Rebased GDP shows huge growth, investment potential in 12 sectors

The rebased GDP has showcased some 12 sectors that are now Nigeria’s fastest growing, large contributors to the economy and hold huge potential for investments, job creation and poverty reduction.

While electricity, motion picture, financial institutions, arts, entertainment and recreation, plastic & rubber as well as coal mining are now the fastest growing sectors in the economy, crop production (agriculture), trade, crude petroleum and natural gas, telecoms and information services, real estate, food, beverage, tobacco are now the largest contributors to the nation’s GDP.

Electricity, a critical enabler to support other economic sectors, now holds the highest growth rate of 44 percent, but shows at the moment a slow base of growth and opportunity for expansion, National Bureau of Statistics (NBS) figures show.

Power has been a challenge in Africa’s oil rich nation with output consistently wobbling between 3,000 megawatts and 4,000 megawatts. However, it is expected that recent privatisation exercise could lead to greater output and realisation of government target of 40,000 megawatts by end of 2020.

Motion picture at 33 percent growth rate habours the Nollywood and is a sector which has evolved in recent years without any government formal intervention/support.

Nollywood is the second largest film industry in the world, now ahead of the United States and behind India. But average cost per movie is still relatively low at $0.1 million compared to Hollywood at $20 million.

The rebased GDP has shown that the motion picture sector holds significant opportunity for value addition, job creation and poverty reduction but the challenges of piracy, informality and non-registration with regulators are still quite huge.

Financial institutions captured under services records some 32% growth rate with the rebased numbers and the sector had evolved from labour-intensive & inefficient to technology-driven and more efficient.

Financial intermediation as a ratio of GDP has “increased”, indicating scope for more growth and is better able to support other sectors, BusinessDay analysis of the new numbers highlights.

Arts, entertainment and recreation post some 27% growth rate and include creative arts, entertainment, libraries, museum, sports and amusement activities.

Like Nollywood, the sector has high value-added potential but there is still this huge challenge of piracy and non-formality.
Estimated at $3 billion in revenue, plastic & rubber is another sector that has shown high growth potential at a rebased growth rate of 24% growth rate.

The sector, the NBS data show, has the huge potential to regain its major non-oil export status.

Experts suggest that there is therefore need for replanting and strengthening value chain link with crude oil and petrochemicals industry to boost output.

Another sector yet is coal mining which is growing at 21%. Coal is an alternative source of power generation. Unfortunately, the sector is still labour-intensive and informal activities remain considerable.

Opportunities exist in the formalisation of the sector and utilisation as power source in future and there is room to foster a technology-aid in the sector.

Further analysis shows that the largest contributors to nominal GDP include crop production, trade, crude petroleum and natural gas, telecommunications and information services, real estate as well as food and beverage.

Crop production (agriculture) now contributes 20% although it has lost its dominance in the entire GDP, according to NBS.
However, the rebased figures have indicated potential for growth from expansion of farmed area.

World Bank data indicate that only 3.5% of Nigeria has permanent crops, yet 87.3% of land is agricultural.

The sector now holds potential from growth in productivity, which in Nigeria is very low relative to other countries, producing between half and 1/3 of the cereal yields of economically similar countries.

Again, low quality/non-certification is constraining exports to large international markets.

Trade contributes 17% to the national GDP, but it is mainly made up of buying and selling of imported goods.

“If domestically produced, these goods could be cheaper, and if good enough, exported”, Yemi Kale, statistician general of the federation, said.

Kale is of the view that population remains an economic advantage because while the nation’s middle class demand for foreign goods, low- income citizens go for cheap manufactured goods.

Crude petroleum & natural gas now accounts for 14% of the nation’s GDP.