1.12 GDP Growth in Nigeria by Sector

4.8 percent in the second quarter of 2022 compared to 6.1 percent in the first quarter. The key contributors to the expansion were the information and communications, finance and insurance, transportation, agriculture, and manufacturing sectors.

Economic growth in Nigeria continues to suffer from an underperforming oil sector. Oil output was down by 11.8 percent year-on-year in the second quarter of 2022 against 26 percent in the first quarter. After dropping for the fifth consecutive quarter (from 1.4 million barrels per day in the first quarter to 1.2 million in the second quarter), oil production slowed further in August to a 50-year low of 1.13 million barrels per day, behind Angola (1.17 million). It continues to lag the production levels of last year (1.6 million barrels per day). Despite elevated oil prices, the country’s (net) official oil earnings have not increased. Several headwinds, such as increasing petroleum product subsidies (deducted directly from the gross oil earnings), limited investment in oil infrastructure, and theft on the pipelines, prevent the economy from realizing gains from rising oil prices. Real GDP growth is expected to slow from 3.6 percent in 2021 to 3.3 percent in 2022, 0.5 percentage point lower than the April 2022 Africa’s Pulse forecast.

Due to its heavy reliance on imported petroleum products and constrained oil production, Nigeria did not benefit from favorable terms of trade induced by the Russia-Ukraine conflict. The downward revision partly reflects headwinds from rising food and fuel prices and a contractionary monetary policy. On the demand side, economic growth was supported by a moderate uptick in private consumption and investment, which have been held back by monetary policy tightening and insecurity. Direct central bank lending to the agriculture and manufacturing sectors provided some support to private investment. Net exports benefited somewhat from elevated oil prices; however, rising import bills dragged them down. Government spending rose to cover the large publicsector wage bill, spending for security, and interest costs. On the production side, the service sector has been the 2 key driver of growth over the past year (figure 1.12). The industrial sector suffered from a series of obstacles, including among others, power shortages, insecurity, and low oil production. The minor contribution of the agriculture sector was partly due to limited formal land and import restrictions.

FIGURE 1.12: GDP Growth in Nigeria by Sector (%)

12 10 8 6 4 0 –2 –4 –6 –8

Q1 Q2 Q3 Q4 Q1 Q2 2021 2022 Agriculture Industry Services Source: Nigeria National Bureau of Statistics. Note: GDP = gross domestic product. Real GDP growth is expected to slow in Nigeria, partly because of constrained oil production. Growth is supported by the service sector.