AFDB WRITES OFF NIGERIAN ECONOMY

How did the Nigerian economy fare last year? It did not do well, says the African Development Bank (AfDB).

AfDB wrote off the economy, citing the economic growth, which it claimed did not translate into job creation or poverty alleviation, to buttress its stand.

AfDB, in its latest report on African Economic Outlook (AEO), said unemployment rose from 21 per cent in 2010 to 24 per cent in 2011.

In a swift reaction, the Presidency described the report as “false and political’’.

Special Adviser to the President on Media and Publicity Dr Reuben Abati, said it was inconceivable that the report came barely a month after the United Nations (UN) gave an award to Nigeria for the government’s efforts at “reducing poverty significantly”.

The AfDB report said: “The Nigerian economy slowed down from 7.4% growth in 2011 to 6.6% in 2012. The oil sector continues to drive the economy, with average growth of about 8.0%, compared to -0.35% for the non-oil sector.

“Agriculture and the oil and gas sectors continue to dominate economic activities in Nigeria.

“The fiscal consolidation stance of the government has helped to contain the fiscal deficit below 3.0% of gross domestic product (GDP). This, coupled with the tight monetary policy stance of the Central Bank of Nigeria (CBN), helped to keep inflation at around 12.0% in 2012.

“The outlook for growth remains positive. Short and mid-term downside risks include security challenges arising from religious conflicts in some states, costs associated with flooding, slower global economic growth (particularly in the United States and China) and the sovereign debt crisis in the euro area”.

The report added: “The economic growth has not translated into job creation or poverty alleviation. Unemployment increased from 21% in 2010 to 24% in 2011 because the sectors driving the economic growth are not high job-creating sectors (the oil and gas sector, for example, is a capital intensive “enclave” with very little employment-generating potential).

“The major policy issue is employment generation, particularly among the youth, and inclusive growth.

“The economic growth was not accompanied by a structural change of the Nigerian economy. The economy lacks diversification and agricultural production lacks modernisation.

“To address this, the government is encouraging the diversification of the Nigerian economy away from the oil and gas sector.

“ It is addressing the infrastructure deficit in the country and the development of the agricultural sector through modernisation and the establishment of staple-crop processing zones, with the value chain model to provide linkages to the manufacturing sector.”

The AfDB, however, said the economic outlook was bright.

It said: “The outlook for growth remains positive. Downside risks include security challenges arising from religious conflict in some states and slower global growth.

“As economic growth is largely driven by capital-intensive sectors, it has not translated into sufficient job creation and poverty remains high.

“As a result, Nigeria has a low Human Development Index (HDI). The country has made some progress towards attainment of the Millennium Development Goals (MDGs), albeit slowly and unevenly.

“There is a high need to diversify the Nigerian economy into the non-oil sector. This would help expand the sources of growth and make it broad based, both socially and geographically.

“Further development of agriculture, manufacturing and services could broaden growth, create employment and reduce poverty.”

The News Agency of Nigeria (NAN) quoted Abati as saying that the Food and Agricultural Organisation (FAO), a UN body, at its 38th Session in Rome, Italy in June, gave an award to Nigeria as one of the nations that made significant progress in reducing hunger.

The Minister of Agriculture, Dr. Akinwumi Adesina, he said, represented President Goodluck Jonathan at the ceremony.

Abati said Adesina presented the award to the president during a Federal Executive Council (FEC) meeting, saying such a negative report from the AfDB a few weeks after the FAO award was “suspicious and laced with falsehood and political’’.

Source: The Nation