Nigeria’s non-oil sector has 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 National Bureau of Statistics (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.
Financial services major driver in this sector
This sector’s performance, driven primarily by Financial and Insurance Services, Telecommunications, Agriculture, Trade, and Manufacturing, suggests a concentration of growth in specific industries. Yet, the broader non-oil sector fails 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.
Although this contribution is higher than the 93.62% recorded in Q1 2024, the minimal increase suggests that the sector’s growth is plateauing rather than accelerating.
The report read: “The non-oil sector grew by 2.80% in real terms during the reference quarter (Q2 2024). This rate was lower by 0.78% points compared to the rate recorded in the same quarter of 2023 which was 3.58% and relatively same with the 2.80% recorded in the first quarter of 2024.
“This sector was driven in the second quarter of 2024 mainly by Financial and Insurance (Financial Institutions); Information and Communication (Telecommunications); Agriculture (Crop production); Trade; and Manufacturing (Food, Beverage, and Tobacco), accounting for positive GDP growth.
“In real terms, the non-oil sector contributed 94.30% 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% and higher than the first quarter of 2024 recorded as 93.62%.”
The underlying factors for this stagnation could 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.
What you should know
While the non-oil sector continues to play a pivotal role in Nigeria’s economy, its inability to sustain robust growth amidst fluctuating global oil prices and economic pressures raises concerns about the country’s economic resilience and long-term growth prospects.
- Without targeted interventions and comprehensive reforms, the non-oil sector’s growth trajectory may continue to plateau, hindering broader economic development.
- Nairametrics earlier reported that 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.