The economy improved marginally with macroeconomic indicators showing a better performance compared to the corresponding period
in 2017. Inflation rate trended downwards for most of the year whilst the exchange rate remained stable. The Central Bank of Nigeria (CBN) maintained the monetary policy rate at 14%. During this period, the Manufacturing and Non-manufacturing Purchasing Managers’ Index (PMI) expanded above 50%. On the fiscal side, the late passage of the 2018 budget muted the impact of fiscal policy intervention.
However, the upward movement in global oil prices enabled a positive economic shift. This sustained oil price recovery consolidated aggregate demand as government revenue increased above the revenues earned in 2017. Notwithstanding the relative macroeconomic stability, the Nigerian economy still suffered from, weak revenue mobilization, rising debt service and counterproductive budget cycle which collectively worked to inhibit any material shift in fiscal expansion in 2018. Some growth was experienced in the Industrial sector, triggered by a modest improvement in oil refining, increased cement production and a strong performance in the Foods, Beverages, and Tobacco, Textile, Apparel and Footwear industries. The sector, however, experienced the usual challenges of high-interest rate, multiple taxations, and infrastructural the deficit, in particular, electricity shortages. In the Agricultural Sector, there was a significant drop in the largest sub-sectors such as crop production and livestock. Despite some of the policies implemented in 2017 by the Government to support operators in the agricultural sector such as the Anchor Borrower’s Programmes (ABP), the heightened farmer/herdsman clashes and the seasonality factors affected agricultural production in 2018.
In the Services Sector, there was a decline in the Real Estate and Trade sub-sectors but the Information Technology and Communication sector grew after consecutive quarters of negative growth. The strong improvement recorded in this sector was largely driven by the Telecommunication and Broadcasting subsectors. The primary challenges confronting business activities in this sector include; limited access to finance, misaligned government policies and inadequate power supply. In its 2018 Macroeconomic Outlook, the NESG highlighted the need for policymakers to focus beyond GDP growth numbers and concentrate more on the quality of growth. The Nigerian economy needed crucial reforms that alter the pattern of GDP growth through the strategic development of productive sectors. This will be triggered by attracting investments into key subsectors within the manufacturing and agro-processing sector, thereby, creating opportunities across the value chain, and creating an extremely conducive environment for capital flows into infrastructure development.
This year 2019, being an election year, presents an opportunity for the Nigerian government to achieve broad-based economic growth by:
- Eliminating subsidies
- Truly encouraging patient FDI
- Enhancing its focus on infrastructure – power, roads, rail, etc
- Stimulating and providing quality education and knowledge, and improving our health facilities
- Creating Social Security structures