February 25, 2021/Proshare
By FBNQuest Research
The release of the latest national accounts gives the opportunity for our quarterly search for green shoots of recovery. We exclude sectors that represent less than 1% of constant price GDP such as human health and social services, and we cover the last four quarters in our chart because the accounts are not seasonally adjusted. The result of our search is familiar, namely that there is only one sector (information and communications). The conclusion would be the same in many economies, both advanced and developing.
Exceptions would be where production meets needs either created by the COVID-19 virus (protective clothing for hospital employees) or unaffected by it (minerals for electric vehicle batteries). Info and comms, which is 81% telecoms in Nigeria, was already expanding rapidly due to the mobile data revolution and has been further boosted by the prevalence of working from home during life with COVID-19.
Agricultural growth of 3.4% in Q4 ’20 was the highest since Q4 ’17. This may finally be the reward for the sizeable credit interventions in its favour by the CBN, the development banks and the deposit money banks (DMBs).
Under just one of its schemes for the sector, the anchor borrowers’ programme, the CBN has disbursed NGN555bn to date. (The aggregate figure for DMBs at end-September was NGN933bn, an increase of 38.6% y/y yet still only 4.8% of their total outstanding credit).
The inclusion of real estate, which had contracted for six successive quarters, in our chart is less easy to explain in the context of Covid. We would have been less surprised by construction (1.2% y/y in Q4 ’20), given the FGN’s plans for capital investment.
Beyond the normal rebound from its contraction, our chart does not point to robust growth for the economy. A stellar performance by info and comms, which we expect in the quarters ahead, will not suffice. If we look at GDP on an expenditure basis, household consumption has been squeezed for five years and the FGN, unlike in the first half of the last decade, cannot provide a substantial fiscal stimulus.
The NBS is to release a new rebased set of national accounts next year or in early 2023 (Good Morning Nigeria, 05 February 2021). Rebasing begins with a listing of new establishments, which for obvious reasons tends to favour expanding sectors. It will therefore result in a larger GDP weighting for info and comms (15.0% at constant prices in 2020). More broadly, we would expect a larger share for the tertiary (services) sector at the expense of the secondary.
Top performing sectors (% chg; y/y)
Sources: National Bureau of Statistics (NBS); FBNQuest Capital Research
