14 February 2018
Only 11 per cent of the Nigerian economy is out of recession while the remaining 89 per cent is still in recession, CEO of RTC advisory services Ltd, Mr. Opeyemi Agbaje has said.
The economic expert said Nigeria’s exit from recession was largely driven by oil sector, and then, partly by agriculture and utilities (particularly power sector), which he said summed up to constitute only 11 per cent of the nation’s economy.
“The economy is not policy driven,” he argued, “It is driven by the oil sector.” “If you want to look at the growth or movement of the economy, you look at policies and politics.” For instance, he said, “during recession, telecoms didn’t go into recession. But it is now in recession.”
“Our economy has become poorer as a result of inflation, recession and devaluation of the currency. The significant issue is the structure of the economy,” he maintained.
Mr. Agbaje made the assertion on Tuesday while delivering a lecture at a media parley that was organized by the leading financial institution in Nigeria, First City Monument Bank, FCMB.
He observed that stability in the Deltan region and rise in prices of crude oil at the international market are responsible for the economic growth that has seen Nigeria witness marginal rise in foreign reserves up to over $40 billion.
He said the nonoil sector that accounts for 89 per cent of the economy with key sectors including manufacturing, agriculture, telecoms, amongst others is still in recession following what he described as failure of the authorities to embark on pragmatic reforms or investment-end policies towards jobs creation.
He stated that as a country, Nigeria is optimizing many of its sectors, including oil sector, public administration, amongst others.
While Mr. Agbaje agreed that the nation’s economy has recorded positive growth in recent times, he pointed to the persistent low growth and/or continuing contraction in nonoil economy sector, poor manufacturing performance, sharply rising unemployment, high domestic food inflation and the fuel subsidy conundrum as some of the significant negatives of the economy.
For the financial industry, the economic analyst said “risks remain”, but added that the industry is cleaning up portfolios and profitability is improving.
Against popular view that the Nigerian economy is not diversified, Mr. Agbe said “our economy is diversified. What is not diversified is government revenue and export.” To him, the challenge is actually to get all manufacturers to produce enough for local consumption and export, and get everyone to pay tax.
Agbaje remarked that the 2018 budget that is currently before the National Assembly is too opportunistic, delusional and overambitious. He wondered if the fiscal structure for financing the budget is sustainable.
However, on a general note, he predicted a bright economic outlook for the nation in 2018 based on the relative peace in the Niger-Delta region, rise in prices of crude oil and projections of international bodies including World Bank and the International Monetary Fund (IMF).