Nigeria’s economy showed a marked improvement in the second quarter of 2024, with the Gross Domestic Product (GDP) growing by 3.19% year-on-year in real terms, a notable increase from the 2.51% recorded in Q2 2023 and higher than the 2.98% growth in Q1 2024, according to the latest data released by the National Bureau of Statistics (NBS).

This growth reflects economic improvement, bolstered by key sectors that have shown significant performance despite the myriad challenges facing the nation.

Sectoral Performance: Services Lead the Charge

The performance of Nigeria’s GDP in Q2 2024 was primarily driven by the Services sector, which recorded a robust growth rate of 3.79%, contributing a substantial 58.76% to the aggregate GDP. This sector has consistently been a major contributor to Nigeria’s economic output, driven by sub-sectors such as Information and Communication, Financial Institutions, and Trade, which collectively anchor the non-oil economy.

“In terms of share of the GDP, the industry and services sectors contributed more to the aggregate GDP in the second quarter of 2024 compared to the corresponding quarter of 2023,” the NBS said.

The Agriculture sector, traditionally a cornerstone of the Nigerian economy, grew by 1.41% in Q2 2024, slightly down from the 1.50% growth recorded in the same period of 2023. Within this sector, Crop Production remains dominant, accounting for 87.48% of the sector’s nominal value. Despite the modest growth, agriculture continues to play a vital role, contributing 22.61% to the overall real GDP in Q2 2024.

The Industry sector also showed an encouraging turnaround, growing by 3.53% in Q2 2024, a significant improvement from the -1.94% contraction observed in Q2 2023. This growth underscores the sector’s recovery, particularly in Mining and Quarrying, Manufacturing, and Construction activities.

Oil Sector: Rebounding with Caution

The Oil sector, often a volatile component of Nigeria’s economy, recorded a notable real growth of 10.15% year-on-year in Q2 2024, a significant recovery from the -13.43% decline in the same quarter of 2023. The average daily oil production stood at 1.41 million barrels per day (mbpd), an increase from 1.22 mbpd in Q2 2023 but lower than the 1.57 mbpd recorded in Q1 2024.

The oil sector contributed 5.70% to the total real GDP in Q2 2024, reflecting its ongoing relevance to the national economy despite global shifts towards renewable energy and the challenges of maintaining production levels.

Non-Oil Sector Yields Steady but Slower Growth

The non-oil sector, which encompasses a broad range of economic activities outside the oil and gas industry, grew by 2.80% in real terms in Q2 2024. This growth rate, while robust, was slightly lower than the 3.58% recorded in Q2 2023, indicating a marginal deceleration.

Nevertheless, the non-oil sector remains the backbone of the Nigerian economy, contributing a commanding 94.30% to the nation’s GDP in Q2 2024. Key drivers of this sector include Financial and Insurance Services, Information and Communication, Agriculture, Trade, and Manufacturing.

Detailed Sectoral Analysis

1. Mining & Quarrying: The Mining & Quarrying sector, which includes Crude Petroleum, Natural Gas, Coal Mining, and Metal Ores, experienced a nominal growth of -0.37% year-on-year in Q2 2024. However, Metal Ores exhibited the highest growth rate within this sector, surging by 62.37%. The sector’s overall contribution to GDP was 5.60%, slightly lower than in Q2 2023. In real terms, the sector grew by 7.79% year-on-year, indicating a robust performance despite challenges such as illegal mining, fluctuating global commodity prices, and lack of regulatory framework.

2. Agriculture: The Agriculture sector’s real growth of 1.41% in Q2 2024 was driven primarily by Crop Production, though it marked a slight decline from the 1.50% growth in Q2 2023. Despite this, the sector remains crucial, contributing 22.61% to the real GDP. The nominal growth of 2.86% year-on-year reflects the sector’s ongoing struggles with challenges such as insecurity, access to finance, and inadequate infrastructure, which have tempered its potential.

3. Manufacturing: Manufacturing, a critical sector for job creation and economic diversification, grew by 1.28% in real terms year-on-year in Q2 2024. This was lower than the growth recorded in Q2 2023, underscoring the sector’s persistent challenges, including high production costs, poor power supply, and a challenging business environment. The sector’s contribution to GDP was 8.46%.

4. Electricity, Gas, Steam, and Air Conditioning Supply: This sector recorded a year-on-year real growth of 5.96% in Q2 2024, a slight decrease from the 6.10% growth in Q2 2023. The sector’s quarter-on-quarter growth of 294.08% indicates significant volatility, likely due to seasonal factors and ongoing reforms in the energy sector. The sector contributed 0.73% to real GDP, a modest but vital contribution to the overall economic output. This is attributed to the rising cost of the services amid the dwindling spending power of consumers.

