The Nigerian economy experienced a growth of 3.46 percent in the third quarter of 2024, reaching an output of ₦20.115 trillion, surpassing the 3.19 percent (₦18.285 trillion) recorded in the previous quarter.
This expansion was largely driven by the non-oil sector, as highlighted in the Central Bank of Nigeria's latest Economic Report for Q3 2024.
The report notes a decline in inflation during this period, which was linked to falling food prices in the Consumer Price Index and the effects of the restrictive monetary policy that was put in place.
Additionally, domestic crude oil production saw an increase due to improved security measures around oil pipeline infrastructure in the Niger Delta region.
Despite ongoing challenges, the Central Bank of Nigeria reported that the economy continued to grow in the third quarter of 2024.
The 3.46 percent growth recorded in Q3 2024 marked the third consecutive expansion year-to-date, exceeding the 3.19 percent and 2.54 percent growth rates seen in Q2 2024 and the same quarter of 2023, respectively.
This growth can be attributed to ongoing initiatives aimed at enhancing the business environment, simplifying complex business processes, and improving the quality of business infrastructure.
The 24-month period established for banking sector recapitalization, based on their license category and authorization, contributed to significant growth in the services sector, particularly within the finance and insurance sub-sector, as detailed in the report.
Furthermore, the government's commitment to boosting crude oil production to a target of 2 million barrels per day by the end of 2024 has supported the oil sector in maintaining positive growth for the fourth consecutive quarter..
Thus, the oil sector grew by 5.17 per cent (year-on-year) in Q32024, 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 US$82.07/b from US$86.92/b in Q22024.
However, with the increase in crude oil production from 1.27mbpd in Q22024 to 1.33mbpd in Q32024, the sector maintained a positive contribution to overall growth.
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.
In terms of 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 per cent in Q22024 and 3.99 per cent in Q32023, remaining the most dominant sector, and accounting for 53.58 per cent 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 per cent (contributing 0.95pp 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 per cent, respectively.
The transport and storage sub-sector grew by 12.15 per cent, compared with contractions of 13.53 and 35.85 per cent 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.
Agricultural sector growth reached 1.14 percent, a modest increase compared to the 1.41 percent and 1.30 percent growth observed in the preceding and corresponding quarters of 2023, respectively. This growth is attributable to favorable weather conditions and increased harvests of key staple crops.
Crop production grew by 1.18 per cent, compared with1.65 per cent in Q22024, while the forestry and livestock sub-sectors grew by 2.23 and 1.03 per cent, respectively, compared with a growth of 2.77 per cent and a contraction of 1.71 per cent in Q22024.
The fishing sub-sector, however, contracted by 1.91 per cent, against a growth of 0.38 per cent in the preceding quarter.
The industry sector maintained a positive trajectory, growing by 2.18 per cent in Q32024, compared with 3.53 and 0.46 per cent in Q22024 and Q32023, respectively.
This slower growth was reflected in the Industrial Production Index (IPI), which grew by 2.04 per cent (year-on-year) in Q32024, compared with 4.13 per cent in the preceding quarter.
Government initiatives to enhance crude oil production, resulting in an increase from 1.27 mbpd in Q2 2024 to 1.33 mbpd in Q3 2024, significantly contributed to the sector's positive performance during the review period. This production increase is attributable to improved security within the oil-producing region.
Modest performances were recorded in the mining & quarrying sub-sectors with a growth of 3.27 per cent compared with 7.79 per cent and a contraction of 1.96 per cent in the preceding and corresponding quarters of 2023, respectively.
The industry sector, less oil, grew by 0.87 per cent compared with 0.85 and 1.04 per cent in the preceding and corresponding quarters of 2023, respectively.
Growth stemmed from sustained increases in water supply (9.78%) and sewerage waste management (3.23%); more moderate expansion was seen in electricity, construction (2.91%), and manufacturing (0.92%).
Conversely, the mining and quarrying subsector experienced a significant contraction of 61.36%, compared to contractions of 45.89% and 29.01% in the previous and corresponding 2023 quarters, respectively.