While statistical data provide a clearer picture of economic performance, the need to support enterprise development and inclusive economic growth cannot be over emphasized. FESTUS OKOROMADU in this report reviews the growth in Nigeria’s GDP in the last quarter of 2024 and the prospect of these figures to real sector operators.
Last week’s release of Nigeria’s gross domestic product rate by the National Bureau of Statistics indicates a growth of 3.84 percent year-on-year growth in the fourth quarter of 2024. The figure exceeded the 3.46 percent y/y expansion recorded in the third quarter of 2024. By implication, the Nigerian economy expanded by 0.38 points between the third and fourth quarter of 2024.
During the week, the Monetary Policy Committee of the Central Bank of Nigeria also met and decided for the first time since the inception of the current administration to hunt for further increase in the Monetary Policy Rate, leaving it at 27.50 percent.
Both decisions have enormous implications on the nation’s economy, as GDP depends on productivity which in turn relies on access to capital on the side of entrepreneurs to increase capacity.
Consequently, stakeholders view the impact of the report and MPC decision from different perspectives.
While analysts are optimistic that the economy seems to be turning the corner, operators are calling for improvement on the side of the government as it concerns providing a conducive environment, including access to funding.
The call is coming even when detailed analysis of the GDP report shows that a large number of the economic sub-sectors chronicled by the NBS did not report remarkable growth.
“We believe the government’s intensified efforts to boost oil production through enhanced pipeline surveillance and increased output from new oil fields supported the growth recorded in the sector. However, expansion remains constrained by ageing oil infrastructure, a consequence of prolonged underinvestment”
Q4, 2024 GDP report review
Performance breakdown of the Q4, 2024 report shows that the non-oil sector grew stronger during the period posting an increase of 3.96 percent y/y as against 3.37 percent y/y in Q3, 2024.
Analyzing the outturn reveals that real increases were recorded across the Services Sector which rose 5.37 percent y/y better than 5.19 percent y/y in Q3, 2024 and Agriculture which appreciated by 1.76 percent y/y in Q4, 2024 higher than 1.14 percent y/y in Q3, 2024, while the Industries sub-sectors neutered the slowdown with 2.00 percent y/y growth in Q4, 2024 but lower than 2.18 percent y/y reported in Q3, 2024.
By implication, the Services sub-sector grew by 4.70 percent y/y in full year 2024 as against 4.18 percent y/y reported in 2023, while the Agriculture and Industries sub-sectors grew slower by 1.19 percent y/y full year 2024 compared to 2.10 percent y/y in 2023 and 2.45 percent y/y in 2024 and 3.86 percent y/y full year 2023, respectively.
Services Sector
On a sub-sector performance analysis, the service sector growth was primarily driven by acceleration in Trade which grew by 1.19 percent y/y as against 0.65 percent y/y growth in Q3, 2024.
However, while growth in the Information & Communication stood at 5.90 percent y/y in Q4, 2024, it was less than the 5.92 percent y/y growth posted in Q3, 2024. Similarly, even though the Financial & Insurance reported 27.28 percent y/y appreciation in Q4, 2024 it was less than 30.83 percent y/y posted in vs. Q3, 2024.
Reviewing the GDP report, financial analysts at Cordros Securities Limited said the expansion in the Trade sub-component was supported by increased consumer demand during the festive season and reduced currency volatility, which bolstered performance in the review period. Conversely, the moderation in ICT growth reflects the lingering impact of mobile line disconnections on subscription rates amid the conclusion of the NIN-SIM linkage program by network providers in September.
They noted that growth in the Finance & Insurance sub-component remained strong, supported by higher interest income amid elevated interest rates.
“Furthermore, we believe CBN’s mandated 50.0% loan-to-deposit ratio has continued to support increased risk asset creation by banks. However, we attribute the moderation in growth partly to a high statistical base from the corresponding period last year (Q4-23: +29.78% y/y),” the report stated.
