activities as many states in the western part of Nigeria were forced to declare a curfew. The period was characterised by the destruction of private and public-owned properties, which some victims are yet to recover from.
GDP is Nigeria’s biggest economic data and it measures the monetary value of everything produced in the country. It depicts the nation’s total economic activity.
- A decline in GDP means major economic activities are slow or sluggish, which may be as a result of several factors.
- The latest figure shows that Nigeria’s economy contracted by 1.92% in 2020 compared to a growth rate of 2.27% recorded in the previous period.
- A positive growth of 0.11% recorded in Q4 2020, indicates that Nigeria has recorded from its economic recession.
- The Information and Communication sector grew the highest in the year with 12.9% growth, mostly attributable to the increased usage of internet and mobile devices during the lockdown.
Transport fare watch: Motorcycle “Okada” commuters paid less in January 2021
Commuters on motorcycle per drop (Okada) paid less in January 2021 than they did in December 2020.
The average fare paid by commuters for journey by motorcycle per drop decreased by 11.60% month-on-month and increased by 95.22% year-on-year to N259.33 in January 2021 from N293.36 in December 2020, according to the National Bureau of Statistics (NBS) report for the month of January 2021.
According to the report, commuters in Taraba (N400.80), Yobe (N400.15) and Rivers (N400.00) paid the highest journey fare by motorcycle per drop while commuters in Adamawa (N84.22), Katsina (N134.90) and Kebbi (N152.05) paid the lowest journey fare by motorcycle per drop.
Other key highlights
- The average fare paid by commuters for bus journey intercity decreased by 0.25% month-on-month and increased by 39.55% year-on-year to N2,346.41 in January 2021 from N2,352.19 in December 2020.
- Commuters in Abuja FCT (N4,482.24), Lagos (N3,300.23) and Sokoto (N3,300.00) paid the highest bus journey fare intercity while commuters in Bayelsa (N1,600.45), Bauchi (N1,640.20) and Enugu (N1,687.45) paid the lowest bus journey fare within city.
- The average fare paid by commuters for bus journey within the city decreased by 0.66% month-on-month and increased by 74.75% year-on-year to N352.15 in January 2021 from N354.49 in December 2020.
- Commuters in Zamfara (N600.00), Bauchi (N522.75) and Ekiti (N458.77) paid the highest bus journey fare within city while commuters in Oyo (N189.46), Abia (N205.22) and Borno (N240.79) paid the lowest bus journey fare within city.
- The average fare paid by air passengers for specified routes single journey increased by 0.02% month-on-month and by 18.27% year-on-year to N36,463.65 in January 2021 from N36,454.59 in December 2020.
- Passengers in Anambra (N38,600.00), Cross River/Jigawa/Lagos (N38,500.00), Bauchi (N38,400.00) paid the highest airfare while States with lowest airfare were Akwa Ibom (N32,450.00), Sokoto (N33,700.00), and Gombe (N35,000.00).
- The average fare paid by passengers for water way passenger transport increased by 3.68% month-on-month and by 38.58% year-on-year to N786.19 in January 2021 from N758.27 in December 2020.
- Passengers in Rivers (N2,280.00), Delta (N2,250.45) and Bayelsa (N2,200.10) paid the highest fare by water while states with lowest fare by waterway passenger transport were Borno (N245.10), Gombe (N290.77) and Kebbi (N340.00).
Why this matters
Transportation cost takes a huge portion of budget for most lower/middle-class Nigerians and as well takes not less than 20% of their take-home pay packages.
The drop in fares paid by the commuters on motorcycle per drop (Okada) is a welcome development.
Transport by motorcycle (Okada) has been popularly adopted in most cities by businessmen, government workers, and students to overcome traffic congestion, and for the advantage that it can navigate roads that are inaccessible to automobiles and buses, particularly in villages and urban slums.
The moment Emefiele predicted Nigeria will be out of recession in Q4 2020
The CBN Governor had expressed optimism last year that the country was going to come out of recession in Q4 of 2020.
It is no longer news that Nigeria, Africa’s largest economy, against all expectations exited recession as its Gross Domestic Product (GDP) grew by 0.11% in the last quarter of 2020 (year on year).
However, the Governor of the Central Bank of Nigeria, Godwin Emefiele, had expressed optimism last year that the country was going to come out of recession in the fourth quarter of 2020.
According to the report released by the National Bureau of Statistics (NBS), this is the first positive quarterly growth in the last 3 quarters following growth in telecommunications and agriculture which seem to make up for the sharp drop in oil prices and production.
The surprising rebound of the Nigerian economy is coming against the prediction of the country’s Minister for Finance, Budget and National Planning, Zainab Ahmed, who while speaking at the 26th Nigerian Economic Summit, said that Nigeria is expected to exit recession by the first quarter of 2021.
The CBN Governor had during the November 2020 Monetary Policy Committee meeting, predicted that the country was going to come out of recession by the fourth quarter of 2020.
This as he said that many analysts expressed doubts about that and were waiting to prove him wrong.
In a video during a press conference as seen by Nairametrics, Emefiele said, “You said that in November MPC, I was cautiously optimistic that fourth-quarter GDP will be positive thereby taking Nigeria out of a recession that I was aggressively optimistic that during the first quarter, we will exit recession. I am praying very seriously that my prayer should be heard because I know that people are waiting to put my neck on the chopping board to say that I do not know my work.’’
What you should know
- Despite Nigeria’s surprise exit from recession, experts have still expressed their reservations about the country’s weak economy which is faced with several challenges for businesses ranging from foreign exchange pressure, high unemployment level, increasing consumer prices, serious security challenges, weak investor confidence, etc.
- This is as the growth in GDP was primarily driven by the Information and Communication sector and the Agricultural sector.
- However, the surprise rebound of the economy means that Nigeria may recover faster than expected as crude oil prices and production increase this year.
- This also shows that the country needs to redouble its efforts in the growth of the non-oil sector which contributed 94.13% to Nigeria’s GDP.
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