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| Nigeria’s economy kicked off 2024 with a modest bang, boasting a 2.98% year-on-year GDP growth in the first quarter. This upbeat note trumps the same period in 2023, which saw a 2.31% rise. However, it’s not all roses, as this pace lags behind the robust 3.46% growth of Q4 2023. The star of this economic story is the service sector, which grew by 4.32%, contributing a significant 58.04% of the GDP. This growth was driven by increased activities in trade, transportation, and communication. Unlike Q1 2023, which suffered from a cash crunch, Q1 2024 faced no such issues, allowing economic activities to flourish. The Purchasing Manager Index showed an improvement, with January’s index rising to 54.5, the highest in 13 months, though it declined to 51.1 in March. In contrast, the agricultural sector, crucial to Nigeria’s economy, struggled. Although it avoided the negative growth of Q1 2023 (-0.90%), it only achieved a modest 0.18% expansion. On the brighter side, nominal GDP—the total value of goods and services produced—hit N58,855 billion in Q1 2024, marking a hefty 14.86% year-on-year increase compared to Q1 2023. This suggests a mix of real growth and some price inflation. In summary, Nigeria’s Q1 2024 GDP growth is a mixed bag. The service sector is carrying the day, and nominal GDP is up, but the agricultural sector is limping along, and growth has slowed from the previous quarter. While the year-on-year growth points to a strengthening economy, the uneven performance across sectors calls for a closer watch.  |
| Source: NBS | Comercio Partners |
An Economic Rollercoaster – From High-Flying Years to Rocky Periods Nigeria’s GDP growth rate has been on a bit of a rollercoaster ride over the years. There were high-growth glory days between 2006 and 2010 when the growth rates consistently exceeded 6%. Then came the rocky period of 2016, with the GDP contracting by 1.58% during a recession. |
 Source: NBS | Comercio Partners |
More recently, the GDP growth rate has been slower yet steady, hovering around 3% from 2021 to 2023. In the first quarter of 2024, the growth rate clocked in at 2.98%. The central bank had hiked the Monetary Policy Rate by a hefty 600 basis points to 24.75% to curb inflation in March. Despite these efforts, inflation has been stubbornly high, hitting a record 33.69% in April, eroding consumer purchasing power. The increased interest rate has also raised the cost of borrowing for real sectors, stifling economic growth. Moreover, recent hikes in PMS (Premium Motor Spirit) prices and electricity tariffs have further dampened economic activity, leading to business contraction and minimal expansion. Bottom Line: Nigeria’s GDP growth trajectory paints a mixed picture. While the expansion is positive, the slowdown and uneven sectoral performance warrant caution. The Nigerian economy shows signs of progress, but the uneven growth pattern underscores the need for continued diversification and policy reforms to unlock its full potential. |