Agriculture
According to NBS, the agriculture sector contributed 1.76 percent y/y to the GDP growth in Q4, 2024 as against 1.14 percent y/y in Q3, 2024; experts say it is a reflection of the boost from the harvest season. However, the growth was moderate compared to the same period last year, Q4, 2023 which grew by 2.10 percent y/y, primarily due to the impact of widespread flooding in the country during the primary harvest season. While, crop production contributed 91.5 percent of Agric GDP as it grew by 1.90percent y/y in Q4, 2024 but remained significantly below historical levels of Q4 average between 2020 and 2023, which stood at 3.10 percent y/y.
Further breakdown shows that growth in forestry of 2.02 percent y/y in Q4, 2024 is less than 2.23 percent y/y in Q3, 2024 and livestock’s growth of 0.04 percent y/y is far below 1.03 percent y/y growth in Q3, 2024. The slowed growth experts say is due to elevated cost pressures partly subdued growth, even as the fishing sub-component grew by 0.09 percent y/y rebounding from a negative growth of 1.91 percent y/y in Q4, 2023.
Manufacturing
The Manufacturing GDP recorded stronger growth of 1.79 percent y/y in Q4, 2024 compared to 0.92 percent y/y in Q3, 2024, despite persistent challenges constraining overall production levels. Interestingly, the Oil refining sub-component contributed 9.59 percent y/y allowing the sector to rebound from a negative growth of 32.39 percent y/y in Q3, 2024, even as the sector returned to growth for the first time since Q1, 2018 7.06 percent y/y following the commencement of refining activities at the Dangote refinery and gradual start of production from the Port Harcourt Refinery.
Similarly, the Food, Beverage & Tobacco sub-component of the manufacturing sector expanded by 2.84 percent y/y Q, 2024 compared to 1.76 percent y/y in Q3, 2024. The growth is likely due to the increased food production associated with higher demand owing to the festive period. Additionally, growth in the Construction GDP rose by 2.95 percent y/y in Q4, 2024 indicating a slim increase from 2.91 percent y/y growth reported in Q3, 2024.
Oil sector records moderate growth
On the other hand, the oil sector recorded modest growth of 1.48 percent y/y in Q4, 2024, a slowdown from the growth in the previous quarter’s 5.17 percent y/y Q3,2024 and 12.11 percent y/y in Q4, 2023, despite higher crude oil production in Q4-24 of 1.54 mb/d versus 1.47 mb/d in Q3, 2024.
Energy expert, Ayo Adeyemi, said the moderation reflects the impact of a high base in the corresponding period of the previous year, when oil production averaged 1.56 mb/d in Q4, 2023.
“We believe the government’s intensified efforts to boost oil production through enhanced pipeline surveillance and increased output from new oil fields supported the growth recorded in the sector. However, expansion remains constrained by ageing oil infrastructure, a consequence of prolonged underinvestment,” he stated.
Meanwhile, data from the Nigerian Upstream Petroleum Regulatory Commission revealed significant production increases at the Bonny and Brass terminals rose by 49.1 percent y/y and 44.4 percent y/y respectively, while output declined notably at the Agbami and Okwuibome terminals which dropped by 14.5 percent y/y and 13.7 percent y/y respectively.
Overall, crude oil production (including condensates) averaged 1.55 mb/d in full year 2024, marking a 5.4 percent y/y increase from 2023 full year levels of 1.47 mb/d, while oil GDP growth averaged 5.62 percent y/y in 2024 as against a negative growth of 1.59 percent y/y reported in 2023
Optimism over mid-term GDP growth
While reviewing the GDP report, financial analysis at Cordros Securities Limited expressed optimism about the prospect of the Nigeria economy. A key sector where they expect a turnaround that can impact the economy urgently is the oil and gas sector.
According to them, the oil sector’s GDP is set to expand as reduced oil theft and pipeline vandalism and a gradual uptick in oil investment, pointing out that the Federal Government’s recent approval of key divestment deals between local and international oil firms would boost production.
The Cordros expert analysts insist that the trend is reflected in the recent increase in oil output (including condensates), which rose by 4.2 percent m/m to 1.74 mb/d in January 2025 compared to 1.67 mb/d in December 2024, according to NUPRC data.
“While we could see some moderation in output levels, we expect production to remain well above 1.60 mb/d in the near term. Consequently, oil production (including condensates) is projected to average 1.70 mb/d in Q1, 2025, supporting an estimated oil sector growth of 6.01 percent y/y,” the Cordros analysts stated.
