The Lagos Chamber of Commerce and Industry (LCCI) commends the robust performance of Nigeria’s Gross Domestic Product (GDP) in the second quarter of 2024, which recorded a 3.19% year-on-year growth in real terms. This impressive growth surpasses both the 2.51% growth in the second quarter of 2023 and the 2.98% recorded in the first quarter of 2024, signalling resilience in the economy despite the global and domestic challenges faced during this period.
The growth in Q2 2024 was primarily driven by the Services sector, which posted a remarkable 3.79% growth and contributed 58.76% to the aggregate GDP. The industry sector also showed a significant turnaround with a 3.53% growth, recovering from the negative growth of -1.94% recorded in Q2 2023. While still expanding, the agriculture sector exhibited a modest growth of 1.41%, slightly lower than the 1.50% recorded in Q2 2023.
The oil sector, a critical component of the Nigerian economy, recorded a substantial 10.15% growth in real terms, a stark improvement from the -13.43% contraction seen in Q2 2023. However, the sector’s quarter-on-quarter performance dipped by -10.51%, reflecting volatility in global oil markets and domestic production challenges. Meanwhile, the non-oil sector, the bulk of Nigeria’s GDP, grew by 2.80%, driven by Financial and Insurance Services, Information and Communication, Agriculture, Trade, and Manufacturing.
While the overall GDP growth is commendable, it is imperative that the government remains proactive in addressing key areas to sustain and enhance economic growth in the remaining months of 2024. The LCCI recommends the following focal points
1. The industrial sector’s return to growth is encouraging, but sustaining this momentum requires targeted interventions. We urge the government to maintain the reforms and initiatives in the power sector to boost the electricity supply. It is well noted that the total number of electricity meters provided newly to consumers increased by 3.3 percent on a month-on-month basis to 6.1 million in July 2024 from 5.9 million recorded in June, but the registered unmetered users of about 13.1million as of July points to the need for more efforts.
2. The agriculture sector’s growth remains modest. To harness its full potential and drive more agricultural production, we need to sustain the interventions introduced in the past months, such as the import waivers to agriculture inputs and improving the security situation around our crop production sites. Additionally, improving rural infrastructure to reduce post-harvest losses and enhance market access is critical.
3. Despite the oil sector’s impressive year-on-year growth, the quarter-on-quarter decline highlights the sector’s vulnerability. The recent happenings in the sector indicate the need for more regulatory prowess in dealing with issues like divestments, crude supply to local refineries, resurfacing oil theft, and pipeline vandalism. The plan to hand over the Kaduna and Warri refineries to private sector operators and the eventual refining happening in the Port Harcourt Refinery is critical to the performance of this sector. To resolve the many regulatory matters, we urge the government to implement the Petroleum Industry Act (PIA) letters, which have the legal instruments to regulate the oil and gas sector.
4. The Trade sector has also performed very well in the past months. The sector grew by +0.7% year-on-year in Q2 ’24 against the +1.2% recorded in the preceding quarter. It is typically expected that the depreciation of the Naira against significant currencies should positively impact the balance of trade account by stimulating export growth while we curb imports. We need more investment in port infrastructure to boost exports.
5. The Services sector remains the backbone of Nigeria’s GDP, particularly Information and Communication and Financial Services. Continued support for digital transformation, financial inclusion, and fintech innovations will be vital. Regulatory frameworks that promote fair competition and consumer protection should be strengthened to sustain the sector’s growth.
The LCCI acknowledges the government’s efforts to steer the economy towards growth amidst global uncertainties. However, a sustained focus on the highlighted areas will be critical to stabilizing the economy for growth and development.
DR CHINYERE ALMONA, FCA
DIRECTOR GENERAL
LAGOS CHAMBER OF COMMERCE & INDUSTRY
2 SEPTEMBER 2024
