Can Nigeria sustain GDP growth momentum?

Nigeria's economy has shown significant growth momentum in the third quarter of this year, with a year-on-year increase of 3.46 per cent. The primary driver of this growth has been the non-oil sector, particularly the services sub-sector, which expanded by 3.37 per cent. However, the country still faces challenges, as reflected in the 4.3 per cent unemployment rate reported by the National Bureau of Statistics for the second quarter of this year. To shed more light on these issues, Professor Bongo Adi, an esteemed economist from Lagos Business School, shared his insights in a recent CNBC Africa interview. The interview delved into the sustainability of Nigeria's economic growth, the impact of ongoing reforms, and the structural concerns affecting the economy. Professor Adi expressed cautious optimism regarding Nigeria's economic outlook. While he acknowledged the potential benefits of ongoing reforms, such as those proposed by the Central Bank of Nigeria (CBN), he raised concerns about the country's structural challenges. The recent decision to raise the Monetary Policy Rate (NPR) by 25 basis points was noted as a measure to address inflationary pressures. However, Professor Adi highlighted that inflation in Nigeria is influenced by non-monetary factors, such as issues with the Premium Motor Spirit (PMS) supply. This raises questions about the effectiveness of using monetary policy tools to tackle structural economic issues. The interview also addressed the composition of Nigeria's growth drivers. While the non-oil sector recorded growth, the performance across sub-sectors varied significantly. Sectors like manufacturing and construction showed sub-optimal growth, while agriculture, despite being a major contributor, grew by only one percent. The transportation and ICT sectors emerged as key drivers of growth, but their limited employment potential raised concerns about the overall productivity and inclusivity of the economic expansion. The financial services industry's resilience, in contrast to other sectors, pointed to a disconnect between financial activities and the productive sectors. Furthermore, Professor Adi highlighted discrepancies in the reported unemployment rate, suggesting that the figures may not accurately reflect the true state of employment in Nigeria. The official unemployment rate of 4.3 per cent implies a level below the natural rate of unemployment, leading to questions about the reliability and relevance of current employment statistics. These nuances in economic data pose challenges for policymakers and economists in assessing Nigeria's labor market dynamics. As Nigeria navigates its economic growth trajectory, the need for holistic policy interventions that address structural constraints and promote inclusive growth becomes paramount. The country's reform agenda must align with the realities of the economy, focusing not just on headline growth figures but also on the quality and sustainability of growth. Professor Adi's insights underscore the importance of addressing underlying structural issues, fostering sectoral linkages, and promoting job-intensive growth to ensure long-term economic stability and prosperity in Nigeria.