At a meeting last Friday with journalists and online media publishers which held at his Aguda House residence in the State House, Vice President Yemi Osinbajo argued that Nigeria is not heading into a recession.
Nigeria’s growth slowed last quarter by -0.36% year on year, but the vice president was confident that the economy has “hit a point where we can only go up.”
Osinbajo said that the decline began in late 2014 and GDP figures have been shrinking virtually every quarter since then. “Basically what has happened is that our major earner – oil – has dropped significantly,” he said, while explaining the reasons for the shrinking economy.
Oil prices which fell to less than $30 per barrel in 2015 are now heading towards $50 per barrel, but Osinbajo said this rise hasn’t benefited Nigeria because of the renewed militancy in the Niger Delta region. In fact, according to the vice president, “the reason why oil prices have shot up in the international market is because Nigeria’s oil production has dropped significantly. We’re losing close to 800,000 barrels of crude oil daily due to the vandals. Last month, we made just $550m from oil – our lowest in a very long time.”
Two other reasons adduced by Osinbajo for the negative growth were the delay in passing the budget and the fact that states now earn far less, causing them to owe salaries and spend little on public works.
“However the good news in my view is that we have hit a point where we can only go up,” the vice president stated, anchoring his optimism on three points.
- Government’s ongoing efforts in agriculture.
- The new forex window announced by the CBN which will improve the capacity of manufacturers to access forex, and
- A deal announced during the last federal executive Council meeting by finance minister, Kemi Adeosun, which will see the government get a foreign denominated bond that will “give each state at least a billion naira monthly but only on meeting certain conditions like cleaning their payroll, cutting recurrent expenditure, using Treasure Single Account, among others.”
“These combination of factors,” Osinbajo said, “will encourage GDP growth and will see us bounce back.”