Nigeria’s GDP Records 3.46% Growth in Q3 Spurred by Non-Oil Sector

Nigeria’s Gross Domestic Product (GDP) grew 3.4 percent in the third quarter (Q3) of 2024, with output reaching N20.115 trillion.

According to the Central Bank of Nigeria (CBN) in the latest Economic Report for the third quarter of 2024, this is up from 3.19 percent (N18.285 trillion)  in Q2 2024.

The CBN said despite persisting headwinds, this growth was driven mainly by the non-oil sector.

The report said inflation moderated during the quarter, reflecting the fall in the food component of the Consumer Price Index (CPI) basket, and driven by the restrictive monetary policy stance.

Domestic crude oil production increased, following enhanced security measures around oil pipeline infrastructure in the Niger Delta region.

The growth of 3.46 percent recorded in Q32024, represented the third consecutive expansion year-to-date surpassing the 3.19 percent and 2.54 per cent recorded in Q2 2024 and the corresponding quarter of 2023, respectively.

“Growth was on account of continued efforts to improve the business environment, streamline cumbersome business processes and deepen the quality of business infrastructure.

The 24-month window period opened for the banking sector re-capitalisation (according to their license category and authorisation) supported the robust growth in the services sector, particularly, the finance and insurance sub-sector, the report explained.

The continued drive of the government to improve crude oil production to a target of 2 million barrels per day by year-end of 2024, helped the oil sector to maintain positive growth for the fourth consecutive quarter.

Thus, the oil sector grew by 5.17 percent (year-on-year) in Q3 2024, compared with a growth of 10.15 per cent in the preceding quarter, and contributed 0.28 percentage points to the overall increase in the period under review.

The performance was slower than the preceding quarter, owing to a drop in prices of Nigeria’s Bonny Light crude in the international market, to $82.07 per barrel from $86.92 per barrel in Q22024.

However, with the increase in crude oil production from 1.27 million barrels per day in Q22024 to 1.33 million barrels per day in Q3 2024.

The non-oil sector growth accelerated to 3.37 per cent in Q32024 compared with a growth rate of 2.80 per cent in the preceding quarter, contributing 3.18 percentage points to total growth.

The expansion of the non-oil sector was driven by the performance of the financial & insurance, information & communication, crop production, trade, transportation & storage, and real estate sub-sectors.

Regarding sectoral performance, CBN said all the sectors, (agriculture, industry and services) grew in Q32024.

The Services sector expanded at the fastest pace by 5.19 per cent in Q32024, compared with 3.79 percent in Q2 2024 and 3.99 percent in Q3 2023, remaining the most dominant sector and accounting for 53.58 percent of aggregate Gross Domestic Product.

Within the services sector, financial & insurance sub-sector grew by 30.83 per cent, compared with 28.79 and 28.21 per cent in the preceding and corresponding quarters of 2023, respectively. This performance was spurred by gains from the recapitalisation exercise that was announced by the CBN, according to the report.

Other factors such as profits from interest gains (following continued hikes in interest rates), consultancy fees, and ATM & transfer fees contributed to the growth of the sub-sector.

Also, given the financial sector’s ongoing digital transformation (including the significant growth of fintech companies, mobile banking, and digital payment systems), the information and communications subsector grew by 5.92 percent (contributing 0.95 percentage points to GDP growth).

The performance of the ICT sub-sector was further boosted by the ongoing demand for digital services like e-commerce and data/internet services, which helped to grow economic activity in the other sub-sectors like trade and real estate 0.65 and 0.68 percent, respectively.

The transport and storage sub-sector grew by 12.15 per cent, compared with contractions of 13.53 and 35.85 percent in the preceding and corresponding quarters of 2023, respectively.

The growth was driven by the increase in road transport owing to improved security conditions and substitution from air transport (due to higher air fares). Also, sustained investments in road infrastructure, as well as investments in alternative sources of energy (CNG) for road transport contributed to the uptick in the sub-sector.

The agriculture sector grew modestly by 1.14 percent, compared with 1.41 and 1.30 percent in the preceding and corresponding quarters of 2023, respectively.

The growth was driven by the favourable weather conditions and increased harvests of some staples.

Crop production grew by 1.18 percent, compared with1.65 percent in Q22024, while the forestry and livestock sub-sectors grew by 2.23 and 1.03 percent, respectively, compared with a growth of 2.77 percent and a contraction of 1.71 percent in Q22024.