Almost every economic sector of the country is currently underperforming, and that is the reason why Nigeria is unable to achieve its potential for economic growth, said Yemi Kale, Chief Economist of KPMG.
He stated this during the Nairametrics Q2 2023 Economic Outlook Webinar which took place over the weekend.
The former head of the National Bureau of Statistics (NBS), said, “I think almost every economic activity in Nigeria is underperforming and that is why we are not able to grow anywhere close to our potential, our real potential to achieve the double digits in Gross Domestic Product (GDP). You will find out that the sectors that are underperforming and the ones that are performing that there is a direct correlation with the ones that the government hasn’t too much of its hand in.
“I would say that it’s easier to pick the sectors that are not underperforming, there are fewer of them, and most of the sectors are underperforming. One of them is Agriculture, although the reason why agriculture contracted in the first quarter, the first time since 1982 was largely tied to the Naira redesign policy.
“And apart from that, agriculture has always grown, but that growth in agriculture is understated. Agriculture is growing but is largely a small-scale and subsistence-based traditional method.
“You can imagine if we are growing tow to three per cent using traditional methods of production.
“You can imagine if we scale up, mechanization using more improved seeds, we get these smallholder farmers to work and expand agricultural production.
“So even though agriculture has been responsible for holding the Nigerian economy, I think it’s still underperforming. If you look at the industrial sector, in particular manufacturing, you will see that only two or three sub-sectors in manufacturing account for about 70% of manufacturing growth, that’s food and beverage, cement, and textiles.
“Just three of them account for this 70% then we have about 9 that account for 30%. These sectors are extremely important for their growth, but they account for less than one percent of our GDP.
“So, you have situations like that, even if you go into the service sector, insurance, for example, is significantly underperforming, and a sector like mining as well is underperformance.
“If you look at economic activities of the 46 sectors you will find out that probably about 40 of them are underperforming,” he said.
Kale stated that political instability for a long period is a major limiting factor affecting economic growth, adding that Nigeria has not experienced an extended period of growth and development.
“Unforced errors, things that we did to ourselves, bad policies, bad strategies, and when the government is told that strategy is not working, they just continue.
“The most obvious is our dependence on oil, the major difference between countries we were better in the 1960s and left us today, and that is because they faced proper agenda”, he added.
He emphasized that inadequate planning is a significant challenge, evident in the poor infrastructure, availability of unskilled labour jobs, improper port categorization, and reliance on subsistence farming.
Additionally, the use of oil revenue for imports, the proposed consideration by the Federal Government to move solid to the concurrent list, the need for a developed supply chain model for heavy industries, the lack of land use act reform, and other factors further compound the issues.
