The Nigerian economy skidded into recession in the second quarter of 2016 when the Gross Domestic Product (GDP) started recording negative growth rates.
However, enlightened opinion says the economy is showing signs of recovery from the recession which engulfed it for the better part of 2016.
This is because there are high prospects for economic recovery in 2017 as a result of the proactive policies of the Federal Government and positive developments at the international level.
The optimism is quite high and justifiable, as the International Monetary Fund (IMF) has projected that Nigeria’s economy would be out of recession in 2017.
Besides, Fitch, an international rating agency, has also predicted a 2.6-per-cent growth rate for the Nigerian economy in 2017.
With the benefit of hindsight, the economic recession occurred largely due to the fall in crude oil prices and resurgence of militancy in the Niger Delta in 2016, which cut down oil production below the projection of the 2016 budget.
On the global front, the prospects of Nigeria’s economic recovery have brightened up by rising crude oil prices.
In December 2016, OPEC members reached a deal to cut oil production by 1.2 million barrels per day to mop up the glut and raise global prices.
Expectedly, the tactical move elicited some positive reactions, as oil prices surged and reached an average of 55 dollars per barrel, in contrast with the 29 dollar-per-barrel price in the second quarter of 2016.
The Federal Government’s 2017 Budget is predicated on crude oil price of 42.5 dollars per barrel and 2.2 million barrels daily production.
If this positive trend continues, the liquidity crisis, particularly the shortage of foreign currency and the crisis in the foreign exchange market, will soon be over.
Mr Bismarck Rewane, an economic expert, said that the improvement in oil prices would help mitigate the economic recession and stimulate economic recovery.
However, analysts underscore the need to ramp up the nation’s crude oil production, which has been significantly disrupted by an upsurge in militant attacks in the Niger Delta area.
The militant attacks on oil and gas facilities in 2016 pushed oil shipments to as low as 1.38 million barrels per day (bpd) in August from a peak of 2.1 million bpd in January.
However, Alhaji Aminu Gwadabe, the President of Association of Bureau de Change Operators in Nigeria (ABCON), described the economic outlook for 2017 as bright and promising, in view of the rising oil prices.
“Already, we have prices of crude oil going up; and translating to better foreign reserves and fiscal buffers that will enhance liquidity and grow investors’ confidence in the foreign exchange market.
“Furthermore, this development will lead to the bridging of the gap between the parallel market and official foreign exchange market,’’ he said.
The ABCON president said that the increase in foreign earnings could lead to the convergence of the two foreign exchange rates in the country, with the likely emergence of a single exchange rate of N400 to the dollar in 2017.
Sharing similar sentiments, Mr Edwin Nwachukwu, the Managing Engineer, Frazimer Engineering Nig. Ltd., said that the rise of crude oil prices would enable the government to have enough financial resources to finance the 2017 budget.
He, however, advised the government to work for the sustenance and improvement of peace in the Niger Delta, so as to enable the country to boost its oil production.
Nwachukwu underscored the need to tackle all the nagging problems in the Niger Delta since crude oil remained the country’s main foreign exchange earner.
Aside from the perceptible improvements in the oil sector, the Federal Government has also introduced some measures in other sectors, which have started paying off.
For instance, the revolution in the agriculture sector has boosted rice production across the country, while checking importation of the grains.
The Federal Government has been spending millions of dollars every year to import rice, a major a staple food in the country, with negative consequences on the foreign exchange market and the country’s external reserves.
President Muhammadu Buhari once pledged that his administration would make Nigeria self-sufficient in rice production within 18 months.
The Federal Government, through the CBN, launched the Anchor Borrowers Programme (ABP) in 2015 to boost rice and wheat production across the country.
Under the programme, beneficiary farmers are given loans at nine per cent interest rate.
About 13 states have been identified for rice production and the states include Bauchi, Ogun, Adamawa, Enugu, Ekiti, Ebonyi and Niger, among others.
Many other states have also keyed into programme.
For instance, Alhaji Suleiman Ningi, the Director of Agricultural Services, Bauchi State Ministry of Agriculture, said that the state government would spend over N150 million to support 30,000 farmers under the ABP this year.
“The Bauchi State Government would pay the sum of N150 million to commercial banks so as to ease bank charges and further empower the youth and farmers.
“The farmers are expected to cultivate rice and wheat during the dry season, while in the rainy season, the farmers will cultivate rice and maize,’’ he said.
Gov. Mohammed Abubakar of Bauchi State said that the agricultural programmes of the state in 2017 would focus on the empowerment of youths to enable them to partake in irrigation agriculture.
