07 August 2014, Abuja – The African Development Bank Group on Thursday said the drop in oil revenue occasioned by oil theft and pipeline vandalism, as well as the security challenges in the North-East might dampen the positive economic outlook for the country for the rest of the year and beyond.
The bank stated this in its African Economic Outlook 2014 report which was launched in Abuja.
The report, which covers 54 African countries presents the current state of economic and social development as well as prospects for countries in the continent.
In recent times, the country had been battling with serious disruptions in oil production and lifting operations occasioned by multiple leaks, pipeline vandalism and theft.
Apart from the decline in oil revenue, the report also listed the sluggish recovery of the global economy, continued agitation for resource control in the Niger-Delta region, and possible distraction as a result of the 2015 general elections as other factors that may affect the performance of the economy.
It stated that while prospects in the country was being driven by performance in the activities in the non oil sector such as agriculture, information and communication technology, trade and services, the recent decline in oil production had become worrisome.
It said, “Growth of the oil sector was hampered throughout 2013 by supply disruptions arising from oil theft and pipeline vandalism, and by weak investment in upstream activities with no new oil finds
“Risks to Nigeria’s economic growth are sluggish recovery of the global economy, insecurity challenges in the Northeastern part of the country, continued agitation for resource control in the Niger Delta and possible distraction from the ongoing reforms as a result of the upcoming 2015 general elections.
“Negative growth of the oil sector may also continue to drag down overall growth until a lasting solution is found to the challenge of oil theft and weak investment in exploration due to uncertain state of play in the sector as a result of non passage of the Petroleum Industry Bill.”
The report also explained that the country is still facing the challenge of making its decade long sustained growth more inclusive.
For instance, it noted that “Poverty and unemployment remain prominent among the major challenges facing the country. one reason for that is that the benefits of economic growth have not sufficiently trickled down to the poor.”
Commenting on the report, the Country Director of the AfDB, Mr. Ousmane Dore explained that despite the challenges facing the country, social indicators are beginning to improve as efforts to achieve the Millennium Development Goals have been intensified through the implementation of social-sector reforms.
“We believe that monetary policy has been successful because the country’s inflation rate currently stands at single digit.
“But there is need to put in place policies that will help address poverty to match the tremendous growth which Nigeria had recorded in recent times, ” he added.
The Director-General, Budget Office of the Federation, Dr Bright Okogu admitted some of the challenges facing the country but noted, however that the federal government was currently addressing most of the issues raised in the report.
For instance, he said while the contribution of the oil sector to Gross Domestic Product had been on the decline, other sectors such as services, wholesale and retail as well as agriculture have been contributing tremendously to economic output.
On poverty and job creation, he said that the 2014 budget was specifically prepared to create jobs and ensure inclusive growth for Nigerians.
He also stated that many policies that would drive economic growth is being implemented in various sectors of the economy.
– The Punch