The latest GDP report from the Nigerian Bureau of Statistics (NBS) showed that Nigeria’s economy grew by 3.84% y/y in Q4-24, exceeding the 3.46% y/y expansion recorded in Q3 2024. While GDP growth in the oil sector (Q4-24: +1.48% y/y vs Q3-24: +5.17% y/y) slowed from the previous quarter, non-oil sector growth rose to 3.96% y/y (Q3-24: +3.37% y/y).
Additionally, growth increased across the Agriculture (Q4-24: +1.76% y/y vs Q3-24: +1.14% y/y), Services (Q4-24: +5.37% y/y vs Q3-24: +5.19% y/y) and Manufacturing (Q4-24: +1.79% y/y vs Q3-24: +0.92% y/y) sub-sectors from the prior quarter. Overall, GDP growth averaged 3.40% y/y in 2024FY, higher than the average growth of 2.71% y/y in 2023FY.
Oil Sector Records Moderate Growth
The oil sector recorded modest growth of 1.48% y/y in Q4-24, a slowdown from the growth in the previous quarter (Q3-24: +5.17% y/y | Q4-23: +12.11% y/y), despite higher crude oil production (Q4-24: 1.54 mb/d vs. Q3-24: 1.47 mb/d).
This moderation reflects the impact of a high base in the corresponding period of the previous year, when oil production averaged 1.56 mb/d in Q4-23. We believe the government’s intensified efforts to boost oil production through enhanced pipeline surveillance and increased output from new oil fields supported the growth recorded in the sector. However, expansion remains constrained by ageing oil infrastructure, a consequence of prolonged underinvestment.
Data from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) revealed significant production increases at the Bonny (+49.1% y/y) and Brass (+44.4% y/y) terminals, while output declined notably at the Agbami (-14.5% y/y) and Okwuibome (-13.7% y/y) terminals.
Overall, crude oil production (including condensates) averaged 1.55 mb/d in 2024FY, marking a 5.4% y/y increase from 2023FY levels (1.47 mb/d), while oil GDP growth averaged 5.62% y/y (2023FY: -1.59% y/y).
Non-oil Sector Continues to Support Overall GDP Growth
At the same time, the non-oil sector grew stronger in Q4-24, increasing by 3.96% y/y relative to +3.37% y/y in Q3-24. Analysing the outturn, increases across the Services (+5.37% y/y vs Q3-24: +5.19% y/y) and Agriculture (+1.76% y/y vs Q3-24: +1.14% y/y) sub-sectors neutered the slowdown in the Industries (+2.00% y/y vs Q3-24: +2.18% y/y) sub-sector.
For 2024FY, we highlight that the Services sub-sector grew by 4.70% y/y (2023FY: +4.18% y/y), while the Agriculture and Industries sub-sectors grew slower by 1.19% y/y (2023FY: +2.10% y/y) and 2.45% y/y (2023FY: +3.86% y/y), respectively.
Services: The increased growth in the Services sub-sector was primarily driven by an acceleration in Trade (+1.19% y/y vs. Q3-24: +0.65% y/y), while growth in the Information & Communication (+5.90% y/y vs. Q3-24: +5.92% y/y) and Financial & Insurance (+27.28% y/y vs. Q3-24: +30.83% y/y) moderated. The expansion in the Trade sub-component was supported by increased consumer demand during the festive season and reduced currency volatility, which bolstered performance in the review period. Conversely, the moderation in ICT growth reflects the lingering impact of mobile line disconnections on subscription rates amid the conclusion of the NIN-SIM linkage program by network providers in September.
Meanwhile, growth in the Finance & Insurance sub-component remained strong, supported by higher interest income amid elevated interest rates. Furthermore, we believe CBN’s mandated 50.0% loan-to-deposit ratio has continued to support increased risk asset creation by banks. However, we attribute the moderation in growth partly to a high statistical base from the corresponding period last year (Q4-23: +29.78% y/y).
Agriculture: Agriculture GDP growth rose to 1.76% y/y in Q4-24 (Q3-24: +1.14% y/y), reflecting the boost from the harvest season. However, growth moderated compared to the same period last year (Q4-23: +2.10% y/y), primarily due to the impact of widespread flooding in the country during the primary harvest season.
