The interior economy of Nigeria recorded an expansion of 3.84% in annual sliding in the fourth quarter of 2024, reaching 22.61 Billions of Nairas, according to the latest economic report of the Central Bank of Nigeria (CBN).
This growth, widely driven by the non-oil sector, highlights the deepening structural change in the economic composition of the country while the oil sector continues to underperform.
While the non -petroleum sector increased by 3.96%, the oil sector has lagged behind with a modest growth of 1.48%, reflecting persistent challenges in the production of crude oil in the country. Economists believe that the performance of the non-oil sector underlines the struggles of the former dominant oil industry of Nigeria, which has faced years of falling production due to the vandalism of pipelines, theft of oil, regulatory uncertainties and underinvestment in upstream activities.
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For years, Nigeria has struggled to achieve its crude oil production objectives, which has a significant impact on the overall growth of GDP. Despite being the largest oil producer in Africa, the country is still below its OPEC quota, limiting the contribution of the petroleum sector to economic expansion.
Recently, Nigeria has briefly exceeded its OPEC production quota of 1.5 million barrels per day (MBPD) for the first time in a long time, pointing out a potential rebound. However, this progress has been short -lived because production has decreased again in the following months, hampering the government’s push to reach its ambitious target of 2.2 MBPD.
The drop in oil production has been linked to continuous security problems in the Niger Delta, where raw flight and sabotage of the pipeline remain widespread. In addition, logistical and technical challenges in the main petroleum fields have slowed down production recovery efforts.
The CBN report noted that, although the increase in crude oil production of 1.33 MBPDs to 1.43 MBPDs helped moderate the slowdown in the petroleum sector, the overall oil contribution to GDP growth has remained marginal. In total, the petroleum sector did not contribute to more than 0.07 percentage points of growth of 3.84% of the economy in the fourth quarter of 2024, which further underlines its reduction in the role in the conduct of the economic expansion of Nigeria.
Economic analysts have constantly stressed that the increase in crude oil production could considerably accelerate the growth of Nigeria GDP. Historically, when oil production increased above 2 MBPDs, the economy has experienced higher expansion rates. However, the country has struggled to support such levels, recent production figures falling well below expectations.
According to industry experts, the achievement of the government’s target of 2.2 MBPD would not only increase export benefits, but also strengthen Nigeria exchange reserves, stabilize Naira and provide essential budgetary income to support economic development.
Although the increase in performance in the non-oil sector is considered a sign of economic diversification, analysts claim that relying on it as the main growth engine without solving structural problems in the petroleum sector could limit the long-term economic potential of Nigeria. Given that crude oil still explains most of the exchange revenues and the revenues of the Government of Nigeria, the low performance of the sector presents a significant risk for budgetary sustainability.
The growth of the non -oil sector of 3.96% in the fourth quarter 2024 exceeded the expansion of 3.37% of the previous quarter, contributing to 3.77 substantial percentage points for total GDP growth. The CBN report pointed out that the non -oil sector has extended to a faster rate, making it the main engine of economic growth.
The main industries leading to this expansion include financial services, information and communication, trade, agricultural production and transport. The financial and insurance sector has recorded significant growth due to the growing adoption of financial technology, higher banking penetration and the increase in investment entrances to capital markets. The expansion of digital banking services and mobile payment solutions has contributed to a high performance in the financial sector.
The information and communication sector has also continued its upward trajectory, benefiting from better internet penetration, an increase in demand for data services and increasing digital transformation in various industries.
The commercial and agricultural sectors have remained robust, in particular in agricultural production, which was supported by favorable weather conditions and government interventions aimed at stimulating food security. Commercial activities have increased due to the efficiency of increased logistics and recovery consumption demand.
The transport and storage sector has also experienced significant improvements, driven by government investments in infrastructure projects and increasing electronic logistics networks.
However, the Nigeria electricity and gas sub-sector contracted 5.05% in the fourth quarter of 2024, highlighting the current challenges in the country’s energy sector. The slowdown has been attributed to an increase in electricity prices, to a continuous network collapse and to an increasing change towards alternative energy sources such as solar energy.
For the future, the CBN provides that the Nigeria economy will continue on a growth trajectory in 2025, supported by government policies, increased investor confidence and the stabilization of exchange rates. However, the ability to maintain this momentum will depend on several factors, including the recovery of oil production, inflationary pressures, exchange rate stability and infrastructure development. The realization of higher crude crude oil production remain essential for global economic performance.
