 The Australian economy recorded a seventh consecutive quarterly growth in the second quarter of 2022. As real GDP expanded by 3.54% year on year, an improvement compared to the 3.11% growth recorded in the previous quarter, although lower than the 5.01% growth printed in the corresponding period of 2021. In terms of aggregate real GDP, it stood at 17.29 trillion naira, representing a quarter-on-quarter decline when compared to 17.35 trillion naira recorded in the first quarter of this year. A review of the second quarter GDP performance is our discussion for today. Welcome to Business Insights and Plus TV Africa. I am Justin Acadone. First off, maximizing sales and operations are key requirements if young people want to off-skill their businesses and move it to the next level. Now, this advice was given at the Ilfogen's masterclass, which was tagged Scale Up Your Business, organized for young people. Take a look. It is often tough for anyone to start out as an entrepreneur, building a new business from the ground up. Being young at the same time brings a unique set of challenges to the table. At this masterclass, these young people gather to upgrade their skillset in marketing, sales and operations management, as required for the next level. If you want to grow your business in terms of how to sell, because you can be an entrepreneur, doesn't mean you have the capacity or the knowledge to sell. What's the marketing requirement? What's the operations requirement? For countries like Nigeria, where disposable income is hard to get and earning capacity is reduced, there is a required capacity for salespeople. The facilitators also speak volume of challenges of instability in operations and how they can be surrounded. There are proven skills and proven methodologies where you can bring more value to your customers, that your customers are willing and able to pay more. So those are some of the things we are hoping to share today, that we are practicing, even in our own businesses. And within, in spite of the slump in economic situations, we are seeing growth in revenue. So we are hoping that we can share some more ideas, because the truth is this, you must spend yourself at a recession. COVID, world of business has changed completely globally and locally in Nigeria. You know, the issue of working from home, you now have employees that never had a problem coming to the office five days a week saying they need to start working from home for more days. Then the changes in the economy, the impact of the effects, the impact of the Ukraine war, and all these activities that had direct impact on costs, generally had inflation rate going out of the roof. So entrepreneurs gave insight on how to explore homegrown solutions for the country and indeed the continent. This is just as they implore Nigerians to make the most of opportunities which can make the country a hub. Regardless of the fact that we're Africans and we're promoting African tech talents, we try to ensure that they meet global standards and even the internal products and services that we build, we ensure that they meet global standards to change that narrative. So I think a fundamental challenge would be the level of tech adoption in this part of the world. I think there's a rapid rate of tech adoption presently, especially in this day and age, but there's still like a huge gap, especially when you factor in the literacy rates and whatnot. I think there's a lot for us to do to make sure that we are pushing our own style, our own fashion. And braids is one of it. Braids has a lot of histories. For example, the Bantu knot. The Bantu knot is one of these slave trade styles for back in the days and it was a wave sometime last year. We need that entrepreneurial ability to be able to mass produce products that we can now export, but we need to be able to meet global standards for us to be able to export it. For cost management, young entrepreneurs are advised to be innovative as there is always something to improve on and ways to add more value to clients. Welcome back, those who are useful inside for young people who want to upskill their businesses. Now moving on, road transport, coal mining, and Nigeria's fastest growing sectors in the second quarter of this year. Joining us now to give a review of the second quarter, GDP performance is a research and development economist, Gospel Obeli. He is also the CEO of Street Nomics Ltd. Thanks for joining us, Gospel, on the show. Thank you, Jay, for having me. It is indeed a pleasure. Let's just get straight to it now. The economy recorded a seventh consecutive quarterly growth in the second quarter of this year, as real GDP expanded by 3.54% year on year and improvement compared to 3.11 growth recorded in the previous quarter. What does this translate to, really? Well, in economic terms or mutual terms, it simply means that the economic activities has improved by 3.5%, which is an increase from the previous quarter, Q1. From the top of mind, that sounds like a very positive thing to have, but it also tells us there's a difference between economic growth and the quality of life of the average person as it were. So economic growth may not necessarily necessitate the quality of lives have improved. Economic growth only tells us that economic activities are on the rise, but you can have increased economic activities and still have poverty. You can have increased economic activities and still have poor infrastructure, worsening quality of life, worsening standard of living. So they don't really, really go in the same direction in the context. So it's important for me to state that because conversations are out there asking Nigeria's if they feel the GDP growth. Nigerians can't feel GDP growth. They can only interpret the means of livelihood in terms of the quality of standard of living. But GDP growth in itself talks about economic activities, which can be positive, increasingly positive, but yet you may also have the worsening standard of living at the same time. So put differently. Now, what you're saying is that economic activities might have actually improved. But would you say that standard of living has changed in any way recently, judging by what we have right now? Yeah, that's