Nigerian economy has remained on a steady path throughout 2021 – FG

Nigerian economy has remained on a steady path throughout 2021 – FG

Dec. 31, 2021

…N1.53 trillion VAT generated

The Federal Government has said recovery of the Nigerian economy has remained on a steady path throughout the year 2021.

This was disclosed by the Minister of Information and Culture, Alhaji Lai Mohammed on Thursday in Lagos, at an end of the year press briefing to showcase the achievements of the Buhari administration during the outgoing year, 2021.

The minister’s speech reads in path:

As you are aware, many countries around the world face unprecedented challenges, starting from 2020, as a result of the COVID-19 pandemic and Nigeria is no exception.

The Nigerian economy was hit by the pandemic in mid- 2020, and the economic disruptions led to a recession. The poor performance of the economy during the COVID-19 era affected output growth, trade, household welfare and livelihood.

However, this led to a quick response by the federal government with the rolling out of effective fiscal and monetary policies as well as health-related policies intended to curb the spread of the pandemic and mitigate the negative impact of the pandemic on the economy. This has yielded considerable results.

For example, the country’s domestic growth in the first three quarters of 2021 was positive, recording real GDP of 0.51 percent in Q1, 5.01 percent in Q2 and 4.03 percent in Q3 2021, This was an improvement from a declining performance in the first three quarters of 2020 (which led to economic recession) put at 1.87 percent in Q1, -6.10 percent in Q2 and -3.62 percent in Q3 2020.

Nevertheless, the fourth quarter 2020 recorded a slight improvement of 0.11 percent, ushering in positive growth rates in the three quarters of 2021.

The Ministry of Finance, Budget and National Planning generated N1.53 trillion from Value Added Tax (VAT). Some N496.4 billion was generated from VAT in the first three months of 2021, the highest in nine years and has maintained the January-December Budget cycle with the support of members of the National Assembly.

This economic performance in 2021 shows a steady improvement in growth over the last three quarters of 2020, and this can be attributed to government policies and strategies such as the Economic Sustainability Plan; the N500 billion COVID 19 Crisis Intervention Fund etc.

In the oil sector, real growth shows poorer performance in 2021, recording 2.21% (year-on-year) in Q1 2021, -12.65% in Q2 2021 and –10.73% in Q3 2021, from stronger growth of 5.06% in Q1 2020, -6.63% in Q2 2020, and -13.89% in Q3 2020. However, oil production in million barrel per day continued to decline in 2021, from 2.07mbpd in Q1 2020,1.81mbpd in Q2 2020, 1.67mbpd in Q3 2020 to 1.72mbpd in Q1 2021, 1.61mbpd in Q2 2021 and 1.57mbpd in Q3 2021. Non-oil sector indicated better performance of 0.79% in Q1 2021, 6.74% in Q2 2021 and 5.44% in Q3 2021, compared to 1.55% in Q1 2020, -6.05% in Q2 2020, and -2.51% in Q3 2020.

In Foreign Trade, Nigeria witnessed dwindling performance in 2020, arising from trade restrictions on accounts of COVID-19 pandemic. Disruptions of trading activities driven by the pandemic
further weakened the balance of trade witnessed in Q4 2019 in the subsequent quarters.

Consequently, total imports in the first three quarters of 2021 rose by 57.13%, from N13.97 in the corresponding quarters of 2020 to N21.95 trillion. Similarly, total exports grew by
40.62%, which was N13.12 trillion in the first three quarters of 2021, compared to N9.33trillion in the corresponding period, an indication of improved trading activities although with a deficit position.

Over the same period crude oil export improved considerably at N10.03 trillion, compared to N6.92 trillion, showing a growth rate of 44.93%, while Non-oil exports grew by 21.17% – from N1.19trillion to N1.44trillion over the same period. Inflation rate has continued to decline on a year-on-year basis since April 2021 when 18.12% was recorded.

Looking at the trend, a declining rate was recorded from 17.93% in May to 17.01% in August, 15.99% in October and 15.40% November 2021. It is projected that proper implementation of the proposed 2022 project of N17.13trillion, and Medium-Term Expenditure Framework & Fiscal Strategy Paper 2022-2024 are likely to improve the performance of the economy.