The West African country was also faced with the prospect of more terror attacks in the economic capital of Lagos. It appears that, with some economic sectors now being measured more accurately, their growth rates have been revealed to be lower in recent years than was previously thought.
And going forward, the indirect impact of Boko Haram’s terror campaign – through effects on investor sentiment and the political environment – are real enough for the Nigerian economy.
Boko Haram has claimed responsibility for an explosion outside a Lagos fuel depot in late June. On Sunday, July 13, AFP reported seeing a video in which Boko Haram’s leader Abubakar Shekau claimed responsibility for the blasts, saying: “A bomb went off in Lagos. I ordered [the bomber] who went and detonated it.”
The explosions took place on June 25, at the gate of the Folawiyo depot in Apapa, in an area of Lagos’s port where fuel depots are concentrated. At least two people were killed.
Accounts differ as to what exactly happened, but it seems established that there were two explosions, one from a car bomb, and a less powerful explosion triggered by a female suicide bomber. The plan appears to have been to ignite the fuel in the tanks at the depot; a huge explosion could have been triggered in this way. June 25 was the same day that a bomb attack in Abuja killed 22 people, an attack for which Mr Shekau also claimed responsibility in the video.
Authorities’ version had been that the explosion had been an accident; this was also the version of events put forward by the Yinka Folawiyo Group of Companies, run by billionaire Tunde Folawiyo.
During the week, however, articles started to surface in which anonymous security sources and foreign diplomats said that the blast had been a terror attack that the authorities were trying to hush up. After the AFP reported on Mr Shekau’s video, the military and police declined to comment.
It is odd that Mr Shekau would claim responsibility for the bombing so long after it took place, and this may mean that the attack was planned by an independent cell operating without the knowledge of Boko Haram’s leadership. But this does not really matter – the key point is that there are cells in Lagos planning and attempting bomb attacks.
It is likely that one such attempt will be successful at some point, and the impact of a terror attack in Nigeria’s economic capital on risk perceptions and investor sentiment will be serious.
We still do not see the Boko Haram insurgency as having a large direct effect on stability, but the indirect impact of the terror campaign for Africa’s largest economy, through effects on investor sentiment and the political environment, are real enough.
Economic growth in Nigeria is already volatile in many sectors, which makes forecasting and interpretation difficult. In addition, the latest data from the National Bureau of Statistics (NBS) indicates that real GDP growth in the country was lower in recent years than was previously thought. Real GDP growth at market prices is now estimated at only 4.3% in 2012 (6.8% previously), and 5.4% last year (7.3% previously).
The sharp adjustments for 2012-13 were driven by revisions to the crude oil and natural gas sector, which is now estimated to have contracted by 13.1% last year and 4.9% in 2012.
Real growth in the trade sector last year was revised to 6.6% from 7.8% previously, while transport & storage was downgraded to 3.8% from 5.1%. Furthermore, the information & communication sector is now estimated to have grown by 8.2% last year, lower than a previous estimate of 9.4%. Notably, growth in the financial & insurance sector for 2013 was downgraded from 21% to 8.6%.
The NBS also released GDP figures for the first quarter of this year. The crude oil and natural gas sector continued to contract (by 6.6% y-o-y) due to lower oil production, while non-oil real GDP expanded by 8.2% y-o-y, up from 7.4% y-o-y in 2013 Q1. The agricultural sector performed well, with growth of 5.4% y-o-y in crop production in Q1 surpassing the 1.8% y-o-y seen in the same period of 2013. The overall growth rate for Q1 (at factor cost) is estimated at 6.2% y-o-y, up from 4.5% y-o-y in 2013 Q1. The growth in real GDP at market prices was slightly lower at 6% y-o-y, compared to 4.3% y-o-y in the corresponding period last year.
The NBS expects real GDP growth to pick up in the remainder of the year, with Q1 usually having the slowest expansion as it is the beginning of the planting season and since consumers tend to spend less.
Having said that, the continuing decline of the crude oil & gas and oil refining sectors is a concern. The NBS expects real GDP growth of at least 6.2% this year.