definitely a no because I mean, reasons why I also had to set the table or the tone clear from the start. It's a capital no. I mean, we all know that the price of tomatoes has increased in the market. I mean, inflation is on the rise. You have a worsening interest exchange rate situation. Insecurities also on the rise. So comprehensively, Nigeria is the worst state that was last month, last quarter. But it doesn't necessarily mean that GDP activities would also worsen. GDP activities may increase, but the cost of doing business has also increased. So it makes such that Nigeria cannot feel the impact of an above improved economic activity. Also to say that economic activity does not necessarily mean economic productivity. When we look at the quality of life in Nigeria, we look at it from a productivity standpoint. All right. Now the CBN raised interest rates twice in two months in the bid to combat the rising cost of goods and services. However, inflation, like you said, is still high. In the month of July, it rose to 17, year high of 19.64%. But what sense does this really make when we're recording growth? CBN is trying to adjust the economy. Nigeria's go to the market and they're still growing. Does it really mean that this rate and this review by the CBN are not really working at all? I mean, conventional economics, basic conventional economics says that interest rates are powerful too to consider when seeking to curb inflation. But then again, that assumption or that definition was built on the assumption that the inflation you're backing with is a monetary phenomenon. So you can have inflation that is driven slightly by increasing money supply. That is a monetary phenomenon. So the idea of interest rates is to discourage money supply so that you don't have a lot of, in quotes and unquote, a lot of money chasing few goods. But the context of the inflation we're dealing with right now globally, as well as in Nigeria, is no longer of a monetary nature. It's now more structural. It's now more geopolitically informed. It's now more leakage driven. It's now more cost push than monetary. So in my own opinion, I think central banks are just in Nigeria globally are still using a conventional instrument to fight an unconventional war. That's why you see that inflation numbers are worsening even though interest rates are increasing. And central bank officials keep going through that cycle of seeking to increase interest rates more. The only way out of it is to begin to look for more creative ways to bring down inflationary numbers that are not driven from monetary economics as it were. So top of mind is to let us know that I do not think that interest rates is the best or most effective tool. It may be an important tool, but it looks as though we need a complementary a pool of tools to curb inflation right now in the economy. Anything outside that will keep hurting the economy. Let's not forget, a rise in interest rates also increases the cost of borrowing for the real sector. So let's just take it step by step now and look at some of those sectors that actually grew. For instance, let's start with the road transport sector. The sector recorded the highest growth rate in the Nigerian economy, the second quarter with a 56.38% growth rate following a 24.63% contraction recorded in the previous quarter. My question right now would be what did we really do differently because what would have thought that maybe there was some improvement, but Nigerians are still wallowing in transportation costs and all of that. So what does this percentage growth really mean? Yeah, the percentage growth simply means that there has been an improvement in economic activities in that space. Now it may not necessarily mean there's been some form of improvement in economic productivity in that sector. I mean, for instance, has Nigeria exported more valuable use of coal to the global community? The answer is a big no, but our GDP says that our economic activities in the coal sector has improved. It just means that you have more pressure on economic activities that has triggered or some form of concentration of investments or some sort that has triggered economic activities in that sector. But it doesn't necessarily tell you that the country has taken that sector as a leapfrog towards growth or development or towards prosperity or towards unlocking raw materials used for valuable processing. It doesn't say anything of such. In terms of road use, it may just have been that the context is that you have more road users. They have been more road-related or infrastructure-related activities. And technically, if you look at it, a lot of state governors are engaging in a lot of states-related infrastructure activities, especially road projects. But it doesn't necessarily tell you that Nigeria is much more prosperous for this particular economic activity, which is why I also go back to what I said by saying that economic activity in that sector does not necessarily mean that the country is moving towards the trajectory of economic prosperity or unlocking the potential of that sector to earn for real exchange or to boost economic growth and development in real terms. So that's what we're dealing with here. All right, I'm glad you actually mentioned that coal mining, but let me leave that for one minute and talk about air transportation, which apparently grew by 22.45%. I don't know about the past few months. There's been some turbulence per se and crisis in the aviation sector. I'm really surprised that we actually recorded lots of activities. How do you really react? Yes, so the interesting thing about the GDP report is that the GDP report is a large report. So the large report simply means that the activities of last quarter are being reported this quarter. So technically, the activities of this quarter will be reported in the next quarter. That's Q4. So that's to say that all of the events we're seeing in the aviation sector recently will be captured if it will be captured in that two different story now will be captured in the next GDP report. So we expect to see the impact of in recent years, those who also read that Delta Airlines are also considering withdrawing from Lagos, New York routes