There are fresh indications that the real sector of the economy would drive the nation’s economy in 2016.
Despite the challenges in the global economy, top executive officers in the banking industry have expressed the hope that 2016 would be a very challenging year for all.
However, there is a general consensus that the high incidence of poverty and unemployment are incoherent with a 7.5 per cent Gross Domestic Product (GDP) growth over the last decade but counter-intuitively inflation and interest rates remain in double digits.
The nation’s economy faced numerous challenges which impacted the overall economic activity in 2012. Declines in the real growth rates of economic activity were experienced in both the oil and non-oil sectors.
According to the CBN’s report, the economy has enjoyed sustained economic growth for a decade, with annual real GDP increasing by around 7per cent; it was 6.3 per cent in 2014.
Meanwhile, the 2015 outlook was for moderate growth of 5 per cent, due to vulnerability to slow global economic recovery, oil-price volatility and global financial developments.
Industry watchers had maintained that the low oil price would lead to a sharp decline in fiscal revenues, while the overall impact on non-oil sector GDP would be relatively muted.
The Central Bank of Nigeria (CBN), Governor, Mr. Godwin Emefiele, said without equivocation, these are challenging times for many economies around the globe. “For us in Nigeria, rather than grieve over the dwindling oil revenue, the present situation provides us a painful but indispensable opportunity to look inwards in a bid to trigger economic growth and development.
Emefiele who spoke at the 21st Seminar for Finance Correspondents and Business Editors in Ibadan, Emefiele recalled that the real sector is the engine of every economy as it facilitates the production of raw materials, which add value to the domestic economy and consequently serves as a source of wealth creation and income generation to the productive population.
He said the sector also provides effective linkages among crucial sub-sectors such as: agriculture, manufacturing, power, financial services, among others.
Represented by the Deputy Governor Corporate Services, Mr. Adebayo Adelabu, the CBN boss said “Indeed, as I noted recently, the rate of oil today at below $35 underscores the harsh reality that Nigeria is left with no choice but to diversify our economy away from oil, and into agriculture, manufacturing, services and other non-oil sectors.
“The real sector, which consists of the agricultural, industrial, building and construction sub-sectors accounted for 83.67 of the country’s GDP in 2000. The sector’s contribution, however, witnessed a decline to 76.21per cent in 2010 and further down to 70.71per cent in 2013. The rebasing of the economy further delineated the real sector into a variety of sub-sectors with agriculture, mining and quarrying activities, manufacturing and construction jointly contributing about 43.2per cent to the total GDP as at 2014,” he said..
According to him, the level of credit injected into the development and expansion of this crucial sector has not matched its percentage contribution to GDP. “For instance, sectorial distribution of loans and advances by Deposit Money Banks (DMBs) to the real sector was 42.2 per cent of total loans by DMBs in 2000. It however declined to 38.46per cent in 2010 but rose slightly to 44.03per cent in 2013. This clearly represented a mismatch in credit allocation to a sector that contributes remarkably to the nation’s GDP.