Business

Expert lists non-oil sector as major driver of economic growth

Expert lists non-oil sector as major driver of economic growth

The non-oil sector has been identified as the major driver of the nation’s economic growth in 2020.
 
A macroeconomic analyst at Codros Securities, Wahab Mustapha, while explaining part of the firm’s special report titled: “Nigeria in 2020: At the Cliff’s Edge,” said there was a high base in crude oil price and production level in 2019, which would affect its performance during the year.
   
Despite the corrective measures over the years, the imbalance in Nigeria’s export trade has persisted with non-oil sector accounting for just six per cent of the country’s revenue.
   
As a result, he said the sector is currently characterised by a systemic decline in the contribution of total exports to the gross domestic product (GDP). He added that figures from 2014 to 2017 have been below global average of exports-to-GDP of about 30 percent, according to World Bank data.
 
In 2016, oil sector contributed 91.9 percent to the total export earnings, and 76.5 percent of total government revenue.
 
Mustapha listed the high prospect sectors to include: banking, cement, agriculture and telecom.
 
He said: “There is quite a high base in 2019 giving the crude oil price and production level. We saw the three year high of 2.0 barrels per day, and so we do not expect significant growth from oil sector.
   
“However, we expect the agriculture sector to grow significantly this year. They have high CBN support, including the manufacturing sector.
   
“The telecom sector has massive room for growth. In information technology sector, we see a lot of fintech companies coming up in that sector. So the growth expectation for non-oil sector is a major driver for growth expectation in 2020.”
   
For the cement sector, the analyst predicted a significant push from private sector demand to drive cement companies revenue in this year.
   
According to him, this is in addition to the construction of the Apapa/Oshodi Expressway, expected to reduce gridlock and ultimately improve business activities within the axis being a location for major cement industries.
   
He said the banking sector, which accounts for 30 percent of overall market capitalisation is currently of immense value despite its increased risks, adding that the fundamentals remained compelling even as market sentiments have kept prices low.
   
“The banking sector will still do well this year; the expansion of risk assets base in the banking sector should drive earning performance in the sector. We will still see single digit growth among the tier 1 banks.