Despite a slow down in economic growth in 2006, Nigeria’s per capita income rose to $1,036.2 from $847.4 in 2005.
Per capita income means how much each individual receives, in monetary terms, of the yearly income that is generated in his country through productive activities. In effect, it is what each citizen would receive if the yearly income generated by a country from its productive activities were divided equally among the population.
The Central Bank (CBN) in its 2006 economic report released yesterday said: “A review of macroeconomic developments shows that the Nigerian economy continued on an expansion path in 2006, albeit, at a slower rate, demonstrating the sustained resilience. The economy recorded an estimated 5.6 per cent growth rate, down from 6.5 per cent in 2005. The economic expansion was commendable as it was broad-based, in spite of the several challenges which included: the slow down in the oil sector and the energy crisis that militated against growth in the economy. Overall, the country’s per capita income rose to $1,036.2 from $847.4 in 2005.
“The total federally-collected revenue stood at N5, 965.1 billion in 2006, 7.5 per cent over the level in 2005. The revenue performance, which was 32.7 per cent of GDP, was largely attributed to the receipts from the oil sector occasioned by the sustained increase in crude oil prices in the international oil market. Revenue from the non-oil sector, however, declined by 13.7 per cent from the level attained in 2005. The overall fiscal balance narrowed from a notional deficit of N161.4 billion or 1.1 per cent of GDP to N101.3 billion or 0.6 per cent of GDP while the primary balance recorded a surplus.
“Growth in the economy was driven mainly by agriculture, wholesale/retail trade, building and construction, and services, which grew by 7.2, 13.7, 12.1 and 8.9 per cent, respectively. Industrial production, however, declined by 2.6 per cent, largely due to the fall in crude oil production.
"The agricultural sector continued its recovery in 2006, benefiting from the various Federal Government Initiatives and favourable weather. The efforts to increase agricultural productivity by increased fiscal incentives to the sector, review of import waiver as well as the promotion of increased use of agricultural machinery and inputs through favourable tariff policy and subsidies contributed to the healthy growth. Output of staples grew by 8.0 per cent, contributed by all the components.
Cassava production increased by 10.8 per cent compared with 8.0 per cent in 2005 and rice by 6.9 per cent. Growth in cassava production was driven by the urge to take advantage of the expanded export and domestic markets. The expansion in the markets resulted from the increased international demand for the product given its use in the production of various products, prominent among which was ethanol and the increase in domestic consumption occasioned by the compliance with the Federal Government’s directive to Nigeria’s flour millers to include at least 10 per cent of cassava flour in the production of bread and other confectioneries.
“The industrial sector benefited from the continued government privatisation policy in 2006 and a focused effort on providing the enabling environment for core investors to take off and grow. The enabling environment was enhanced by the removal of legal hurdles associated with equity investment that hitherto hindered the inflow of foreign investment. The present fiscal regime allows foreign investors to freely repatriate dividends, profits and proceeds from their investments in Nigeria. Withholding tax was also reduced by 33.3 per cent for nationals of countries with which Nigeria had a double taxation agreement.
Manufacturing output declined by 1.5 per cent below the level in the previous year and average capacity utilisation rate fell from 54.8 per cent in 2005 to 53.3 per cent in 2006. The poor performance of the sector was attributable to the worsening power supply situation in the country, which further increased the cost of production, coupled with the influx of cheaper and sometimes sub-standard goods into the country. The cement sub-sector, however, improved substantially owing to the refurbishment of cement factories across the country. Regulatory activities by the National Food, Drugs Administration and Control (NAFDAC) and the Standard Organisation of Nigeria (SON) impacted on the sub-sector positively.
“Aggregate crude oil production declined from an average of 2.53 million barrels per day in 2005 to 2.23 million barrels per day. This was as a result of the persistent disruption of oil operations, especially, of the major Joint Venture Companies, in the Niger Delta Region. Nevertheless, some new oil wells started production, contributing about 265,000 barrels of crude oil per day, thus moderating the losses from the supply disruptions in the Niger Delta region. Aggregate export of crude oil, therefore, averaged 1.80 mbd compared with 2.08 mbd in 2005. The average spot price of Nigeria’s reference crude, the Bonny Light (37API) increased from $55.43 in 2005 to $66.46 per barrel. Aggregate volume of gas produced in 2006 was estimated at 57,753.7 million cubic meters (MMm3) compared with 57,369.4 MMm3 in 2005. Of this total, 31.8 per cent was flared.
Solid minerals production increased substantially compared with 2005 as aggregate output rose from 4,471.1 thousand tonnes in 2005 to 36,031.2 thousand tonnes. The growth in production was broad based. The installed capacity of electricity generation increased by 2.2 per cent over the level in 2005. This was due to the commissioning of the 150 MW Omoku power plant by the Rivers State Government in December 2006. Progress was made in the construction of five other power plants under the National Integrated Power Projects with an aggregate installed capacity of 1765 MW/h spread across the country.
Electricity generation, however, declined by 5.1 per cent in contrast to the increase of 0.6 per cent in 2005. The decline in electricity generation was attributed to the low water level at the hydropower plants and the disruption of gas supply to the thermal stations following the vandalization of gas pipelines in the Niger Delta area. Energy consumption, therefore, fell in 2006. The aggregate energy consumed fell from 24.5 million tonnes of coal equivalent to 23.5 million tonnes in 2006.
“The external sector continued to expand, driven by the robust current account surplus as in the previous year. The overall balance of payments recorded a surplus of N1, 772.7 billion, or 9.7 per cent of GDP, compared with N1, 362.3 billion or 9.2 per cent of GDP in 2005. The improved performance was attributed to oil sector receipts, increased inward transfers and other financial inflows.
Following the further liberalization of the foreign exchange market through the introduction of the Wholesale Dutch Auction System, and the approval granted to the BDC operators to access the CBN foreign exchange window, which further enhanced the supply of foreign exchange to the market, the Naira appreciated in all segments of the market. This culminated in a convergence of rates across all the segments of the foreign exchange market, the first time in about two decades