· The National Bureau of Statistics says Nigeria’s Gross Domestic Product grew by 3.19 per cent in the second quarter of 2024
· Despite the growth, the DG of the World Trade Organisation, Ngozi Okonjo-Iweala, the World Bank and economists say Nigeria’s GDP per capita has experienced a steady decline
· According to economists, a declining GDP per capita in a nation with exponential population growth has negative economic outcomes
The National Bureau of Statistics (NBS) says Nigeria’s GDP grew by 3.19 per cent in real terms in the second quarter (Q2) of 2024.
In its GDP report released on Monday, August 26, the NBS said the GDP growth rate is higher than the 2.51 per cent recorded in the same quarter of 2023 and the 2.98 per cent recorded in Q1 2024.
It said the Q2 2024 GDP performance was majorly driven by the services sector, which increased by 3.79 per cent and contributed 58.76 per cent to the total GDP. The agriculture sector, on the other hand, decreased to 1.41 per cent in the quarter from the 1.50 per cent growth recorded in the corresponding quarter of 2023.
According to the NBS, the industry sector grew by 3.53 per cent compared to the -1.94 per cent recorded in Q2 2023. The sector however contributed more to the total GDP in the quarter compared to the corresponding quarter in 2023.
Non-oil sector is a major contributor to the total GDP
The non-oil sector contributed hugely to the total GDP recorded in the quarter with 94.30 per cent in real terms. The figure is slightly lower that the 94.66 per cent recorded in Q2 2023 but higher than the 93.62 per cent of the sector’s contribution in Q1 2024.
The sector’s growth was driven primarily by financial and insurance (financial institutions), information and communication (telecommunications), agriculture (crop production), trade and manufacturing (food, beverage and tobacco).
The oil sector, however, contributed 5.70 per cent to the total GDP recorded in the quarter. Though the figure is an increase from the 5.34 per cent recorded in Q2 2023, it is a decline from the 6.38 per cent the sector contributed in first quarter of 2024.
With real growth of 10.15 per cent year-on-year in Q2 2024, the sector increased by 23.58 percentage points higher than the -13.43 per cent recorded in the corresponding quarter of 2023.
The decline in the sector is largely due to the reduction in daily oil production within the quarter. Though Nigeria recorded an average daily oil production of 1.41 million barrels per day (mbpd) in Q2 2024, which is 0.19 mbpd higher than the average 1.22 mbpd recorded in Q2 2023, it is 0.16 mbpd lower than the 1.57 mbpd produced in Q2 2024.
Increased GDP but Nigeria’s GDP per capita still declining
Notwithstanding the GDP growth in the quarter, the Director-General of the World Trade Organisation (WTO), Ngozi Okonjo-Iweala, said the average growth rate of Nigeria’s gross domestic product (GDP) has been steadily declining since 2014.
Okonjo-Iweala, at the opening ceremony of the 2024 Annual General Conference of the Nigerian Bar Association (NBA) in Lagos, on Sunday, August 25, said the development signposts a downturn in the economic wellbeing of the average Nigerian and non-consolidation of the gains recorded by previous administrations.
The WTO DG stressed that in the years between 2000 and 2014, the country’s economy experienced steady growth, with the average GDP growth rate reaching 3.8 per cent but the situation has reversed in the last decade with the GDP declining to 0.90 per cent.
She said, “Many of the big problems the NBA is grappling with today have its root in Nigeria’s failure to sustain the rate of economic growth and development that consistently outpaced the growth of our population.
“We have had episodes of reforms and faster economic growth that were not merely a function of the price of oil. But we have been unable to consolidate and build on them and millions of our compatriots have paid the price in terms of diminished job prospects and human wellbeing.
“For example, in the decade between 2000 and 2014, we have an average GDP growth rate of 3.8 per cent, well above our population growth rate of 2.6 per cent per annum, meaning that people were on average truly improving their standard of living.
“During the following decade, average annual GDP per capita has been negative around minus 0.9 per cent, meaning people were worse off because we were not able to sustain prior positive growth momentum.”
Lending credence
Okonjo-Iweala’s assertion is also the view of Peter Obi, the presidential candidate of the Labour Party in the 2023 general election.
Obi, in July, said the last decade has seen the GDP per capita decline, slipping from $3,200 in 2014 to $1,087 by 2024.