5. Water Supply, Sewerage, Waste Management, and Remediation: This sector saw a real growth rate of 8.20% year-on-year in Q2 2024, a decline from the 20.56% recorded in Q2 2023. The sector’s performance is said to underline ongoing challenges in environmental management and infrastructure development, significantly compounded by poor economic growth.

6. Construction: The Construction sector, a key indicator of economic activity, grew by 1.05% in real terms year-on-year in Q2 2024. This was lower than the growth recorded in the previous year, highlighting the sector’s vulnerability to economic cycles and policy changes. The sector contributed 3.17% to real GDP despite the high cost of building materials, stoked up by high inflation.

7. Trade: The Trade sector, which includes both wholesale and retail trade, recorded a nominal year-on-year growth of 45.89% in Q2 2024, a significant increase from Q2 2023. However, in real terms, the sector grew by just 0.70%, underlining the impact of inflation, exchange rate volatility, and consumer spending patterns on the sector’s performance. Trade contributed 16.39% to real GDP, making it one of the largest contributors to the economy.

8. Accommodation and Food Services: This sector grew by 2.13% in real terms year-on-year in Q2 2024, lower than the growth recorded in Q2 2023. The sector’s modest contribution to GDP, at 0.39%, reflects the ongoing challenges in the hospitality industry, including low consumer spending and the high cost of food and services.

9. Transportation and Storage: The Transportation and Storage sector experienced a real contraction of -13.53% year-on-year in Q2 2024, reflecting the sector’s ongoing struggles with infrastructure deficits, regulatory challenges, and fluctuating demand. The sector contributed 0.74% to real GDP, a decrease from previous periods that is attributed to the high cost of petroleum products due to the removal of subsidies.

10. Information & Communication: This sector recorded a real growth rate of 4.44% year-on-year in Q2 2024, a decrease from the previous year. Despite this, the sector remains a significant contributor to GDP, with a contribution of 19.78% in real terms. The sector’s performance is believed to be a reflection of the ongoing digital transformation in Nigeria, driven by increasing internet penetration, mobile phone usage, and the expansion of digital services.

11. Arts, Entertainment, and Recreation: The Arts, Entertainment, and Recreation sector grew by 1.79% year-on-year in real terms in Q2 2024, a decline from Q2 2023. The sector’s contribution to GDP was modest, at 0.20%, revealing the nascent nature of the industry and challenges such as access to needed resources and monetizing cultural and creative content in Nigeria.

12. Real Estate Services: Real Estate Services grew by 0.75% in real terms year-on-year in Q2 2024, a slight decline from the previous year. The sector’s contribution to GDP was 5.17%, underscoring its resilience despite challenges such as high property prices, low access to finance, and regulatory bottlenecks.

13. Finance and Insurance: The Finance and Insurance sector, a key pillar of the economy, continued to show strong performance. Growth was driven primarily by Financial Institutions, which account for a significant portion of the sector.

“Overall, the sector grew at 86.59% in nominal terms (year-on-year), with the growth rate of Financial Institutions at 88.87% and 64.14% growth rate recorded for Insurance,” the NBS said.

The sector’s performance is said to highlight the resilience of Nigeria’s financial system and the ongoing reforms aimed at deepening financial inclusion and stability.

Implications for Policy and Economic Planning

The Q2 2024 GDP report presents a mixed picture of Nigeria’s economy. Analysts believe that while the overall growth of 3.19% year-on-year indicates resilience, the performance across sectors suggests areas of concern that require targeted policy interventions.

The modest growth in Agriculture and Manufacturing, coupled with contractions in sectors such as Transportation and Storage, is said to highlight the need for comprehensive strategies to address structural challenges, improve infrastructure, and create an enabling environment for businesses.

The oil sector’s recovery, though significant, also is believed to underscore the ongoing dependence on crude oil, which exposes the economy to global price fluctuations. Against this backdrop, analysts said diversifying the economy remains critical to achieving sustainable growth and reducing vulnerability to external shocks.

They also note the performance of the Services sector, particularly Information and Communication, to demonstrate the potential of the digital economy as a driver of growth. Thus, they advocate continued investment in digital infrastructure and skills development to harness its potential.

