Nigeria’s Q2 GDP contracts by 6.10%

By Lucas Ajanaku and Blessing Olaifa

Nigeria’s economy contracted the most in at least a decade in the second quarter (Q2) of this year as the crash in oil prices and the global fallout from COVID-19 took toll on output.

The nation’s Gross Domestic Product (GDP) shrank 6.10 per cent in the three months through June from a year earlier, compared with growth of 1.87per cent in the previous quarter, stats agency, the National Bureau of Statistics (NBS) said on its website on Monday.

The median estimate of six economists in a Bloomberg survey was for a 4.05per cent decline. Quarter-on-quarter non-seasonally real GDP decreased by 5.04 per cent after falling 14.27per cent in the three months through March.

The contraction notwithstanding, the information communication technology (ICT) sector lifted the GDP with about 17.8 per cent.

The Minister of Communications and Digital Economy, Dr Ibrahim Pantami described the development as heart-warming.

“Nigeria’s GDP decreased by –6.10 per cent (year-on-year) in real terms in the second quarter of 2020, largely attributable to significantly lower levels of both domestic and international economic activity during the quarter, which resulted from nationwide shutdown efforts aimed at containing the COVID-19 pandemic, ” the report said.

The non-oil sector contributed 91.07per cent to the nation’s GDP in Q2 2020 as opposed to the 8.93per cent contributed to total real GDP by the oil sector, the report added.

Pantami said: “It is worthy of note that the ICT sector contributed 17.83per cent to the total real GDP in Q2 2020, 20.54 per cent higher than its contribution a year earlier and in the preceding quarter, in which it accounted for 14.07per cent. This contribution is unprecedented.

“The strategic policy directions of the Federal Government include the Digital Economy in the mandate of the Ministry, the unveiling and implementation of the National Digital Economy Policy and Strategy and the National Broadband Plan, among others.

“As at July 2020, the broadband penetration in the country was 42.02per cent, translating to a percentage increase of almost double digits in less than 1 year. This is another remarkable achievement.

“The unprecedented contribution of ICT to Nigeria’s GDP can also be attributed to dynamic and results-oriented leadership which has been acknowledged and appreciated by a wide spectrum of the stakeholders in the sector.

“The GDP Report has shown how critical the ICT sector is to the growth of our country’s digital economy and, by extension, the general economy.’’

Oil production fell to 1.81 million barrels a day (bpd) from 2.07 million bpd in the previous three months. That’s the lowest since the first quarter of 2017, which was the last time Africa’s largest economy contracted.

Crude contributes less than 10per cent to the country’s GDP, but it accounts for about 90 per cent of foreign-exchange earnings and half of government revenue. That means the plunge in oil prices in the wake of the coronavirus pandemic, which hit as the economy’s recovery from a 2016 slump was still gaining traction, have emptied coffers.

Still, the drop in output was wider than just crude. The oil sector contracted by 6.6per cent from a year earlier and the non-oil sector shrank by 6.05per cent, the first drop in non-oil GDP since the third quarter of 2017.