Oil GDP contribution amid low output and diversification from the liquid gold
By Jeph Ajobaju, Chief Copy Editor
Oil sector contribution to Gross Domestic Product (GDP) is expected to drop 5 per cent between 2023 and 2025, down on 5.19 per cent in the fourth quarter of 2021 (Q4 2021).
This is contained in the draft Medium Term Expenditure Framework 2023-2025 which was confirmed in Abuja by Finance Minister Zainab Ahmed.
Ahmed said the draft assumed crude price in 2023 at $70 per barrel (pb), 2024 ($66), and 2025 ($62 per barrel); with production in 2023 estimated at 1.69 million barrels per day (mbpd), and 2024 and 2025 (1.813 mbpd).
“We have also projected on the nominal GDP, that the size of Nigeria’s economy will rise up to N225.5 trillion with 95 per cent of this contribution by the non-oil sector while the oil sector will contribute only 5 per cent,” she explained.
“And some steady increase from 2024 to reach up to N280.7 trillion in 2025. This means that Nigeria continues to retain its position as the largest economy in Africa.”
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Backdrop
Data released in February by the National Bureau of Statistics (NBS) shows oil sector contribution to the economy declined to 5.19 per cent at N1.055 trillion in Q4 2021, down 3.68 basis points from 5.87 per cent in Q4 2020, per Nairametrics.
It also shows oil production at 1.50 mbpd in Q4 2021, 0.06mbpd lower than 1.56mbpd in Q4 2020 and 0.07mbpd lower than 1.57mbpd in Q3 2021.
Lower oil production due to pipeline vandalism and oil theft has seen oil revenue and oil sector contribution to the GDP drop in recent times.
The move by the government to diversify the economy and reduce dependence on oil exports for foreign exchange earnings will see a further drop in oil contribution to GDP.