The Managing Director of Cowry Asset Management Limited, Mr. Johnson Chukwu has said that the federal government’s effort to diversify the economy is still work in progress as it is yet to manifest in the productivity of the economy.
Chukwu who took this position in an interview with our correspondent in Lagos said although the economy grew by 1.4% in the third quarter of 2017 going by the GDP performance, the real sector of the economy which includes agriculture, manufacturing, telecommunication, transportation, real estate, construction among other sectors excluding oil and gas, contrasted by 0.76% even as he said that the contraction notwithstanding, the economy still grew because the oil and gas sector grew by 25.89%.
He explained that going by the scenario above, one could only decipher that the economy was still largely dependent on oil and that the much talked about diversification of the economy was yet to attain significant success.
According to him,” The best one could say is that the effort to diversify the economy is still work in progress to the extent that it is not yet manifested in the productivity of the economy. If you look at the third quarter GDP performance, you observe that though the economy grew by 1.4%, the real sector of the economy which includes agriculture, manufacturing, telecommunication, transportation, real estate, construction and what have you excluding oil and gas, contrasted by 0.76% despite that the economy still grew because the oil and gas sector grew by 25.89%.
“So, what that means is that the economy is still largely oil dependent, that the much touted diversification of the economy has not attained significant success and that was also why was it JP Morgan spoke sometime last year on the volatility of the economy, it stated that the government has not succeeded in diversifying the economy because the economy was still an oil dependent economy”.
On milestones achieved attained in the economy in the year 2017, the Cowry Asset Management Limited boss described Nigeria’s exit from recession as the major achievement recorded in the economy in the year under review.
“In the second quarter of 2017, the economy recovered from a recessionary period by growing 0.70%, by third quarter of 2017, the economy grew by 11.4%. That is positive growth indices that one could say was the greatest achievement that the economy recorded given the fact that it was coming from a very weak position and today we are now talking of positive growth.
“In a nutshell, the economy is growing, it encapsulate virtually everything happening in the economy. We have seen stability in the exchange rate, prior to last year, we have rate that was oscillating and depreciating on a very fast lane till it got to the rate of N525 per dollar before we now moved back and today we are dealing with relatively exchange rate of around N360/363 at the parallel market and official window market. We have also seen inflation declined from 18.70% in January 2017 to 15.37% in December 2017. Those are positive trajectory that the economy recorded in 2017”, he said.
He however predicted that the year 2018 would be a better year than 2017 going by the economic outlook as according to him, a lot of foreign portfolio investors were back into the country, Nigeria’s reserve had gone up and there is a likelihood of government’s expenditure improving ahead of elections at different levels.
“So, these things will reflect in the lives of the people. We have seen inflation rate trend downwards, all these factors will create lower inflation rate, will trigger lending, lending will lead to improve production, there will be job creation and from the political and social sides, governments at different levels will try to create jobs even though they are temporary jobs and that will put income on the part of the people which will lead to demand for goods. So, on an average basis, I think 2018 will be better than 2017”, he added.
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