The Central Bank of Nigeria has revealed that the country’s economy grew by 3.46 percent in the third quarter 2024, with output rising to ₦20.115 trillion, up from 3.19 per cent or ₦18.285 trillion recorded in Q2 2024.
This was contained in the CBN’s Economic Report for the third quarter of 2024, released at the weekend.
According to the report, the growth was driven mainly by the non-oil sector.
It also stated that inflation moderated during the quarter, reflecting the fall in the food component of the Consumer Price Index basket, and driven by the restrictive monetary policy stance.
The CBN stated that domestic crude oil production increased, following enhanced security measures around oil pipeline infrastructure in the Niger Delta region which led to an average production rate of 1.33 million barrels per day (mbpd) as against 1.27 mbpd reported in Q2, 2024.
The report noted that despite persisting headwinds, the economy continued to expand in the third quarter of 2024.
The growth of 3.46 percent recorded in Q3 2024, represented the third consecutive expansion year-to-date surpassing the 3.19 per cent and 2.54 per cent recorded in Q2 2024 and corresponding quarter of 2023, respectively.
According to the report, the growth was on account of continued efforts to improve the business environment, streamline cumbersome business processes and deepen the quality of business infrastructure.
The 24-month window period opened for the banking sector re-capitalisation (according to their license category and authorisation) supported the robust growth in the services sector, particularly, the finance and insurance sub-sector, the report explained.
The continued drive of the government to improve crude oil production to a target of 2 million barrels per day by year-end of 2024, helped the oil sector to maintain positive growth for the fourth consecutive quarter.
Thus, the oil sector grew by 5.17 per cent (year-on-year) in Q3 2024, compared with a growth of 10.15 per cent in the preceding quarter, and contributed 0.28 percentage points to the overall increase in the period under review.
The performance was slower than the preceding quarter, owing to a drop in prices of Nigeria’s Bonny Light crude in the international market, to $82.07 per barrel from $86.92 per barrel in Q2 2024.
However, with the increase in crude oil production from 1.27mbpd in Q2 2024 to 1.33mbpd in Q3 2024, the sector maintained a positive contribution to overall growth.
The non-oil sector growth accelerated to 3.37 percent in Q3 2024 compared with a growth rate of 2.80 percent in the preceding quarter, contributing 3.18 percentage points to total growth.
The expansion of the non-oil sector was driven by the performance of the financial & insurance, information & communication, crop production, trade, transportation & storage, and real estate sub-sectors.
In terms of sectoral performance, the CBN said all the sectors (agriculture, industry and services) grew in Q3 2024.
The Services sector expanded at the fastest pace by 5.19 percent in Q32024, compared with 3.79 percent in Q22024 and 3.99 percent in Q32023, remaining the most dominant sector, accounting for 53.58 per cent of aggregate Gross Domestic Product.
Within the services sector, the financial & insurance sub-sector grew by 30.83 percent, compared with 28.79 and 28.21 percent in the preceding and corresponding quarters of 2023, respectively.
This performance was spurred by gains from the recapitalisation exercise that was announced by the CBN, according to the report.
Other factors such as profits from interest gains (following continued hikes in interest rates), consultancy fees, and ATM & transfer fees contributed to the growth of the sub-sector.
Also, given the financial sector’s ongoing digital transformation (including the significant growth of fintech companies, mobile banking, and digital payment systems), the information and communications subsector grew by 5.92 percent, thus contributing 0.95 percentage point to GDP growth.
The performance of the ICT sub-sector was further boosted by the ongoing demand for digital services like e-commerce and data/internet services, which helped to grow economic activity in the other sub-sectors like trade and real estate 0.65 and 0.68 percent, respectively.
The transport and storage sub-sector grew by 12.15 percent, compared with contractions of 13.53 and 35.85 percent in the preceding and corresponding quarters of 2023, respectively.
The growth was driven by the increase in road transport owing to improved security conditions and substitution from air transport (due to higher air fares).
Also, sustained investments in road infrastructure, as well as investments in alternative sources of energy (CNG) for road transport contributed to the uptick in the sub-sector.
The agriculture sector grew modestly by 1.14 percent, compared with 1.41 and 1.30 percent in the preceding and corresponding quarters of 2023, respectively.
The growth was driven by the favourable weather conditions and increased harvests of some staples.
Crop production grew by 1.18 percent, compared with1.65 percent in Q2 2024, while the forestry and livestock sub-sectors grew by 2.23 and 1.03 percent, respectively, compared with a growth of 2.77 percent and a contraction of 1.71 percent in Q2 2024.
The fishing sub-sector, however, contracted by 1.91 percent, against a growth of 0.38 percent in the preceding quarter.
The industry sector maintained a positive trajectory, growing by 2.18 percent in Q3 2024, compared with 3.53 and 0.46 percent in Q2 2024 and Q3 2023, respectively.
This slower growth was reflected in the Industrial Production Index (IPI), which grew by 2.04 percent (year-on-year) in Q3 2024, compared with 4.13 percent in the preceding quarter.