Indeed, crop production (91.5% of Agric GDP) grew by 1.90% y/y in Q4-24 but remained significantly below historical levels (Q4 average between 2020 and 2023: +3.10% y/y). Further breakdown shows that growth in forestry (+2.02% y/y vs. Q3-24: +2.23% y/y) and livestock (+0.04% y/y vs. Q3-24: 1.03% y/y) slowed as elevated cost pressures partly subdued growth while the fishing sub-component (+0.09% y/y vs. Q4-23: -1.91% y/y) rebounded.
Manufacturing: The Manufacturing GDP recorded stronger growth of 1.79% y/y in Q4-24 (vs. Q3-24: +0.92% y/y), despite persistent challenges constraining overall production levels. Notably, we highlight that the Oil refining sub-component (+9.59% y/y vs. Q3-24: -32.39% y/y) returned to growth for the first time since Q1-18 (+7.06% y/y) following the commencement of refining activities at the Dangote refinery and gradual start of production from the Port Harcourt Refinery.
At the same time, the Food, Beverage & Tobacco sub-component expanded by 2.84% y/y (Q3-24: +1.76% y/y), likely due to the increased food production associated with higher demand owing to the festive period. Additionally, growth in the Construction GDP (+2.95% y/y vs Q3-24: +2.91% y/y) expanded.
Outlook – GDP Growth to Remain Robust in the Medium Term
Oil GDP: The oil sector’s GDP is set to expand as reduced oil theft & pipeline vandalism and a gradual uptick in oil investment—driven by the FG’s approval of key divestment deals between local and international oil firms—boost production. This trend is reflected in the recent increase in oil output (including condensates), which rose by 4.2% m/m to 1.74 mb/d in January (vs 1.67 mb/d in December), according to NUPRC data.
While we could see some moderation in output levels, we expect production to remain well above 1.60 mb/d in the near term. Consequently, oil production (including condensates) is projected to average 1.70 mb/d in Q1-25, supporting an estimated oil sector growth of 6.01% y/y.
Non-Oil GDP: For the non-oil sector, we believe factors such as a gradual increase in consumer demand due to the ease of inflationary pressures and a relatively stable naira will support expansion. Nonetheless, high borrowing costs and still weak FDI investment are likely to weigh on growth in the short term. Overall, we expect the non-oil sector to grow by 3.25% y/y in Q1-25.
Agriculture: We expect persistent challenges in the sector—such as insecurity in food-producing regions and low investment stemming from limited access to finance—to continue restricting output expansion. However, reduced input cost pressures and a potential extension of the harvest period in Q1-25 could offer some support for growth. As a result, we forecast Agricultural GDP to expand by 1.09% y/y in Q1-25.
Services: The Services sub-sector is projected to sustain strong growth in Q1-25, driven primarily by expansion in Trade and ICT and continued positive momentum in Transportation, while growth in Finance and Insurance is expected to moderate further. Specifically, we expect improving consumer demand and naira stability to fuel growth in the trade sub-component. For ICT, we expect a gradual recovery in mobile subscriptions due to SIM reactivation efforts by telecom providers following the completion of the NIN-SIM linkage program and (2) reduced currency pressures to buoy expansion.
Meanwhile, the Transportation sub-component is expected to maintain positive growth, with the sector benefitting from slower increases in energy prices and improved petroleum product supply. Conversely, growth in Financial and Insurance is likely to slow, given a high base in the previous year and a potential moderation in interest income in line with the MPC’s pause in monetary policy tightening. Overall, we project the Services sector to grow by 4.27% y/y in Q1-25.
Manufacturing: We believe the Manufacturing sub-sector growth outlook leans towards the upside, as output is expected to be boosted by easing cost pressures from reduced naira volatility and lower energy prices. Additionally, increased refining activities are expected to further bolster growth in the short to medium term. However, elevated borrowing costs pose a downside risk to the sector’s expansion. Consequently, we estimate manufacturing sub-sector growth to reach 2.05% y/y in Q1-25.
Accordingly, we project real GDP to settle at 3.43% y/y in Q1-25, with full-year growth of 3.85% y/y in 2025FY (2024FY: +3.37% y/y). We highlight that the results of the GDP rebasing could present an upside risk to our estimate.
Cordros
