“Nigeria’s 2024 GDP Growth: 3.4%, A Mixed Picture for 2025 and Beyond”

Driven by Services Sector Amid Oil Struggles

Nigeria’s Gross Domestic Product (GDP) expanded by 3.4% in 2024, marking a solid recovery after the previous year’s growth of 2.74%. This represents the country’s fastest growth rate in three years, but still fell short of the Federal Government’s 6% growth target. While the services sector took the lead, driving much of the growth, the oil sector continued to struggle, hampering the overall performance.

Economic Performance Overview: Non-Oil Sector Resilience Amid Oil Challenges

The services sector emerged as a dominant contributor to economic performance, growing by 5.37% year-on-year and continuing to fuel the country’s recovery. This sector’s strength was underpinned by growth in key areas like telecommunications, financial services, trade, and manufacturing, which were further boosted by the increasing digital financial services and telecommunications expansion. However, despite this positive trajectory, Nigeria’s oil industry faced persistent challenges that acted as a drag on overall growth.

Oil sector struggles: Nigeria’s oil sector remained a key issue in 2024, struggling with structural inefficiencies and weak crude oil production. The sector’s contribution to GDP was 5.51% in 2024, slightly up from 5.40% in 2023. Despite a modest increase, crude oil output averaged just 1.54 million barrels per day (mbpd), which was lower than the 1.56 mbpd recorded in 2023. The sector continued to underperform, preventing a more significant economic boost, especially as oil prices remained volatile.

The non-oil sector made up 94.49% of real GDP, reflecting its importance in driving growth, although this was a slight dip from 94.60% in 2023. Key contributors to this growth included agriculture (crop production), road transport, and trade, with the manufacturing and telecommunications sectors playing especially vital roles.

Quarterly Performance: Steady Growth with a Strong Finish

Nigeria’s economic growth showed steady improvement throughout 2024. Q1 posted a 2.98% growth rate, which improved to 3.19% in Q2 and 3.46% in Q3. By Q4, growth had accelerated to 3.84%, marking a strong close to the year. This growth pattern highlighted the resilience of the non-oil sectors, particularly financial services, telecommunications, agriculture, and manufacturing, which continued to expand.

Despite the overall growth, the oil sector remained a major challenge. In Q4 2024, real growth in the oil sector declined to 1.48%, a sharp drop from 12.11% in Q4 2023 and even lower than the 5.17% recorded in Q3 2024. The oil sector’s performance worsened by 7.19% on a quarter-on-quarter basis, indicating persistent issues with crude oil production and the broader sector’s structure.

In contrast, the non-oil sector grew by 3.96% in Q4, outpacing the 3.07% growth in the same quarter of 2023, driven by the growth in sectors like telecommunications, financial services, agriculture, and road transport.

Challenges and Sectoral Vulnerabilities

Despite the overall growth, Nigeria’s economy in 2024 faced structural challenges that hampered its long-term potential. Inflationary pressures, foreign exchange volatility, and inefficiencies in the oil sector have remained significant challenges. These issues underscore the importance of continuing to diversify away from the oil sector to build a more sustainable, resilient economy.

Nigeria’s agriculture sector, which had seen steady expansion, grew by just 1.76% in Q4 2024, slightly below the 2.10% growth recorded in Q4 2023. The industrial sector also faced a slowdown, posting just 2% growth in Q4, down from 3.86% in the same period in 2023. On the other hand, telecommunications, financial services, and trade continued to perform robustly, supporting the overall positive trajectory in the non-oil sector.

Looking Ahead: Focus on Diversification and Recovery

The outlook for 2025 remains focused on the expansion of the non-oil sector, with financial services and ICT expected to continue their strong growth. Agriculture and trade are also anticipated to see moderate gains, though there remain risks tied to oil dependency, especially given the sector’s vulnerability to global market shifts.

Nigeria’s efforts to diversify its economy away from oil dependency remain crucial for long-term stability. The financial services and ICT sectors are expected to remain strong drivers, but Nigeria must address underlying structural issues to ensure sustained economic growth.

For the oil sector, recovery will depend on reforms that improve upstream activities and increase investment in midstream and downstream operations. Such reforms could help mitigate the oil sector’s volatility, reducing its reliance on global oil prices. Without significant reform, Nigeria’s economy will continue to face vulnerabilities tied to oil’s underperformance, limiting the full potential of its non-oil sectors and overall economic stability.

The country’s future growth will likely be shaped by continued diversification, investment in key sectors, and efforts to overcome oil-related vulnerabilities.