Oil, banking raise economic growth to 4.6% – NBS

Nigeria’s economy expanded by 3.46 per cent year-on-year in the third quarter of 2024, largely driven by a strong performance in the services sector, the National Bureau of Statistics revealed in its latest GDP report on Monday.

This marks a notable increase from the 2.54 per cent growth recorded in Q3 2023 and a slight improvement on the 3.19 per cent achieved in Q2 2024.

The services sector emerged as the biggest contributor to GDP growth, recording a 5.19 per cent increase and accounting for 53.58 per cent of the total output.

The surge was primarily powered by Telecommunications and Information Services, reflecting rising digitalisation and demand for connectivity, alongside robust activity in Financial Institutions.

The report read, “Nigeria’s Gross Domestic Product grew by 3.46 per cent (year-on-year) in real terms in the third quarter of 2024.

“This growth rate is higher than the 2.54 per cent recorded in the third quarter of 2023 and higher than the second quarter of 2024 growth of 3.19 per cent.

“The performance of the GDP in the third quarter of 2024 was driven mainly by the Services sector, which recorded a growth of 5.19 per cent and contributed 53.58 per cent to the aggregate GDP.”

The oil sector showed a significant rebound, growing by 5.17 per cent, a sharp contrast to the contraction of -0.85 per cent in the same period last year.

Average daily oil production rose to 1.47 million barrels per day (mbpd), up from 1.45 mbpd in Q3 2023 and 1.41 mbpd in Q2 2024.

The sector contributed 5.57 per cent to GDP, underscoring its continued importance despite diversification efforts.

Non-oil activities maintained their dominance, contributing 94.43 per cent to GDP and growing by 3.37 per cent, an improvement from 2.75 per cent in Q3 2023 and 2.80 per cent in Q2 2024.

Key drivers of growth included Telecommunications, Financial Institutions, Agriculture, Transportation, and Construction, signalling the benefits of economic diversification.

Agriculture grew modestly by 1.14 per cent, slightly lower than the 1.30 per cent recorded in Q3 2023, with crop production leading the sector.

The industrial sector recorded a 2.18 per cent growth, recovering from 0.46 per cent in Q3 2023, with Mining and Quarrying, led by Crude Petroleum and Natural Gas, providing the most significant boost, supported by gains in Manufacturing and Construction.

In nominal terms, Nigeria’s GDP for Q3 2024 stood at N71.13tn, a 17.26 per cent year-on-year increase from N60.66tn in Q3 2023, reflecting the combined effects of inflation and higher economic activity.

A renowned economist and former vice-chancellor of the University of Uyo, Prof Akpan Ekpo, said that the 3.46 per cent Gross Domestic Product in the third quarter had no real impact on the lives of the average Nigerian.

He said, “The GDP may be growing but inflation is still 33.88 per cent, unemployment is rising, so that growth is really not impressive. Growth is not development. There should be no excitement over this data. This would make sense if it was in the double-digit and sustained for about 15 years. If you look at that growth, I suspect that it is mostly from the sale of crude oil.

“It is possible to have sustained growth for 15 years. Some countries have done it, like Malaysia, Indonesia, and China. When you arrive at it, then you can celebrate this kind of growth. If you look at Nigeria’s economic trajectory, there were times we had high growth rates but they were not sustained. So, 3.46 per cent is slightly higher than population growth but because the other fundamentals are not doing well, we cannot celebrate.

“I know that the government will defend it and say that is it worth celebrating but in real terms, it is not. It is better than negative growth no doubt. We are not in recession but the economy is in a stagflation meaning rising inflation, rising unemployment, and sluggish growth.”

The Managing Director of Arthur Steven Asset Management Limited, Tunde Amolegbe, said that the services sector was driving the GDP growth, a trend he expressed concerns about.

“It’s clear that the GDP growth we’ve seen for the third quarter is skewed towards the service sector, particularly Finance, Transport and Education. The limited growth seen in the real sector is probably driven by price increases due to inflation rather than actual increased production and trade. The oil sector also continued to underperform in the third quarter which is not positive for an economy heavily dependent on that sector.

“The agricultural sector showed very limited growth as the harvest season started to wrap up. The apparent disconnect between the GDP report and what is obvious on the streets is coming from growth being driven mainly by the finance sector rather than the real sector such as Manufacturing and Production. The reverse needs to be the case for the people to feel the impact of the growth.”

Expressing similar sentiments, professor of capital market, Uche Uwaleke, at the Nasarawa State University, said the drivers of the GDP growth were of concern.

“In my view, this identified growth pattern, weighted in favour of the services sector, is not healthy for a developing economy such as ours. Little wonder, economic growth does not appear inclusive, reflecting rising unemployment and poverty levels. It is time we reset this faulty economic structure, leveraging technology, in favour of the productive sectors: industry and agriculture.

“Indeed, structural change is strongly recommended (by the United Nations Conference on Trade and Development) as one of the ingredients of building productive capacities,” Uwaleke said.

Also, the Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, said, “Despite the ongoing economic challenges, Nigeria’s economy has seen a positive Gross Domestic Product growth in the third quarter (Q3) of 2024, with a 0.27 per cent improvement over the second quarter’s performance.”

While this marks a slight recovery, Yusuf revealed that growth has been predominantly driven by the service sector, raising concerns over the imbalance between services and key real sectors like agriculture and manufacturing.

However, he emphasised that the service sector, particularly financial services, telecommunications, and transportation, was the main driver of this growth.