The economy is on the path of recovery, Federal Government assured Nigerians on Monday; Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, who said this on Monday, indicated that Nigeria will soon bounce back to the pre-COVID-19 economic period.
She described the 5.01 per cent growth of Gross Domestic Product (GDP) as a positive one.
She explained that the non-oil sector accounted for the GDP growth.
She said 42 out of 46 economic activities expanded during the quarter compared to only 13 at the same time last year.
She insisted that the country was borrowing “sensibly and responsibly.”
On how the Federal Government will finance the budget deficit next year, she said there was an approval to fund a deficit of 50% locally and 50% externally.
She said 50% of external borrowing is 6.1 billion Euros with half of it from Eurobonds and the other from multilateral and bilateral sources.
She confirmed that the Federal Government will begin the Eurobond roadshow from the week of 11th of October.
Mrs Ahmed, who spoke at a news conference in Abuja said: “We are happy inflation is moving downward.
She spoke with reporters in company with the Minister of Information and Culture, Alh. Lai Mohammed; the Minister of State for Budget and National Planning, Clem Agba and Statistician-General of the Federation Simon Harry.
She said: ”The National Bureau of Statistics (NBS) recently published the 2nd Quarter (Q2) 2021 Gross Domestic Product (GDP) estimates which measure economic growth.
“During the quarter, Nigeria’s Gross Domestic Product (GDP) grew by 5.01% (year-on-year) in real terms, resulting in the third consecutive quarter of growth since last year’s slowdown. This is the strongest real GDP growth the economy has recorded since Q4 2014.
“ The 2021 Q2 growth rate reflects much better economic performance compared to the same period last year, which recorded -6.10% growth rate.
“Furthermore, it was also better than the previous quarter (Q1) growth rate of 0.51%, on a year-on-year basis. Year to date, real GDP grew 2.70% in 2021 compared to -2.18% for the first half of 2020.
“Broadly speaking, the services sector recorded a strong performance growing at 9.27% during the quarter representing the fastest growth in the services sector since 2010.”
Ahmed gave a breakdown of how the non-oil sector accounted for the new GDP in the 2nd Quarter of 2021.
She added: “Growth in Q2 2021 would have been much stronger had it not been for Agriculture recording slower growth at 1.30% due to several bottlenecks currently negatively affecting the sector and due to the Industrial sector contracting by -1.23% largely due to the over 12% contraction in Crude Oil and Natural Gas Production.
“Nevertheless, the non-oil sector was a major driver of growth during the quarter, recording a growth rate of nearly 7% which represents the fastest growth in the non-oil sector since Q3 2014.
“Specific activities which recorded growth during the quarter include Trade, Transportation, Coal mining, metal ores, as well as Insurance, each of which recorded double-digit growth.
“The report, however, also indicates that some activities such as oil refining, crude petroleum and natural gas production as well as financial services recorded negative quarterly growth.
“Overall, a total of 42 out of 46 economic activities expanded during the quarter compared to only 13 at the same time last year, while 37 activities performed better than they did last quarter (Q1).”
She added: “These figures indicate that business and commercial activities are fully returning to pre-pandemic levels as restrictions to movement, business activities, as well as domestic and international travel, have been relaxed.
“When these estimates are considered along with declining inflation rate which slowed from 18.17% at the end of Q1 to 17.75% at the end of Q2 and as at July, stands at 17.38%, it is clear that the economic recovery is gradually picking up steam.
“With favourable international economic conditions expected as economic activities and normalcy returns across major economies, and focal conditions continue to improve to allow business activities, the Nigerian economy is expected to maintain a steady path to more inclusive growth.”
Responding to a question on why Nigerians are not feeling the positive effects of the GDP growth rate, the Minister of Finance said: ”Until we get a growth rate that is larger, the impact will not be felt by Nigerians.
“But we are happy that the growth rate is a positive one. We are happy to report that inflation is moving downward. The prices of some major foodstuffs, like corn and guinea corn, have started moving or going down.”
She said it is possible to sustain the GDP growth rate.
She said: “There are a number of reforms in the economy to maintain sustainable growth. We are happy economic and business activities are fully returning to pre-COVID-19 period.”
Asked when the Federal Government will launch Eurobond, the Minister of Finance said: “We will be going on Eurobond roadshow from the week of 11th of October after we have submitted the 2022 budget to the National Assembly.
“We will be starting with Nigerian investors in Lagos and then we will move to New York and the United Kingdom.”
Concerning recourse to loans by the Federal Government, she said: “We have been borrowing sensibly and responsibly. We are also borrowing to invest in critical infrastructure.”
The Minister said: “We are borrowing with very close consideration to the sustainability of borrowing. The borrowing level for Nigeria today is still 23 per cent of the GDP.
“I have said it several times that the problem we have is that of revenue and when you look at the country that is within the peer group with Nigeria, there are some that had 50 per cent growth that is now at about 70 per cent growth.”
“We are at 53 despite the escalated borrowing we had to deal with in 2020 also in 2021 to get a good grip on the economic situation that was occasioned by COVID-19 pandemic and in our case due to the crash in crude oil price.
“We are borrowing sensibly we are also borrowing to invest in critical infrastructure like power, water, roads and rails which are investments that are required to enhance business productivity in the country today.