and that's big impact for the sector. And what that simply means in the Q3 report which will come out in Q4 is expected that aviation numbers should slow down because of these economics of variables that were similarly out of control. And Central Bank is trying to pump in some billions of naira to rescue that sector in terms of all of the havoc that it has caused with the stakeholders. So GDP is a lag report. What we're looking at right now are events that happen in Q2 and this is already Q3. So we may not be able to so it doesn't also question us the situation where we can see the true state of things. We can only understand better what happened in the previous sector. However, which also makes people who plan and businesses who plan and do a lot around GDP report are actually reactive in the strategy and data that is one quarter behind. I don't even get what I'm trying to say. Alright. Okay, fine. It is really very interesting now that you've actually showed us or talked to us about the true picture. But let's move forward. Quaring and other minerals recorded about 22.15%. My concern right now is the oil sector which deeped by 11.77% year on year in the second quarter to a contraction of 26.04% recorded in the first quarter of 2022. They did really surprise with what is playing out in the international market, Russia, Ukraine crisis and all of that. I'm not really surprised I'm not really surprised as well because there are many more forces right now. We are facing against the growth of the oil sector and one of the major events that really shaped the world is Russia and Ukraine war, not just in war or conflict but also in commodities like grains, soybean and sunflower and all those important ingredients that goes into home cooking products and all that and that's where the global inflation also started from. So the impact is way more and that's also what has been reflected in inflationary numbers as well in Nigeria. That was sinful inflation going at 2% and all of that. So I'm not surprised to say but it keeps clearly shows to us as a nation, as a people that our hope is now clearly in the oil sector. Even in the revenue numbers alright, the non-oil sector in tax revenue made double of what the oil sector made in Q1 2022 and lots of efforts were more hinged around oil sector but oil sector performed literally about 300 something billion compared to non-oil that was almost 600-700 billion. So without much effort, without much intentionality the non-oil sector has grown in terms of impact and contribution. That means that we need to focus our efforts better. I was going to say that because specifically in real terms about 4.77% that's what the oil sector grew to or by. But specifically in real terms ICT, trade, finance and of course agriculture, despite of that particular sector but I want to stay on FinTech. How do you see the pace of the FinTech moving forward in the third quarter, fourth quarter what do we expect to see? So to a really a large extent, the FinTech industry sector I've watched for a while now and I realize that diverging views around FinTech depend on which lens you're wearing if you're wearing a core FinTech hat this has the next big thing that's the next big thing and if you're wearing a hat of an economist like myself and you've looked at numbers closely you understand that what is really powering the FinTech growth is the blend of two sectors, the financial sector and the ICT sector. And if you look at also the pandemic, those are two major sectors that were not really really achieved and they grew consistently because online payments, online transactions also grew, digital transactions also grew, so you have finance people need to spend, people need to pay people need to save money and all that then you have ICT, people are doing on the mobile phones or through the mobile networks and all that, by the time you blend that that's why it's called FinTech, financial technology however, the context of FinTech as an industry startup is still very very infant in its nature so there are still regulatory issues there are still greater theft issues there are still licensing issues there are still what's the potential of the sector to scale, so here a few sectors will be raising money here and there but the sector still needs a lot of governance and substance for its impacts to come alive and it also needs to evolve beyond the proposition of savings and just expenses or pocket money and all that there's still a lot of substance value that's lacking in the sector, however the sector is very promising due to the strategic blend of the digital economy and the financial payments economy. Alright, thank you so much Angus but very quickly now before we go you talked about your concerns about the interest rate and of course the CBN policies and everything but what would you really advise right now on the last note moving ahead into the late Q3 and of course the fourth quarter of the end of the year? I think I'll look forward to Nigerian trying to tap into every low hand input she has, you know and one major thing right there would be organizing the non-all sector space for exports no matter how little a lot of SMEs are already exporting based on without government so how can we organize it and make it more simpler for them to export and compete but the time you do that you have in exchange you know which sort of balances out the demand side demand and supply side pressure you know that sort of informing the cost push inflation we find right now at some point it was a demand pulled inflation but right now it's switched to a cost push inflation so we really had an FX edge to be able to combat that that's number one number two that close to other complementary tools including interest rate will help to curb inflation but interest rates as a standalone if you will do more harm than good thank you so much gospel for your time we do appreciate all the insight that you have brought alright and that's the size of the show monster a very big thank you to gospel Obelli and economists who actually broke down all that we needed to know about the Q2 report of the GDP and that's the size of the show for today I am Justin at Kadene see you again next time bye for now