Nigeria’s economy grew by 3.46% in the third quarter of 2024, marking a notable improvement from the 2.54% growth recorded in the same period of 2023 and 3.19% in the previous quarter, according to a report by the National Bureau of Statistics (NBS).
The growth was driven primarily by the services sector, which contributed 53.58% to the country’s Gross Domestic Product (GDP). Key drivers in the sector included information and communication (14.51%), trade (12.67%), and financial and insurance services (4.72%). The financial and insurance sector recorded an extraordinary 30.83% growth, attributed to gains from naira devaluation and tightened monetary policies.
Agriculture and industry contributed 28.65% and 17.77% to GDP, respectively, with agriculture serving as a critical supply chain source for other industries. However, the manufacturing sector lagged, growing by only 2.18%, which the Manufacturers Association of Nigeria (MAN) described as “meager.”
Reacting to the NBS report, MAN’s Director General, Segun Ajayi-Kadir, warned that the poor performance of the manufacturing sector signals challenges for Nigeria’s industrialization agenda. “This poses a significant drawback for the country’s aspirations of reducing forex demand pressures, promoting value addition, generating employment, and achieving sustainable development,” Ajayi-Kadir stated.
The decline in the sector’s nominal growth, which dropped from 36.59% to 32.97% year-on-year, highlights the impact of inflation, high energy costs, and unfavorable macroeconomic policies. Ajayi-Kadir also cited the exit of major multinational companies as a troubling indicator of the manufacturing sector’s struggles.
Ajayi-Kadir noted that the sector is being “choked” by interest rate hikes, high exchange rates, and escalated energy costs. Security challenges in farming areas have disrupted agriculture, which supplies affordable raw materials to manufacturers, leading to increased production costs.
“The high cost of living, unemployment, and inflation have reduced consumer purchasing power, resulting in unsold inventories and reduced production,” he explained. Foreign investors are hesitant to commit to the sector due to economic instability and limited access to foreign exchange.
To revive the manufacturing sector and sustain economic growth, MAN has proposed several measures:
1. Access to Funding: Creation of special windows for single-digit interest loans for productive sectors and relaxed conditions for SMEs to access funding.
2. Recapitalization: Expanding the Bank of Industry’s capacity to meet industrial credit demands.
3. Tax and Duty Reforms: Implementation of the Presidential Fiscal Policy and Tax Reforms Committee’s recommendations, including maintaining the current excise duty on non-alcoholic beverages and reducing import duty rates for essential production inputs.
4. Infrastructure Development: Prioritization of budget allocations for roads, railways, and port access to support industrial hubs.
5. Energy Solutions: A review of electricity tariffs for manufacturers, prioritization of domestic gas supply, and introduction of outage compensation mechanisms by the Nigerian Electricity Regulatory Commission (NERC).
While the services sector has bolstered overall GDP growth, Ajayi-Kadir stressed the need for inclusive development. “Given the prevalence of unemployment and poverty, a double-digit GDP growth rate is necessary to ensure prosperity for all segments of society,” he said.
MAN also highlighted that achieving the administration’s goal of a $1 trillion economy by 2026 remains uncertain unless the government addresses these critical challenges.