Non-oil sector
Further reviewing the nation’s economy, the financial analysts at Cordros Security Limited, in their weekly report also expressed confidence in the non-oil sector, saying “we believe factors such as a gradual increase in consumer demand due to the ease of inflationary pressures and a relatively stable naira will support expansion. Nonetheless, high borrowing costs and still weak FDI investment are likely to weigh on growth in the short term.
“Overall, we expect the non-oil sector to grow by 3.25% y/y in Q1, 2025,” the report stated.
On a sectorial basis the Cordros analysts said they expect persistent challenges in the agriculture sector. They identified such as insecurity in food-producing regions and low investment stemming from limited access to finance—to continue restricting output expansion.
They however, noted that reduced input cost pressures and a potential extension of the harvest period in Q1, 2025 could offer some support for growth.
“As a result, we forecast Agricultural GDP to expand by 1.09 percent y/y in Q1, 2025,” they stated.
According to the Cordros weekly report, the services sub-sector is projected to sustain strong growth in Q1, 2025, driven primarily by expansion in Trade and ICT and continued positive momentum in Transportation, while growth in Finance and Insurance is expected to moderate further.
“We look forward to seeing a persistent focus on fighting the fundamentals that have contributed to rising inflation that has occasioned the hiking of rates as a form of response”
“Specifically, we expect improving consumer demand and naira stability to fuel growth in the trade sub-component. For ICT, we expect a gradual recovery in mobile subscriptions due to SIM reactivation efforts by telecom providers following the completion of the NIN-SIM linkage program and (2) reduced currency pressures to buoy expansion.
“Meanwhile, the Transportation sub-component is expected to maintain positive growth, with the sector benefitting from slower increases in energy prices and improved petroleum product supply. Conversely, growth in Financial and Insurance is likely to slow, given a high base in the previous year and a potential moderation in interest income in line with the MPC’s pause in monetary policy tightening. Overall, we project the Services sector to grow by 4.27 percent y/y in Q1, 2025.”
The report stated that the Manufacturing sub-sector growth outlook leans towards the upside, as output is expected to be boosted by easing cost pressures from reduced naira volatility and lower energy prices. Additionally, increased refining activities are expected to further bolster growth in the short to medium term. However, elevated borrowing costs pose a downside risk to the sector’s expansion. Consequently, we estimate manufacturing sub-sector growth to reach 2.05 percent y/y in Q1, 2025.
“Accordingly, we project real GDP to settle at 3.43% y/y in Q1-25, with full-year growth of 3.85% y/y in 2025FY (2024FY: +3.37% y/y). We highlight that the results of the GDP rebasing could present an upside risk to our estimate,” the report stated.
Beyond the figures
But on its part, business owners under the umbrella of the Lagos Chambers of Commerce are more concerned with the monetary policy decision stressing that GDP growth can only be realized when productivity is improved.
While appreciating the latest decision by the MPC to maintain the MPR at 27.50 percent, the Chamber described the move as the beginning of a better deal for the business community regarding the cost of credit.
“In recent months, the rising and high interest rates have tormented businesses seeking to leverage credit for business operations and expansion. We look forward to seeing a persistent focus on fighting the fundamentals that have contributed to rising inflation that has occasioned the hiking of rates as a form of response,” the Chamber said in a statement.
Taking a broader look at the economy and figures released by the NBS as the custodian of the nation’s data and the importance of their precision, the LCCI noted that the recent recalibration of the Consumer Price Index methodology by the NBS has resulted in a notable statistical decline in inflation, dropping from 34.80 percent in December 2024 to 24.48 percent in January 2025.
“The reality remains that many businesses and households continue to grapple with high costs of goods and services. The rebasing provides a more updated and reflective measure of economic conditions but does not necessarily translate into immediate relief from inflationary pressures in practical terms,” LCCI stated.
According to LCCI the real test of whatever statistical figures released by the government and its agencies lies in how economic fundamentals improve over time.
Hence, the private sector operators are offering to continuously engage with policymakers to ensure that both monetary and fiscal interventions are aligned toward sustainable economic growth and improved living conditions for Nigerians.
