Nigeria’s Economy has recorded its fastest growth in three years, with the Gross Domestic Product (GDP) expanding by 3.84% in the fourth quarter of 2024, surpassing the 3.46% growth rate recorded in the same quarter of 2023, with the services sector emerging as the dominant force behind this impressive performance. The highest growth seen before this was the 3.98 percent recorded in the fourth quarter of 2021. The service sector, which grew by 5.37%, contributed a significant 57.38% to total GDP, surpassing all other sectors in driving Economic Expansion in the quarter under review.
While the services industry soared ahead, other key industries grew more slowly. The industrial sector increased by 2.0%, and the Agriculture sector only rose by 1.76%, both reflecting a decline from their 2023 performance. The oil sector, historically a significant driver of Nigeria’s economy, continued to face difficulties. Despite an average output of 1.54 million barrels per day, real sector growth fell to 1.48% in Q4 2024, a significant decrease from the 12.11% increase observed in the same period the year before.
Services sector cements its dominance in economic expansion.
These figures highlight the oil industry’s persisting Volatility and production issues, as well as the services sector’s increasing significance as the major driver of Nigeria’s economic expansion. The services sector dominated the economic expansion throughout 2024, with GDP growth improving to 3.40% on an annual basis from 2.74% in 2023. Driven primarily by services, the non-oil sector contributed 95.40% to GDP in Q4 2024, maintaining an upward trend from Q3 (94.43%), Q2 (94.30%), and Q1 (93.62%).
This recurring trend emphasizes Nigeria’s continuous transition away from reliance on oil, reinforcing the services sector’s ability to sustain economic growth. Economist experts perceived that this is a move in the right direction toward economic diversification, lessening the nation’s susceptibility to changes in the price of oil globally and production hiccups. Throughout the year, not just in Q4, the services sector’s dominance was clear. When the GDP increased by 3.46% in Q3 2024 compared to 2.54% in Q3 2023, the services sector led the growth at 5.19% and accounted for 53.58% of total GDP.
A structural shift toward a service-driven economy.
Meanwhile, the industrial sector had improved growth of 2.18% compared to 0.46% in the same period in the previous year, while the agriculture sector grew by 1.14%, just less than its 1.30% growth in Q3 2023. Similarly, the services sector maintained its standing in Q2 2024, as GDP grew by 3.19%, surpassing the 2.51% growth in Q2 2023. During the quarter, the services sector recorded a 3.79% growth rate and accounted for 58.76% of the GDP, further cementing its position as the main engine of economic expansion.
The growing share of services sector’s contribution to GDP indicates a fundamental shift in Nigeria’s economic structure, with financial services and digitally driven industries quickly displacing oil as the main economic pillar of the nation. Nigeria’s economy has already changed due to the quick rise of digital financial services, mobile banking, and tech-driven entrepreneurship; additional expansion in these sectors could hasten the nation’s shift to a service-dominated economy. While agriculture and industry remain vital, the services sector’s continued expansion signifies a transformation in Nigeria’s economic structure.
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On a broader view, the outlook of Nigeria’s Economy is expected to continue to grow and become more service-driven. According to a research and credit rating firm, Augusto & co, the country’s GDP growth is expected to hover between 3 and 4.0% (base case scenario) in 2025 as Inflation peaks and starts to decrease, with monetary conditions potentially easing by the end of the year. However, there are concerns regarding fiscal Sustainability and inflation, which must be addressed through structural reforms.