Nigeria’s economy grew 3.19 per cent year-on-year in the second quarter of 2024, the National Bureau of Statistics (NBS) has revealed.
The development gave President Bola Ahmed Tinubu some excitement as he assured that the reforms put in place by his administration were beginning to yield the right results.
The growth rate was quicker than the 2.51 per cent growth recorded in the second quarter of 2023 and the 2.98 per cent growth seen in the first quarter of this year.
“In real terms, the non-oil sector contributed 94.30 per cent to the nation’s GDP in the second quarter of 2024, lower than the share recorded in the second quarter of 2023 which was 94.66 per cent and higher than the first quarter of 2024 recorded as 93.62 per cent”, the NBS said in its latest GDP report released Monday.
Analysts identified underlying factors for this stagnation to include structural challenges, limited diversification, and persistent economic uncertainties, all of which may hinder the sector’s potential to drive more robust and sustained economic growth.
In recent time, Nigeria’s non-oil sector had exhibited signs of stagnation despite Nigeria’s overall growth in Gross Domestic Product (GDP) in the second quarter of 2024.
According to the latest GDP report by the NBS for the second quarter of 2024, the non-oil sector recorded a growth rate of 2.80% in real terms, mirroring the growth rate seen in the first quarter of 2024.
This growth rate is notably lower than the 3.58% recorded in the same quarter of 2023, indicating a slowdown, and raising concerns about the country’s economic diversification efforts.
Growth performance was driven primarily by Financial and Insurance Services, Telecommunications, Agriculture, Trade, and Manufacturing, suggests a concentration of growth in specific industries.
Despite this, the broader non-oil sector failed to exhibit dynamic growth.
Also, this stagnation is further highlighted by the non-oil sector’s contribution to GDP, which stood at 94.30% in Q2 2024, down from 94.66% in the same period the previous year.
…Uwaleke explains
Reacting to the NBS report, Professor of Economics at the Nasarawa State University, Uche Uwaleke, noted that several factors combined to drive the GDP growth.
In a chat with Blueprint, Uwaleke, who is also the President of the Association of Capital Market Academics of Nigeria (ACMAN) said the aggressive hike in monetary policy rate in February and March 2024 by the CBN and the high cost of petroleum products impacted GDP growth.
According to Uwaleke, it may be responsible for the decline recorded in major contributors to GDP such as Manufacturing, Trade, ICT and Real Estate.
“The Non-oil sector performance was powered by the Services sector chiefly financial services and ICT. This sector’s contribution to GDP in Q2 was 2.80%, exactly same as in Q1 2024.
“Manufacturing and agriculture sectors appeared hugely impacted by economic headwinds during the quarter. Growth rates were a mere 1.28% and 1.41% respectively.
“The Agric sector (comprising 4 activities although dominated by crop production) improved in Q2 2024 to 1.41% from 0.18% in the previous quarter,” he explained.
He further added that like in Q1 2024, when growth was driven by the oil sector, growth in Q2 2024 was also driven by the oil sector at 10.15 per cent.
He further said oil sector growth was aided largely by the increase in crude oil price during the quarter as average crude oil production fell (from 1.57mbpd in previous quarter to 1.41mbpd).
The ACMAN president pointed out that the financial sector which recorded a 28.79 per cent growth was a clear demonstration that it is detached from the productive sectors of the economy.
Uwaleke said, “In my view, this identified growth pattern, weighted in favour of the services sector, is not healthy for a developing economy such as ours. Little wonder, economic growth does not appear inclusive, reflecting rising unemployment and poverty levels.
“It is time we reset this faulty economic structure, leveraging technology, in favour of the productive sectors: Industry and Agriculture.
“Indeed, structural change is strongly recommended (by UNCTAD) as one of the ingredients of building productive capacities,” said the capital market expert.
…Tinubu excited
Commending the growth, President Tinubu said: “We are confident that with the policies we have put in place, we expected production to rise to about two million barrels very soon.”
Special Adviser to the President on Information and Strategy, Mr Bayo Onanuga, quoted Tinubu as saying this in a statement.
He said the new NBS report “affirms that the economy is on the right trajectory and is indeed on the path to recovery.”
“As the President said in his August 4, 2024 national broadcast, our economy is recovering. Sooner than later, Nigerians will begin to feel, see, and enjoy the impact of his administration’s economic re-engineering efforts.
“We want to reiterate that this government will continue to work assiduously to rekindle Nigerians’ hope and confidence. President Tinubu is working to build a solid and resilient economy.
“The president urged Nigerians to retain their faith in the government and not allow themselves to be swayed by naysayers’ intent in aborting and undermining the current reforms for their selfish ends.
“According to the NBS report, the growth rate in Q2 is higher than the 2.51% recorded in Q2 2023 and higher than the 2.98% growth in Q1 2024.
“The GDP’s performance in the second quarter of 2024 was driven by the service sector, which recorded a growth of 3.79% and contributed 58.76% to the aggregate output.
“The agriculture sector grew by 1.41% in contrast to the 1.50% recorded in the second quarter of 2023. The industrial sector’s growth was 3.53%, up from the -1.94% recorded in the second quarter of 2023.
“The NBS also reported that crude production grew to 1.41 million barrels per day, compared with 1.22 million barrels a year earlier.
“In terms of share of the GDP, the industry and services sectors contributed more to the aggregate GDP in the second quarter of 2024 compared to the corresponding quarter of 2023.
“In the quarter under review, aggregate GDP at basic price stood at N60, 930,000.58 million in nominal terms. This performance is higher than the second quarter of 2023, which recorded an aggregate GDP of N52, 103,927.13 million, indicating a 16.94% year-on-year nominal growth,” the statement said.