GDP Report: Time To Reset Faulty Economic Structure -Prof. Uwaleke

By Sunday Etuka, Abuja

Renowned Professor of Finance and Capital Market at the Nasarawa State University, Uche Uwaleke has said that with the current Gross Domestic Product (GDP) growth rate, the time is ripe for the country to reset its faulty economic structure.

The President of the Association of Capital Market Academics of Nigeria (ACMAN) made the submission in a chart with TheFact Daily on Friday.

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His submission was in response to the earlier
report released by the National Bureau of Statistics (NBS) where it revealed that the GDP grew by 2.98% (year-on-year) in real terms in the first quarter of 2024.

NBS said, the growth rate was higher than the 2.31% recorded in the first quarter of 2023 and lower than the fourth quarter of 2023 growth of 3.46%.

Highlighting the performance of the GDP with regards to sector contributions, the Bureau said, oil sector 5.70% (Q4 2023 12.11%), with average oil production of 1.57mbpd (Q4 2023 1.55mbpd), Non oil sector 2.80% (Q4 2023, 3.07%).

Others are: Agriculture 0.18% (Q4 2023 2.10%), Manufacturing 1.49% (Q4 2023 1.38%), Trade 1.23% (Q4 2023, 1.40%), Transport 3.33% (Q4 2023, -29%), ICT 5.43% (Q4 2023, 6.33%), Real Estate 0.84% (Q4 2023, 1.34%), Finance and Insurance 31.24% (Q4 2023, 29.78%), Education 1.62% (Q4 2023, 1.60%), and Health 2.21% (Q4 2023, 3.73%).

Top contributing sectors to GDP in Q1, 2024, include, Agriculture 21.07%, ICT 17.89%, Trade 15.70%, Manufacturing 9.98%, Finance & Insurance 6.81%, Crude oil 6.38%, and Real Estate 5.20%.

Commenting on the sector performance, Prof. Uwaleke noted that the aggressive hike in monetary policy rate by the Central Bank of Nigeria (CBN) in February 2024 had a negative impact on output in Q1 2024.

He said, just like in Q4 2023, when growth was driven by the oil sector, growth in Q1 2024 was also driven by the oil sector at 5.70%.

The Nigeria’s first Capital Market Processor said, the oil sector growth was aided partly by the increase in crude oil production during the quarter (from 1.55mbpd in previous quarter to 1.57mbpd), while the Non-oil sector performance was powered by the Services sector chiefly Financial services and ICT.

He submitted that manufacturing and agriculture sectors appeared hugely impacted by economic headwinds during the quarter. Growth rates were a mere 1.49% and 0.18% respectively, while the Agric sector (comprising 4 activities although dominated by crop production) tanked significantly in Q1 2024 to 0.18% from 2.10% in previous quarter.

He maintained that with the agric sector’s dismal performance, it is easy to understand why food inflation has climbed to over 40% as of April 2024, adding that the financial sector growth of 31.24% was a clear demonstration that it was detached from the productive sectors of the economy.

The former Commissioner of Finance, Imo State, said, “this identified growth pattern, weighted in favour of the services sector, is not healthy for a developing economy such as ours. Little wonder, economic growth does not appear inclusive reflecting in rising unemployment and poverty levels.

“It is time we reset this faulty economic structure, leveraging technology, in favour of the productive sectors: Industry and Agriculture.

“Indeed, structural change is strongly recommended (by UNCTAD) as one of the ingredients of building productive capacities,” he said.

Uwaleke who said that the nation’s economy is tanking, recommended that the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) pause policy rate hike.

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