By Jeph Ajobaju, Chief Copy Editor
Cheers over the 2.3 per cent growth in Nigeria’s Gross Domestic Produce (GDP) in the last quarter (Q4) of 2018 may peter out after the last leg of election on March 2 when politicians stop spending.
The latest figure, released by the National Bureau of Statistics (NBS), is better than the 2.11 per cent GDP in Q4 2017, but the rise in Q4 2018 seemed buoyed by political spending in the run up to the national vote.
The 2.3 per cent growth in Q4 2018 was the strongest quarterly growth in four and a half years.
Oil output, from which Nigeria gets 95 per cent of its foreign exchange, reduced in Q4 2018, and the recent decline in crude prices may taper down overall spending from now on, according to Reuters.
Nigeria’s economy climbed out of recession in 2017 and has been riding largely on the back of higher oil prices. Growth remains fragile, though Abuja has signed an export-financing agreement with investment partners to inject $30 billion from products manufactured in Nigeria and sold abroad.
But that may not be enough to stem losses in Nigerian stocks since President Muhammadu Buhari came to power.
Bloomberg reports that analysts at Citigroup think Nigeria’s stock market may rally only if Buhari loses the vote on February 16.
If that happens, it would end a run that has seen it fall more than any other in the world in dollar terms since Buhari mounted the saddle in May 2015.
Some foreign investors prefer a government led by Peoples Democratic Party (PDP) presidential candidate, former Vice President Atiku Abubakar, a businessman and Buhari’s main challenger.
But while Atiku has pledged to privatise state assets and float the naira, many are skeptical and point to his reputation for corruption.
According to ThisDay, the $30 billion deal on the Made in Nigeria for Exports project was signed on February 10 with the African Export-Import Bank, Africa Finance Corp., the African Development Bank, Bank of Industry and Nigerian Sovereign Investment Authority.
Africa’s biggest oil producer seeks to increase manufacturing share of GDP to 20 per cent, generate $30 billion in annual export earnings, and create 1.5 million jobs in the next six years, Buhari said at the signing ceremony in the Villa.
Nigeria SEZ Investment Co., set up to run the project, will start off a pilot phase with special economic zones in Enyimba Economic City in Abia State, Funtua Cotton Cluster in Kastina, and Lekki Model Industrial Park in Lagos.
Nigeria’s economy grew in 2018 at its fastest pace since 2016.
GDP grew 1.93 percent 2018, up from 0.82 per cent in 2017 and just short of 2 per cent projection. It grew 2.4 per cent in the fourth quarter, the NBS announced on February 12.
A Reuters poll of analysts had forecast growth of 2.1 per cent, saying it was expected to slow as some investors held off before the elections.
Nigerian stocks rose 2.14 per cent to a three-month high after the NBS released the GDP data.
Economic growth has been recovering since the third quarter of 2016, when recession bottomed out. Higher oil prices helped the country exit that contraction.
“Nigeria’s economy accelerated to 2.4 per cent in Q4, but momentum in the non-oil sector remained very weak,” John Ashbourne, senior emerging markets economist at Capital Economics in London, said in a note quoted by Reuters.
“Low oil prices will weigh on growth in 2019, but the longer-term outlook depends heavily on the result of Saturday’s presidential election.”
The election is expected to be a tight contest between Buhari and Atiku. More than 60 other candidates are running but have little chance of winning.
Rejuvenating the economy a key issue for Buhari, who hopes his record can secure him a second four-year term in office. Atiku touts pro-business policies, including floating the naira.
Budget Minister Udoma Udo Udoma told Reuters the GDP data showed the economy was recovering, although growth was less than the government projected.
The trajectory for growth, Udoma said, pointed to a bigger expansion in 2019 and beyond.
The 2018 results were in line with improvements in inflation, he added.
The World Bank had expected Nigeria’s growth to be slightly less than 2 per cent this year as the election kept some foreign investors away.
The non-oil sector grew 2 per cent in 2018, more than the oil sector, which rose 1.14 per cent from January to December, the NBS said.
Oil production was 1.91 million barrels per day in the fourth quarter.
