…Say High Interest Rate Weakens Agric, Manufacturing, Others Sector Growth
… Crop Production Drove 3.46% GDP Growth Rate In Q3 – NBS
Some financial experts have said that Nigeria’s GDP growth in 2024 has been driven by the non-oil and services sectors, but structural imbalances persist with agriculture and manufacturing lagging due to inflation and high interest rates.
The National Bureau of Statistics has said Nigeria’s Gross Domestic Product growth rate in real terms grew by 3.46 per cent in the third quarter of 2024 on a year-on-year basis.
In an exclusive chat with NewsNGR, the experts highlighted the need for economic reforms to address the disproportionate reliance on the services sector and promote inclusive growth through agriculture and industry.
While recent fiscal policies have stimulated short-term growth, analysts caution that rising unemployment, poverty, and economic pressures demand urgent structural adjustments.
Nigeria’s first Professor of Capital Market, Uche Uwaleke highlighted the steady improvement in Nigeria’s real GDP growth in 2024, driven primarily by the non-oil sector.
Speaking to NewsNGR, he noted that while the economy showed resilience in some areas, significant structural challenges persist.
Professor Uwaleke revealed that the oil sector underperformed in the third quarter of 2024 compared to the second quarter, despite marginal improvements in crude oil production.
He attributed this decline to lower crude oil prices during the period, with average crude oil output across the first three quarters of 2024 falling below 1.5m barrels per day.
He noted that the agriculture sector continues to show weak performance, reflecting the impact of rising food inflation on productivity.
Meanwhile, the manufacturing sector is reeling under the pressures of high interest and exchange rates, with a consistent decline in performance since the first quarter of the year.
According to him, the transport sector recorded significant improvement over the previous quarter, although its contribution to GDP remains modest at less than one per cent. On the other hand, the financial sector experienced over 30 per cent growth.
However, Professor Uwaleke pointed out a disconnect between the financial sector and the productive economy, as the weak growth rates in agriculture and manufacturing highlight an imbalance in Nigeria’s economic structure.
“The growth pattern weighted in favour of the services sector is not healthy for a developing economy like ours,” he remarked.
He expressed concern that the lack of inclusivity in economic growth is evident in rising unemployment and poverty levels.
Professor Uwaleke emphasized the urgent need for structural reforms to reset the economy.
“It is time we reset this faulty economic structure, leveraging technology to favour the productive sectors—industry and agriculture,” he said.
Citing the United Nations Conference on Trade and Development (UNCTAD), he reiterated the importance of structural change as a key component in building productive capacities for sustainable growth.
The Group Managing Director of Crane Securities Limited, Mr Mike Eze, also commented on Nigeria’s recent economic performance, describing the country’s Gross Domestic Product (GDP) growth of 3.46 per cent year-on-year in real terms for the second quarter of 2024 as both expected and welcome development.
In an exclusive interview with NewsNGR, Eze emphasized Nigeria’s position as the strongest economy in Africa, attributing the GDP growth to a range of ongoing financial strategies to restructure the nation’s economic system.
“Nigeria remains the leading economy on the continent, and there are significant financial engineering efforts underway to revamp and strengthen our economic framework,” Eze stated.
However, he noted that the government is currently grappling with several economic challenges, including the devaluation of the naira, a persistent foreign exchange crisis, the removal of fuel subsidies, and increases in electricity tariffs.
These issues have had a substantial impact on both the economy and the populace, creating a complex economic landscape.
Discussing the relationship between economic policy and GDP growth, Eze explained that, in times of inflation and economic downturn, it is common for experts to advise governments to borrow funds.
“The process of borrowing and subsequent spending can stimulate economic activity, which often leads to an increase in GDP.
“This growth is primarily a result of increased government expenditure and investment,” he noted.
Eze further elaborated that the recent GDP growth reflects the immediate effects of such borrowing and spending, suggesting that these measures have begun to positively influence the economy.
“The rise in GDP by 3.46 per cent indicates that the economy is responding to these fiscal policies, and we can anticipate further growth in the coming quarters,” he said.
Analysts at Afrinvest West Africa Limited noted a steady expansion in Nigeria’s real GDP growth, supported by contributions from both the oil and non-oil sectors. However, they caution that structural and economic challenges continue to impede broader economic momentum.
The analysts emphasized the disproportionate reliance on the services sector for growth, highlighting the need for stronger performance in agriculture and industries to achieve balanced and inclusive economic development.
They noted that elevated energy costs, foreign exchange volatility, and inflationary pressures continue to pose challenges to achieving sustainable growth across critical sectors.
While the Nigerian economy shows resilience in parts, analysts call for focused policies to address structural issues and enhance productivity in the underperforming sectors to drive long-term economic stability and prosperity.