Sustained efforts by the government, however, to improve crude oil production (to 1.33mbpd in Q32 024 from 1.27 mbpd in Q2 2024), contributed to the sector’s growth outcome in the period under review.
The increased production was on account of improved security in the oil-producing region.
Modest performances were recorded in the mining & quarrying sub-sectors with a growth of 3.27 percent compared with 7.79 percent and a contraction of 1.96 percent in the preceding and corresponding quarters of 2023, respectively.
The industry sector, less oil, grew by 0.87 percent compared with 0.85 and 1.04 percent in the preceding and corresponding quarters of 2023, respectively.
Growth reflected the sustained gains in water supply (9.78 percent), sewerage waste management (3.23 percent); milder expansions in electricity, construction (2.91 percent), and manufacturing (0.92 percent) activities, with growth rates, respectively.
However, marked contraction was observed in the mining and quarrying subsector which shrunk by 61.36 percent compared with 45.89 and 29.01 percent contractions in the preceding and corresponding quarters of 2023 respectively.
Nigeria’ net forex inflow decreased by 2.97% in Q3 – CBN report
Also, the CBN has revealed that net foreign exchange inflow to the country’s economy in the third quarter of 2024 (Q3 2024) declined by 2.97 percent to $14.46 billion from $14.89 billion in recorded in the second quarter of the year.
However, while the net foreign exchange decline on a quarter-on-quarter basis, the situation is different when compared to the third quarter of 2023, as net foreign inflow increased by 75.91 per cent from $8.22 billion to $14.46 billion.
In Q3, foreign exchange inflow increased by 3.01 percent to $22.89 billion from $22.22 billion in Q2 2024.
Also, inflows through official sources increased in Q3 as those of autonomous sources declined.
The report said, “Inflows through the bank rose by 39.63 per cent to $11.86 billion from $8.49bn, while autonomous sources fell by 19.66 per cent to $11.03bn from $13.72bn in the preceding quarter. Foreign exchange outflow through the economy rose by 15.18 per cent to $8.43bn, relative to the level in Q2 2024. Outflows through the bank rose by 27.91 per cent to $7.31bn, while those through autonomous sources decreased by 30.06 per cent to $1.12bn.
“Consequently, net foreign exchange inflow through the economy decreased by 2.97 per cent to $14.46bn, from $14.89bn in the preceding quarter. However, net inflow through autonomous sources fell to $9.90bn from $12.12bn in the preceding quarter. A net inflow of $4.55bn was recorded through the bank compared with a net outflow of $2.78bn in the preceding quarter.”
The Governor of the Central Bank of Nigeria, Olayemi Cardoso, during a recent meeting with the Senate Committee on Banking, Insurance, and Other Financial Institutions, revealed that diaspora remittances processed through International Money Transfer Operators between January and October 2024 reached $4.22 billion.
This figure is nearly double the $2.62 billion recorded during the same period in 2023.
Cardoso added that on a monthly analysis, remittances increased from $336 million in September 2024 to $402 million in October 2024.
He attributed this surge to improved efficiency in the remittance system, the favourable effects of President Bola Tinubu’s policies, and the growing trust among Nigerians in the Diaspora to support national development.
Meanwhile, in the same quarter, the average exchange rate at the Nigerian Autonomous Foreign Exchange Market depreciated by 14.62 percent to N1,588.64/$, from N1,385.96/$ in Q2’2024, owing to increased demand pressure.
Also, the external reserves rose to $39.29 billion from $34.76 billion at end-September 2024. This level of reserves could cover 8.91 months of imports for goods and services or 13.34 months for goods only.
In its projections on the domestic economy, the CBN report said, “For the remaining three months in the year 2024, inflation is expected to remain elevated. This expected rise is on account of the impact of ongoing policy reforms, leading to an increase in both energy and transport costs. However, the banks’ sustained contractionary stance, the relative stability at the foreign exchange market, as well as the continuous harvest of some food staples could contribute to moderating inflation.
“Fiscal outlook remains bright in the near- to medium-term, as fiscal reforms continue to exert favourable outcomes, evident in contracting fiscal deficits and higher revenue collection.
“The volatility in global crude oil prices, coupled with low production vis-à-vis the OPEC quota, are, however, risks to the outlook.
“The external sector is expected to remain strong in 2024, driven by sustained improvements in trade surplus, higher domestic crude oil production, and the full operation of the Dangote and Port Harcourt refineries. Global economic conditions are also anticipated to be supportive, with easing inflation in advanced economies, which will stimulate trade and investment.”
Nigeria’s inflation as of November stood at 34.60 percent driven by food and energy costs, reflecting a 0.72 percent increase from October’s rate of 33.88 per cent.
There are mixed projections about what the December inflation figure would be; however, it is not likely to be as low as the 21.4 per cent that the apex bank projected in its 2024 macroeconomic outlook for the year.