Beyond that, the Borno State Government has also earmarked N7.72 billion for various agricultural programmes in the state.
Gov. Kashim Shettima said that the money would be used to revolutionise farming and provide the enabling environment for food production, maintenance of plantations and introduction of new crop varieties.
“Government will provide adequate farm machinery and other inputs to boost agricultural activities.
“All counterpart funds for National Programme on Food Security (NPFS), International Fund for Agricultural Development (IFAD) and Fadama III programmes shall be paid to enable us to access more funding,’’ he said.
On the Anchor Borrowers Programme (ABP), the CBN disclosed that at least 219,837 farmers in 17 states were participating in the programme.
The CBN Governor, Mr Godwin Emefiele, said that 246,837 hectares of land had so far been cultivated under the programme.
He said that the programme was also aimed at supporting farmers with agricultural inputs to enhance productivity, create job opportunities and diversify the country’s economy.
He said that the CBN had connected more than 120,000 rice and wheat farmers with reputable millers.
The CBN governor said the apex bank had set aside some funds from the N220 billion Micro, Small and Medium Enterprises Development Fund (MSMEDF) to boost the ABP.
Emefiele said that the CBN would also empower at least 600,000 farmers in the rice, oil palm, wheat, cotton and fish value chains within the next five years.
All the same, commercial banks in the country have resolved to contribute about N30 billion, out of their profit after tax, to the newly created Agriculture-Small and Medium Enterprises Fund, designed to support the funding of SMEs and agricultural projects.
The resolution was one of measures taken at the 8th Annual Bankers Committee retreat in Lagos to facilitate the recovery of the nation’s economy from negative growth.
This is in addition to N23 billion that was expended on boosting local production of rice, soya bean, sugar and other important produce.
It is, however, cheery news to note that the manufacturing sector, which was in a coma several years ago, has started showing signs of recovery.
The average production in the manufacturing sector in 2016 was around 20 per cent of installed capacity.
The Purchasing Managers Index (PMI) in the industry in 2016 stood at 46.0 in November, 44.1 in October and 42.5 in September respectively.
The PMI is an indicator of the economic health of the manufacturing sector. It is based on five major indicators: new orders, inventory levels, production, supplier deliveries and employment environment.
A composite PMI above 50 points indicates that the manufacturing/non-manufacturing economy is generally expanding; 50 points indicate no change and below 50 points indicate that it is generally declining.
But in December 2016, the PMI rose to 52.0, indicating the gradual recovery of the manufacturing sector.
The Manufacturers Association of Nigeria (MAN) has expressed optimism that capacity utilisation in the manufacturing sector would increase in 2017.
It is believed that the non-oil sector, which primarily includes manufacturing, agriculture and mining, will experience a growth in 2017.
Mr Frank Jacobs, President of MAN, commended the Federal Government for the recent reduction of the import duties on 115 items.
The Minister of Finance, Mrs Kemi Adeosun, announced that the government had reduced import duties on 115 items, most of which were raw materials for the industries.
“We can say the step is a welcome idea,’’ Jacobs said, adding: “It shows that that government listened to us, manufacturers and industrialists, because the cost of raw materials is one of the issues crippling the key non-oil sector
“For instance, the reduction of duties on alcohol for medical pharmaceutical purposes and other raw materials needed by local manufacturers in this field will reduce the cost of production.
“The same also applies to ready wines, beverages and vinegar; the increase in duty from 20 per cent to 60 per cent may serve as a deterrent to importation and boost local production
“For 2016, it has been a year of economic recession for two consecutive quarters, with no real policy to stimulate investment, but we are optimistic that 2017 will be better,” Jacobs said.
The MAN president, nonetheless, emphasised that achievable monetary policies should complement fiscal policies so as to achieve the desired results.
Besides, Mr Bassey Edem, the President of NACCIMA, lauded the Federal Government for reviving the Export Expansion Grant (EEG), which would “increase the capacity of non-oil exporters by about 30 per cent to meet the large global demand for Nigerian products’’.
Nevertheless, Chief Duro Kuteyi, the President, Nigerian Association of Technology Incubation Industrialists, called for effective implementation of policies and waivers.
Kuteyi, who is also a food manufacturer, appealed to the government to put in place effective implementation strategies for all its policies in the New Year.
From all indications, Nigeria is gradually stepping out of economic recession and there is heightened optimism that 2017 will be a signpost of another economic boom in Nigeria.