Oil Production Decline Shrinks Nigeria’s Economic Growth

Oil theft coupled with deferred investment in Nigeria’s oil industry has caused Nigeria’s economy growth to slow to 3.52 per cent in the fourth quarter from 3.98 per cent a year earlier.

The economic shrink was also linked to widespread flooding which destroyed farms and rising costs.

Double-digit inflation and a weaker naira currency also affected the country which has merely recovered from the COVID-19 pandemic.

It has now registered growth for nine consecutive quarters, after exiting a recession in 2020.

The National Bureau of Statistics (NBS) said, full-year growth stood at 3.1 per cent in 2022, in line with the World Bank’s projection.

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“Although the agriculture sector grew , its performance was significantly hampered by severe incidences of flood experienced across the country,” the NBS said.

“The Industry sector was challenged recording -0.94 per  cent growth and contributing less to the aggregate GDP relative to the third quarter of 2022 and the fourth quarter of 2021,” it added.

The price of diesel, which many businesses rely on to generate electricity, has soared in Nigeria due to high global oil prices, leading to increased costs of production, while a weaker currency has made imports more expensive.

Nigeria, Africa’s top oil producer, recorded an average daily oil output of 1.34 million barrels per day (mbpd) in the fourth quarter, lower than the daily average of 1.50 mbpd registered in the same quarter of 2021, the NBS said.

Oil production, which accounts for around two-thirds of government revenue and 90 per cent of its foreign exchange reserves, contracted 13.38 per cent year-on-year in the fourth quarter, the NBS said.

The Central Bank of Nigeria(CBN) launched a monetary policy tightening cycle last May to counter inflation that hit its highest since 2005. The bank has so far hiked rates by 600 basis points.