Nigeria’s economic growth in Q2 2024, while positive, is generally believed to be a reflection of a complex landscape that requires nuanced policy responses. Economists said that addressing the challenges in key sectors, while leveraging the strengths of the Services sector, will be vital in sustaining economic growth and achieving broader development goals.

At the annual General Conference of the Nigerian Bar Association (NBA), Ngozi Okonjo-Iweala, the Director-General of the World Trade Organization (WTO), delivered a sobering assessment of Nigeria’s economic trajectory. She highlighted a troubling trend: Nigeria’s Gross Domestic Product (GDP) growth rate has been on a steady decline since 2014, underlining a downturn in the economic well-being of the average Nigerian.

Okonjo-Iweala pointed out that the years between 2000 and 2014 represented a period of robust economic growth for Nigeria. During that time, the country’s average GDP growth rate was approximately 3.8% annually, a figure that significantly outpaced the population growth rate of around 2.6%.

This period of economic expansion led to tangible improvements in the standard of living for many Nigerians, as the economy grew faster than the population, allowing for real per capita income growth.

However, since 2014, the situation has reversed. Okonjo-Iweala noted that the country has struggled to maintain the positive growth momentum of the previous decade, with the average annual GDP per capita now experiencing a negative growth rate of 0.9%. This means that, on average, Nigerians have been getting poorer over the past decade as the economy has failed to keep pace with population growth.

“Many of the big problems the NBA is grappling with today have their roots in Nigeria’s failure to sustain the rate of economic growth and development that consistently outpaced the growth of our population,” Okonjo-Iweala remarked.

She explained that while Nigeria had episodes of reforms and faster economic growth that were not solely dependent on oil prices, the inability to consolidate and build on those gains has led to millions of Nigerians facing diminished job prospects and reduced human well-being.

The former Finance Minister went on to argue that Nigeria’s economic woes are largely due to policy inconsistencies. She stressed the importance of sustaining good economic policies irrespective of the administration or political party in power, to foster long-term development. According to Okonjo-Iweala, policy reversals and a lack of continuity have significantly contributed to the country’s economic challenges.

To address these issues, she advocated for a social contract between the government and the people that transcends political affiliations. This contract, she argued, should focus on generally accepted economic policies that will be followed regardless of who is in power.

“Maintaining good economic and social policies, maintaining policy consistency, and adding more reforms on top of that will lead us along the path of good progress that we all desire,” she added.

This call for consistency comes at a critical time, as Nigeria’s economy continues to face significant challenges. According to the National Bureau of Statistics (NBS), Nigeria’s GDP growth rate declined to 2.98% in the first quarter of 2024, down from 3.46% in the fourth quarter of 2023. While this figure is an improvement over the 2.31% recorded in the corresponding quarter of 2023, it still falls short of the levels needed to significantly improve the standard of living for Nigerians.

The decline in GDP growth is compounded by other economic challenges, including low exports, a reduction in oil sales (which account for about 90% of Nigeria’s revenue), and rising inflation. These issues have raised concerns about the feasibility of President Bola Tinubu’s ambitious goal of transforming Nigeria into a $1 trillion economy.

GDP Growth Reversed by Buhari Policies

The decline in GDP that began in 2014 was accelerated by the economic policies introduced by former President Muhammadu Buhari. These policies, including the controversial exchange rate management, and restrictions on certain imports, contributed to two economic recessions within a span of five years. The first recession occurred in 2016, just a year into Buhari’s administration, while the second hit in 2020, exacerbated by the global COVID-19 pandemic.

One of the critical issues during Buhari’s administration was the significant rise in inflation, which ballooned into double digits and has since remained stubbornly high. The inflationary pressures were partly driven by policy missteps, such as the border closure, delayed response to the economic shocks, and the administration’s focus on exchange rate controls, which led to a widening gap between the official and parallel market rates.

No Plan Yet to Accelerate GDP Growth

Since assuming office, President Bola Tinubu’s administration has faced the daunting task of addressing these economic challenges. However, the current government has yet to develop a clear-cut plan to mitigate the continued decline in GDP. While President Tinubu has articulated ambitious goals, such as growing Nigeria’s GDP to a $1 trillion economy, many analysts remain skeptical about the feasibility of such targets given the current economic conditions. High inflation, low employment rates, and rising national debt continue to pose significant hurdles.

Analysts have noted that the government’s economic reforms, while necessary, have been piecemeal and reactive rather than proactive. They said that the absence of a comprehensive plan to address the underlying structural issues in the economy—such as over-reliance on oil revenues, inadequate infrastructure, and a challenging business environment—has made it difficult for the country to regain its growth trajectory.