GDP snapshot
Nigeria’s Gross Domestic Product (GDP) grew by 3.46% year-on-year in real terms in Q4 2023, the National Bureau of Statistics has said. The…
Nigeria’s Gross Domestic Product (GDP) grew by 3.46% year-on-year in real terms in Q4 2023, the National Bureau of Statistics has said. The growth rate is slightly lower than Q4 2022’s 3.52% but higher than Q3 2023’s 2.54%. The services sector drove growth at 3.98%, contributing 56.55% to GDP. Agriculture grew by 2.1%, and industry by 3.86%. Annual GDP growth for 2023 was 2.74%, down from 3.10% in 2022. The real growth of the oil sector was 12.11 % (year-on-year) in Q4 2023. The non-oil sector grew by 3.07% in real terms.
Nigeria’s Gross Domestic Product (GDP) growth in the fourth quarter of 2023 presents a mixed picture for the country’s economy. While the 3.46% year-on-year expansion marks a positive trend compared to the previous quarter, it falls short of the growth recorded in the same period of 2022 (3.52%). Based on the snapshot, the Q4 growth builds on the momentum gained in Q3 (2.54%), indicating a gradual improvement in economic activity. The most positive news of the NBS report is the significant recovery made by the oil sector, which returned to positive growth for the first time in 16 quarters with a growth of 12.11% y/y in Q4 2023. It is important to note that the sector has been bedevilled by multiple issues, including crude oil theft, pipeline vandalism and lack of infrastructural investment, all of which have precipitated the recent divestments of International Oil Companies (IOCs) from the Nigerian oil industry. The non-oil sector, driven by services (3.98%), continues to be the primary growth driver, mitigating dependence on the volatile oil sector. The services sector has continued to grow strongly on the back of the robust telecoms and banking industries. This highlights the ongoing diversification efforts. Since non-oil contributes 95% to the GDP, it should be the main focus to drive growth. The challenge is that unlocking growth in these sectors requires a more deliberate intervention in security, infrastructure, and the rule of law, which Nigeria’s government has refused or been unable to achieve over the years. Also, Nigeria’s growth rate needs to catch up with sub-Saharan Africa (projected at 4.2% in 2023), raising concerns about the country’s competitiveness in the regional economic landscape. The recent increase in interest rates by the CBN is expected to impede productivity unless there is a substantial increase in government spending. Our outlook is that whilst positive growth is likely to continue throughout 2024, challenges facing the country in the last few decades will persist, including low oil production, farming and factory production, FX illiquidity and widespread unemployment. But overall, the Q4 GDP figures paint a cautiously optimistic picture for Nigeria’s economy. While positive growth is commendable, addressing the slowdown and accelerating the pace of expansion remain crucial challenges. Continued diversification efforts alongside measures to stimulate non-oil sectors will be essential for ensuring sustainable economic growth in the long term.