The improved performance of the services sector boosted Nigeria’s Gross Domestic Product (GDP) to 3.19 percent in the second quarter, up from 2.51 percent in the same period in 2023.
On a quarter-on-quarter basis, the real GDP growth marked a slight improvement of four basis points from the Q1 2024 figure of 2.98 percent, according to the GDP report released by the National Bureau of Statistics on Monday.
The report indicated that the Q2 GDP growth was driven by the services sector, which expanded by 3.79 percent and contributed approximately 58.76 percent to the total GDP.
An analysis of the country’s GDP trend showed that this was the second-highest economic performance in the last five quarters, with the highest being 3.46 percent in Q4 2023.
Several factors contributed to Nigeria’s GDP growth of 3.19% in the second quarter of 2024:
Services Sector: The primary driver, growing by 3.79% and contributing 58.76% to the total GDP1.
Industry Sector: Significant improvement with a growth of 3.53%, rebounding from a previous contraction1.
Agriculture Sector: Modest growth of 1.41%, slightly down from the previous year1.
Oil Sector: Despite a slight reduction in average daily oil production, the sector saw a real growth of 10.15% year-on-year.
These sectors collectively boosted the overall economic performance, indicating a positive trend for Nigeria’s economic recovery.
The services sector encompasses a wide range of industries, including:
- Financial and Insurance Services: These services saw significant growth, driven by increased financial activities and insurance uptake.
- Information and Communication: Particularly strong performance in Telecommunications, which continues to expand with rising internet and mobile phone usage.
- Trade: Retail and wholesale trade activities contributed positively, reflecting increased consumer spending and business activities.
- Real Estate: Growth in real estate services, driven by urban development and increased property transactions.
- Professional, Scientific, and Technical Services: These services, including legal, accounting, and consulting, also showed robust growth.
The strong performance of these sub-sectors within the services sector indicates a diversified and resilient economic base, contributing significantly to the overall economic growth of Nigeria.
The agriculture sector saw modest growth, increasing by 1.41 percent, slightly lower than the 1.50 percent growth rate recorded in Q2 2023.
Meanwhile, the industry sector made a strong recovery, achieving 3.53 percent growth compared to a contraction of 1.94 percent in Q2 2023.
Regarding GDP composition, the industry and services sectors increased their contributions to the total GDP in Q2 2024 compared to the same period in 2023.
During the quarter under review, the aggregate GDP at basic prices stood at N60.93 trillion in nominal terms, higher than the N52.10 trillion recorded in the second quarter of 2023, indicating a year-on-year nominal growth of 16.94 percent.
The real GDP value was N18.29 trillion, marginally higher than the N18.28 trillion recorded in Q1 2024.
During the period under review, the average daily oil production decreased to 1.41 million barrels per day (mbpd) from 1.57 mbpd in Q1 2024, but it was higher than the 1.22 mbpd recorded in the same quarter of 2023.
“The real growth of the oil sector was 10.15 percent (year-on-year) in Q2 2024, representing an increase of 23.58 percentage points compared to the rate recorded in the corresponding quarter of 2023 (-13.43 percent). Growth increased by 4.45 percentage points when compared to Q1 2024, which was 5.70 percent. On a quarter-on-quarter basis, the oil sector recorded a growth rate of -10.51 percent in Q2 2024.
“The oil sector contributed 5.70 percent to the total real GDP in Q2 2024, up from the figure recorded in the corresponding period of 2023 but down from the previous quarter, where it contributed 5.34 percent and 6.38 percent, respectively,” the report stated.
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The non-oil sector grew by 2.80 percent in real terms in Q2 2024, which is 0.78 percentage points lower than the 3.58 percent growth recorded in the same quarter of 2023 and roughly the same as the 2.80 percent recorded in the first quarter of 2024.
This sector’s growth was driven by financial and insurance services (particularly financial institutions), information and communication (mainly telecommunications), agriculture (specifically crop production), trade, and manufacturing (notably food, beverage, and tobacco).
In real terms, the non-oil sector contributed 94.30 percent to Nigeria’s GDP in the second quarter of 2024. This contribution was slightly lower than the 94.66 percent recorded in Q2 2023 but higher than the 93.62 percent recorded in Q1 2024.
President Bola Tinubu welcomed the latest GDP report released by the NBS, as stated in a press release signed by his Special Adviser on Information & Strategy, Bayo Onanuga.
“As the President mentioned in his August 4, 2024, national broadcast, our economy is on the path to recovery. In the near future, Nigerians will begin to feel, see, and benefit from the impact of his administration’s economic reforms. We reaffirm that this government will continue to work diligently to restore Nigerians’ hope and confidence. President Tinubu is committed to building a strong and resilient economy.”
“President Tinubu urged Nigerians to maintain their faith in the government and not be swayed by those who seek to derail and undermine the current reforms for their selfish interests,” the statement added.
In an economic update on the GDP report, Analysts Data Services and Resources (ADSR) highlighted that the financial and insurance sector remained a top performer.
“The financial and insurance sector accounts for 6.57 percent of Nigeria’s GDP and continues to be a major driver of economic growth.
It has remained the fastest-growing sector in recent times. Other fast-growing sectors include water supply, sewerage, and waste management (8.20 percent); mining and quarrying, mainly crude oil and gas (7.79 percent); electricity, gas, and steam (5.96 percent); and ICT (4.44 percent). However, sectors such as transport and storage (-13.53 percent) and other services (-12.66 percent) contracted during this period,” the ADSR report noted.
However, Uche Uwaleke, a Professor of Capital Market at Nasarawa State University, argued that the aggressive hike in the monetary policy rate by the Central Bank of Nigeria earlier in the year negatively impacted output in Q2 2024.
“This could explain the decline seen in major contributors to GDP, such as manufacturing, trade, ICT, and real estate. The high cost of petroleum products also had a significant impact, as reflected in the sharp decline in the transport sector’s GDP from 3.33 percent to -13.53 percent.”
“In my opinion, this growth pattern, which is heavily weighted towards the services sector, is not healthy for a developing economy like ours. It’s no surprise that economic growth doesn’t seem inclusive, as seen in the rising levels of unemployment and poverty.”
“It is time we restructure this flawed economic model, leveraging technology to benefit the productive sectors: Industry and Agriculture. Indeed, structural change is strongly recommended by UNCTAD as one of the key components of building productive capacities,” he said.
Also Note That:
Nigeria’s GDP growth of 3.19% in the second quarter of 2024 is quite notable when compared to other countries. Here are some comparisons:
United States: The U.S. economy grew at an annual rate of 2.1% in the second quarter of 20241.
China: China’s GDP growth was around 5.5% in the same period, driven by strong industrial output and consumer spending2.
India: India experienced a robust growth rate of 6.1%, supported by strong domestic demand and government spending3.
South Africa: South Africa’s economy grew by 1.8%, with improvements in the mining and manufacturing sectors.
Nigeria’s growth rate of 3.19% is higher than that of the United States and South Africa but lower than that of China and India. This indicates a solid performance, especially considering the diverse challenges faced by the Nigerian economy.
