Nigeria’s GDP Grows By 3.19% In Q2, 2024 – NBS

Nigeria’s Gross Domestic Product (GDP) experienced a year-on-year growth of 3.19% in real terms during the second quarter of 2024.
The GDP growth rate surpasses the 2.51% recorded in the second quarter of 2023 and the 2.98% growth seen in the first quarter of 2024.

The GDP performance in Q2 2024 was primarily driven by the Services sector, which grew by 3.79% and contributed 58.76% to the total GDP. The agriculture sector saw a growth of 1.41%, slightly down from the 1.50% growth recorded in Q2 2023.

The industry sector improved significantly, with a growth of 3.53%, compared to the -1.94% decline observed in the second quarter of 2023.

In terms of GDP share, the industry and services sectors contributed more to the total GDP in the second quarter of 2024 compared to the same period in 2023.

Oil sector
The oil sector contributed 5.70% to the total real GDP in Q2 2024, an increase from the 5.34% recorded in the same period of 2023, but a decrease from the 6.38% contribution in the preceding quarter.

The oil sector experienced a real growth of 10.15% year-on-year in Q2 2024, marking a significant increase of 23.58 percentage points compared to the -13.43% recorded in the same quarter of 2023.

This growth also represents a 4.45 percentage point rise from the 5.70% recorded in Q1 2024.

However, on a quarter-on-quarter basis, the oil sector saw a decline, with a growth rate of -10.51% in Q2 2024.

Nigeria recorded an average daily oil production of 1.41 million barrels per day (mbpd), in Q2, 2024 which is 0.19 mbpd higher than the average 1.22 mbpd recorded in the same quarter of 2023.

However, this figure is 0.16 mbpd lower than the 1.57 mbpd produced in the first quarter of 2024.

Non-oil sector
The non-oil sector contributed 94.30% in real terms to the nation’s GDP in the second quarter of 2024.

This is slightly lower than the 94.66% share recorded in the second quarter of 2023 but higher than the 93.62% contribution in the first quarter of 2024.
The non-oil sector grew by 2.80% in real terms during Q2 2024.

This growth rate was 0.78 percentage points lower than the 3.58% recorded in the same quarter of 2023, and it matched the 2.80% growth seen in the first quarter of 2024.

The sector’s performance in Q2 2024 was primarily driven by Financial and Insurance (Financial Institutions), Information and Communication (Telecommunications), Agriculture (Crop Production), Trade, and Manufacturing (Food, Beverage, and Tobacco), all of which contributed to positive GDP growth.

Year-on-year, mirrors a similar trend. Its growth has been influenced more by rising oil prices and an improved production rate of 1.41 million barrels per day than by any significant, deliberate policy interventions. The sector’s quarterly performance, showing a 10.51% decline, highlights its vulnerability to volatile external factors and underscores a reliance on factors beyond domestic control.

In stark contrast, the agricultural and manufacturing sectors have shown disappointing performance. Agriculture grew by a meager 1.41%, a slight decrease from the previous year’s 1.50%. This stagnation is alarming for a sector that is crucial for employment and food security. The manufacturing sector, while seeing some improvements with a 3.53% growth, still lags behind its potential and struggles with high production costs, infrastructural deficits, and an inconsistent power supply. These sectors, essential for sustainable economic development, remain underperforming, revealing a skewed economic structure that overemphasizes service and oil sectors while neglecting the fundamental pillars of a balanced economy.

Drawing parallels to Napoleon’s campaign in Russia, where initial successes were overshadowed by deep strategic miscalculations and the harsh realities of winter, Nigeria’s GDP growth figures present an enticing narrative of progress that may not fully capture the economic cold front approaching the country. Just as Napoleon’s army, despite its initial victories, faltered in the face of a grueling winter, Nigeria’s economic growth is tempered by underlying vulnerabilities. The complexity economics theory, as articulated by Ricardo Hausmann, provides a useful lens to understand this phenomenon. Hausmann’s work emphasizes the importance of structural transformation and the development of complex, high-value industries for sustainable economic growth. Nigeria’s current growth, driven by inflation and external factors, rather than internal structural improvements, highlights a lack of deeper economic complexity and resilience.

The poor performance of the agricultural sector is particularly troubling. Agriculture, which should be a cornerstone of Nigeria’s economy given its vast arable land and potential for export-driven growth, has remained stagnant. This stagnation is indicative of systemic issues such as inadequate infrastructure, lack of investment, and inefficient agricultural practices. The sector’s growth rate of 1.41% is insufficient to meet the needs of a growing population and to drive substantial economic transformation.

Manufacturing, while showing some recovery with a growth rate of 3.53%, continues to face significant challenges. High energy costs, logistical inefficiencies, and a challenging business environment stifle the sector’s potential. The disparity between the growth rates of the oil and services sectors compared to manufacturing and agriculture reveals an imbalanced economic development strategy that favors short-term gains over long-term sustainability.

The overall skewness of Nigeria’s economy, characterized by the overperformance of the services and oil sectors and the underperformance of agriculture and manufacturing, signals a need for a more nuanced economic strategy. The country’s reliance on external factors and inflationary pressures for growth is unsustainable and poses risks for future stability. The current economic structure may lead to short-term gains but will struggle to support sustainable, inclusive growth in the long run.