Afrinvest, a holding company for the Nigerian capital market that has specialized subsidiaries catering to the distinct yet comprehensive wealth management requirements of West African clients, examined the GDP growth trajectory of Nigeria’s seventh largest sector over the last three years and found mixed results across different industries. It revealed that the agriculture sector had decreased, going from 2.1% in 2021 to 1.9% in 2022 and 2023, respectively, to 0.2% in the first quarter of 2024.
Climate change vulnerability and the difficulties associated with rural infrastructure could be the cause of this tendency. In 2022, the mining and quarry industry declined by 7.8%, and in 2021, it declined by -18.2%, according to the research. As of Q1 2024, a growth rate of 6.3% is anticipated for the sector, which has exhibited signs of revival. In 2022, the real estate sector grew by 2.3%, 3.9%, 1.7%, and 0.8%, respectively, from 2021 to 2023 to Q1 2024.
Experts point out that the high cost of housing and the sector’s susceptibility to changes in the economy may be to blame for this tendency. From 3.3 percent in 2021 to 2.4 and 1.4 percent in 2022 and 2023, respectively, and to 1.5 percent in Q1, 2024, the manufacturing sector has gradually decreased. The reduction was ascribed by analysts to the industry’s dependence on imported raw materials and the obstacles presented by the nation’s infrastructure. A decrease in the trade sector has also occurred, from 8.6 percent to 5.1 and 1.7% in 2022 and 2023, respectively, and to 1.2% in Q1, 2024, as a result of the sector’s susceptibility to changes in the world economy and the effects of inflation.
The growth rate of the technology and communication sector has been consistent, rising from 6.5% in 2021 to 9.8% in 2022 before contracting to 7.9% in 2023 and 5.4 percent in the first quarter of 2024. Nigeria’s financial institutions have shown to be remarkably resilient, according to Afrinvest, with the industry rising by 18.4% in real terms between Q3:2023 and Q1:2024, making it the fastest-growing sector among the seven main GDP sub-components in the nation. “Among Nigeria’s seven greatest GDP sub-components, the financial institutions’ activity has remained resilient, expanding by 18.4% in real terms between Q3:2023 and Q1:2024 to emerge as the fastest growing sector,” according to Afrinvest.
A favorable interest rate environment, “increased investment in vertical and horizontal business expansions, rapid growth in earnings from digital channels (aided by a reduction in physical cash in circulation), and a positive spillover effect from naira devaluation (owing to net FCY asset holdings)” were some of the factors cited for the performance. Afrinvest stated that, in the near future, it anticipated that growth in the overall economy will vary from 3.0 to 4.0 percent, mostly due to inadequate institutional capacity to convert reform objectives into observable benefits. Even yet, the company anticipated that the expansion of the banking sector will continue to be stable in the foreseeable future, even as industry participants started raising capital to comply with the new recapitalization standards.
In the foreseeable future, we anticipate that the whole economy will rise by three to four percent. In the near future, we anticipate that the banking sector will continue to grow steadily, according to Afrinvest.
Speaking during the report’s introduction, Saro Africa International’s Managing Director, Rasheed Sarumi, stressed the vital role that agriculture plays in propelling Nigeria’s economy toward reaching $1 trillion in GDP.
He stated, “We need excess agricultural output to achieve a $1 trillion economy, which will drive sustained industrialization, productivity, and employment.”
He pointed out that although productivity and production had increased, inflation was still a problem and that the government’s participation in agriculture during the previous fifty years had not produced meaningful results.
