According to the CBN’s GDP Q1 report, Nigeria’s economy expanded more slowly in the first quarter of 2023, owing mostly to non-oil sector activity such as ICT and finance.
Election-related expenditure boosted economic activity and growth, but it was limited by supply shocks caused by the currency reform process and other obstacles.
Because of rising energy prices and limited access to cash, which exacerbated supply shocks, headline inflation accelerated.
The manufacturing and service industries expanded, while the agricultural sector contracted. The services sector remained the primary driver of growth, accounting for 2.44 percentage points of total increase.
When compared to 2022Q4, the sector grew at a slower rate of 4.35 percent rather than 5.69 percent in 2023Q1.
Individual contributions to total growth from the services sector’s commerce, finance and insurance, information and communications, and transport and storage subsectors were 1.67, 0.92, 0.21, and 0.10 percentage points, respectively.
The increase in the various sub-sectors, particularly in the ICT sub-sector, was primarily due to an increase in the number of internet service subscribers, mobile service subscribers, and broadband p*netration.
The effect of electioneering-induced transportation activities, as well as increasing use of fintech services as a result of the currency redesign policy, also contributed to growth in the Services sector.
Due to a huge fall in livestock output, the agricultural sector contracted by 0.90 percent, compared to a gain of 2.05 percent in the previous quarter.
This was caused by the ongoing security issues affecting cattle husbandry, as well as the limited access to cash that dominated the quarter.
This hampered economic activity because most activities in the sector are cash-driven, notably in the cattle subsector.
Thus, the livestock and fishery subsectors declined by 30.57 and 2.92 percent, respectively, compared to 1.59 and 3.02 percent in 2022Q4.
Crop production and forestry subsectors, on the other hand, rose at a slower rate of 1.93 and 1.24 percent, respectively, compared to 2.41 and 1.63 percent in 2022Q4.
Industry sector performance improved, increasing by 0.31 percent in 2023Q1 after contracting by 0.94 percent in 2022Q4.
Manufacturing (1.61%), Electricity (9.53%), Water supply (5.57%), and building (3.27%) sub-sectors grew, compared to 2.83, 15.22, 8.81, and 3.80%, respectively, in the previous quarter.
The performance of the sub-sectors was due to the combined effects of continuing policy support for the industry sector, as well as an increase in infrastructure investments, which boosted activity in the sector, particularly manufacturing.
The performance of sub-sectoral activities are listed thus:
Information and Communication
- Contribution: 10.32%
- Growth rate: 167.1%
Financial and Insurance
- Contribution: 21.37%
- Growth rate: 96.3%
Crop Production
- Contribution: 1.93%
- Growth rate: 37.8%
Trade
- Contribution: 1.31%
- Growth rate: 21.1%
Manufacturing
- Contribution: 1.61%
- Growth rate: 16.4%
Construction
- Contribution: 3.27%
- Growth rate: 13.7%
Transportation and Storage
- Contribution: 9.36%
- Growth rate: 10.3%
Professional, Scientific & Technical
- Contribution: 3.08%
- Growth rate: 10.0%
Real Estate
- Contribution: 1.70%
- Growth rate: 9.1%
Accommodation and Food Services
- Contribution: 3.59%
- Growth rate: 3.6%
According to the research, the services sector led the way as Nigeria’s GDP expanded by 2.51% year on year in the second quarter of 2023 (April to June).