The Managing Director of Highcap Securities Limited, Mr David Adonri, has expressed scepticism over Nigeria’s reported GDP growth of 3.46 per cent in the third quarter of 2024, describing it as inconsistent with the country’s economic realities.
Adonri questioned the authenticity of the growth, suggesting it may be inflationary rather than real.
“If there is any growth at all, it cannot be real. It is an inflationary growth,” he stated, emphasizing that true economic growth would be reflected in a stable currency and controlled inflation, neither of which were evident during the period.
Adonri highlighted several factors that undermined economic performance in Q3 2024, including a modest increase in crude oil production, which he argued was insufficient to materially impact the economy.
He also pointed to the collapse of the national grid, a surge in energy costs, and persistent insecurity, which significantly hampered industrial production and rural economic activity.
“The period witnessed the worst collapse of the national grid and an unprecedented surge in energy costs. Insecurity continued unabated, leaving the rural economy largely unproductive,” Adonri explained.
Against the backdrop of these challenges, he added that the reported GDP growth figure is difficult to reconcile with on-ground realities.
“It is inconceivable that the economy grew in real terms by 3.46 per cent given the numerous challenges faced during the quarter,” he remarked.
Crop Production Drove 3.46% GDP Growth Rate- NBS
The National Bureau of Statistics said Nigeria’s Gross Domestic Product growth rate in real terms grew by 3.46 per cent in the third quarter of 2024 on a year-on-year basis.
The Statistician General of the Federation, Prince Adeyemi Adeniran said this in a press statement on Monday.
He said the growth is 0.92 percentage points higher than the 2.54 per cent recorded in the third quarter.
The statement added that the growth in the quarter was higher by 0.27 percentage points relative to the 3.19 per cent recorded in the second quarter of 2024.
He said, “This reflects a higher growth rate when compared to the corresponding quarter (Q3 2023) and the preceding quarter (Q2 2024). The major driver of the economy is the Services sector, which recorded a growth of 5.19 per cent and contributed 53.58 per cent to the aggregate GDP.
“The economic activity in real terms for Q3 2024 stood at N20.1tn which is higher than the rates recorded in the preceding Q2 2024 which stood at N18.2tn, and the corresponding quarter Q3 2023 which recorded N19.4tn.”
He stated that nominal terms (current price), aggregate GDP stood at N71.1tn in Q3 2024, indicating a year-on-year nominal growth rate of 17.26 per cent compared to the value of N60.tn recorded in Q3 2023.
“Similarly, the quarter under review is higher than the value of N60.9tn recorded in the preceding quarter (Q2 2024).
“The major contributing economic activities in real terms in the quarter under review (i.e., Q3 2024) are crop production 26.51 per cent, trade 14.78 per cent, telecommunication 13.94 per cent, crude petroleum 5.57 per cent and real estate 5.43 per cent.”
In the report, the data bureau said the country recorded an average oil production of 1.47 million barrels per day (mbpd) in the third quarter of the year.
According to the bureau, this is “0.07million bpd higher” than the second quarter production volume of 1.41mbpd and “0.02mbd higher than the daily average production of 1.45mbpd recorded in the same quarter of 2023”.
“The real growth of the oil sector was 5.17 per cent (year-on-year) in Q3 2024, indicating an increase of 6.02 per cent points relative to the rate recorded in the corresponding quarter of 2023 (-0.85 per cent), the NBS said.
“Growth decreased by 4.98 per cent points when compared to Q2 2024 which was 10.15 per cent. On a quarter-on-quarter basis, the oil sector recorded a growth rate of 7.39 per cent in Q3 2024.
“The Oil sector contributed 5.57 per cent to the total real GDP in Q3 2024, up from the figure recorded in the corresponding period of 2023 and down from the preceding quarter, where it contributed 5.48 per cent and 5.70 per cent respectively.”
The non-oil sector grew by 3.37 per cent in real terms in Q3 2024 — higher by 0.62 per cent compared to the rate recorded in the same quarter of 2023 which was 2.75 per cent, NBS said.
The bureau also said the contribution was higher by the 2.8 per cent recorded in the second quarter of 2024.
“In real terms, the non-oil sector contributed 94.43 per cent to the nation’s GDP in the third quarter of 2024, lower than the share recorded in the third quarter of 2023 which was 94.52 per cent and higher than the second quarter of 2024 recorded as 94.30 per cent,” NBS added.
The non-oil sector, which includes information and communication (telecommunication) topped the contribution, trade, agriculture (crop production), financial and insurance (financial institutions), manufacturing (food, beverage and tobacco), real estate and construction, and accounting contributed positively to the country’s GDP rate growth.
– Ifeanyi ONUBA and Chris UGWU