He said, “When Nigeria returned to democratic governance in 1999, it maintained an average GDP growth of about 6.72% for 16 years from 1999-2014.
“In 2014, just before the inception of a new administration a year later, Nigeria had the biggest economy in Africa with a Gross Domestic Product of $568.5 billion and a GDP Per Capita of about $3,200.
“By 2023, Nigeria had fallen to the fourth largest economy in Africa, with a GDP of $375 billion and a per capita of $1700. Accordingly, the situation worsened in 2024, with the GDP further declining to an estimated $253 billion and per capita dropping to $1087.
“Today, poverty is pervasive and on the increase. Unemployment is rising. Food inflation has skyrocketed to over 43 per cent. Foreign and local investors are losing faith in the future growth of our economy and are leaving in large numbers. Businesses are shutting down.”
The World Bank also noted that Nigeria’s GDP per capita has been impacted by recent policy changes. It said, “Between 2000 and 2014, Nigeria’s economy experienced broad-based and sustained growth of over seven per cent annually on average, benefitting from favourable global conditions and macroeconomic and first-stage structural reforms.
“From 2015 to 2022, however, growth rates decreased and GDP per capita flattened, driven by monetary and exchange rate policy distortions, increasing fiscal deficits due to lower oil production and a costly fuel subsidy programme, increased trade protectionism and external shocks such as the COVID-19 pandemic.
“Weakened economic fundamentals led the country’s inflation to reach a 24-year high of 31.7 per cent in February 2024, which, in combination with sluggish growth, has pushed millions of Nigerians into poverty.”
What does a declining GDP per capita signify for a developing economy?
GDP per capita, which is an economic metric that breaks down a country’s economic output to a per-person allocation, is calculated by dividing a country’s GDP by its population. It is used by economists, alongside other metrics, to determine the prosperity of a nation based on its economic growth.
According to economists, a declining GDP per capita in a country where the population is growing faster can have a negative impact on economic growth. It therefore means that for Nigeria, with a population growth rate of 2.6 per cent per annum, the growth recorded in GDP may be eroded due to a higher population growth rate among other factors.
In 2017, a researcher found that population growth plays a role in economic growth and can influence per capita output of any country.
The researcher said, “Population growth is an important factor in overall economic growth and may even contribute to increased growth in per capita output in some cases. In low-income countries, rapid population growth is likely to be detrimental in the short and medium term because it leads to large numbers of dependent children. In the longer run, there is likely to be a demographic dividend in these countries as these young people become productive adults.”
‘Increased GDP rate doesn’t equal reality’
In reaction to the NBS’ GDP report for Q2 2024, some economists have noted that the growth recorded in the country’s GDP is not reflective of reality and the living conditions of Nigerians.
They stressed that despite the increased GDP growth recorded in the quarter, the economy is not out of the doldrums.
In an interview, Professor Segun Ajibola, a former President and Chairman of the Councils of Chartered Institute of Bankers, said, “The improved growth rate is good news no doubt. As a country, we need to work on the transmission mechanisms between the macro level such as GDP and the micro level such as household income and consumption so as not to be entangled in the trap of growth without development, which is ravaging many developing nations.
“It is also important for growth to be driven across the primary (such as agriculture, mining), secondary (manufacturing) and tertiary (services) sectors to have a balanced, fully integrated growth trajectory that can more easily translate to development.”
Gbolade Idakolo, the Chief Executive Officer of SD$D Capital Management, said, “The economy, in reality, is shrinking and needs a drastic measure to bounce back.
“The NBS GDP is at variance with reality just like the inflation rate decline. The statistical data used by NBS does not take into cognisance the declining productivity in the economy. Most businesses are closing while some are downsizing or relocating because of the harsh economic environment.
“The GDP figures are not a pointer that the economy is out of the woods. The government should be comparing NBS data with independent sources to have a fair idea of how the economy is performing.”
“APC Impact?” Nigeria’s economy drops to 4th in Africa, loses $315.8bn in 10 years
Meanwhile, TheRadar reported that Nigeria’s economy lost $315.8 billion in the 10 years between 2014 and 2024 and fell from being the first largest economy in Africa to the fourth, according to data from StatiSense, a leading data company using AI to simplify data and documents.
According to the data, between 2023 and April 2024, Nigeria lost an estimated $122.2 billion, moving from the third to the fourth largest economy in Africa.
