Poor electricity supply lowered the non-oil sector’s growth in the second quarter of the year, the latest Gross Domestic Product report by the National Bureau of Statistics has stated.
Despite the persistent challenges facing the oil sector, the NBS said the non-oil partly sustained the nation’s economy with a 7.36 per cent growth in real terms in the second quarter of 2013.
When compared with 7.63 per cent of the corresponding period in 2012, and 7.89 per cent in the first quarter of the year, the sector recorded 0.27 per cent year-on-year drop in growth.
The sector’s growth also dropped by 0.53 per cent from the first quarter of the year.
Although analysts noted that the figures appeared insignificant on paper, they were quite impacting in real terms and poor electricity availability was fingered as the cause of the drop.
The Statistician–General, NBS, Dr. Yemi Kale, who signed the report, said the ‘relative decline was partly attributed to lower electricity generation during the period which had ripple effects on manufacturing, telecommunications as well as wholesale and retail trade.
Specifically, the NBS said growth in Wholesale & Retail Trade sector stood at 7.44 per cent in the second quarter of 2013, compared to 8.65 per cent recorded in the second quarter of 2012.
Growth was also lower when compared with the first quarter of 2013 which recorded 8.22per cent.
The sector, however, remained the second largest contributor to GDP, after agriculture, according to the NBS.
“While increased agricultural growth has provided some positive multiplier effects for this sector, the decline in growth recorded in the second quarter of 2013 vis-à-vis the first quarter was attributed to lower performance in the electricity sector which impacted negatively on the Wholesale and Retail trade activities,” the report said.
Telecommunications and post sector recorded a real GDP growth of 22.12 per cent in the second quarter of 2013, but this was down from 24.53 per cent recorded in the first quarter of the year, and 29.38 per cent recorded in the second quarter of 2012.
The report said, “while the telecommunications sector continues to be a key driver of the growth in non-oil sector and the Nigerian economy at large, growth in the sector slowed in the second quarter of 2013 as a result of power supply and other infrastructure constraints.
“The sector remains a highly competitive market backed by intensive marketing strategies and value added services by operators and has continued to add more services to its activities.”
During the second quarter of 2013, NBS said manufacturing output decreased relative to the same period in 2012, adding that real GDP growth in the sector was recorded at 6.81 per cent.
But this was down from 8.41 per cent recorded in the first quarter of 2013, and 7.59 per cent recorded in the corresponding quarter of 2012.
“This decline was due partly to power,” the NBS said.
The President, Manufacturers Association of Nigeria, Chief Kola Jamodu, while reviewing the year 2012 during the association’s 41st AGM recently, lamented that electricity supply to industrial areas was still a big challenge in the country.
This, according to him, has led to low performance in terms of contribution to GDP, export earnings, employment generation and wealth creation.
He said, “The gross inadequacy in public electric power supply and its effect on the economy cannot be over-emphasised. Manufacturing sector spent huge amount in generating electricity to power its operations.
“Although there was a marginal increase in daily electricity supply to industrial areas in 2012, the supply which stood at 8.1 hours/day when compared with the 6.7 hours/day in 2011 was low in quality and regularity. These challenges largely made supply from PHCN unusable by industries, particularly the medium and large ones.”
Jamodu said harsh operating environment caused by huge infrastructure gap, particularly public electric power supply and road infrastructure, had continued to hamper real sector’s growth in the country.
To foster competition of the manufacturing sector, Jamodu said there was an urgent need to continue to revamp the country’s infrastructure particularly power.
“The process of privatising PHCN should be completed. The utilisation of renewable energy resources for power generation such as solar, coal and wind should be fully explored and adopted in addition to our conventional sources of energy,” he added.
Now that the privatisation of 15 unbundled assets of the Power Holding Company is coming to an end, analysts said manufacturers and other non-sector’s players would enjoy improved power supply.
This, they warned, would not be as soon as expected, adding that the new investors would have to revamp the power assets and this might take a little time.
Kale said data for the GDP report were obtained from the Quarterly Establishment Survey conducted by the National Bureau of Statistics.
He said the economy, when measured by the real GDP, grew by 6.18 per cent in the second quarter of 2013, slower than the 6.56 per cent recorded in the first quarter of 2013 and 6.39 per cent recorded in the corresponding quarter of 2012.
“The nominal GDP for the second quarter of 2013 was estimated at N9,115,320.72 million, lower than N9,840,226.91 million estimated for the corresponding quarter of 2012 and N9,493,779.44 million recorded in the first quarter of 2013,” he added.
On the performance of the oil sector in the quarter in review, the NBS boss said the average daily production of crude oil in the second quarter of 2013 was recorded at 2.11 million barrels per day, a decline from 2.29 million barrels per day recorded in the first quarter of the year, and 2.38 million barrels per day recorded in the second quarter of 2012.
“These figures, with their associated gas components, resulted in a real growth rate of -1.15 per cent in oil GDP for the second quarter of 2013, compared to from the -0.54 per cent recorded in the first quarter of 2013 and -0.78 percent recorded in the corresponding period of 2012,” the report said.
Supply disruption as a result of pipeline vandalism was pinpointed as a huge challenge to the Nigerian oil industry.
“Nevertheless, the sector benefited from the relative stability in international crude oil market price, as well as the Naira exchange rate. The Oil sector contributed approximately 12.9 per cent to real GDP in the second quarter of 2013, lower than the 14.75 per cent contribution in the first quarter of 2013, and the 13.86 per cent recorded during the second quarter of 2012,” the report added.