Drop In Agric, Industry Sectors GDP Threat To FG’s Job-Creation Drive-Experts

Financial analysts have said that Nigeria’s GDP growth rate of 3.84 per cent in the fourth quarter of 2024 is a signal that the economic recovery driven mainly by the service sector, forex market stability, and potential interest rate cuts is yielding results.

Analysts in an exclusive chat with THE WHISTLER also noted that the economic expansion reflect a gradual recovery from the shocks of fuel subsidy removal and exchange rate unification.

They attributed the growth to structural reforms, improved investor confidence, and strong performances in agriculture, services, and telecommunications, despite high inflation and borrowing costs.

However, they noted that while crude oil output improved in Q4 2024, key real sectors such as agriculture and industry continue to underperform, necessitating urgent fiscal incentives to boost productivity and job creation.

Nigeria’s economy recorded significant expansion in 2024 compared to the previous year, reflecting the gradual recovery from the economic shocks triggered by fuel subsidy removal and exchange rate unification, according to Professor Uche Uwaleke, Nigeria’s first Professor of Capital Market, in an exclusive chat with THE WHISTLER.

In his analysis of the nation’s economic performance, Uwaleke noted that while the improvement in crude oil output in the fourth quarter of 2024 compared to the third quarter is commendable, concerns remain over the continued underperformance of key real sectors such as agriculture and industry.

“The expansion in economic activities in 2024 compared to 2023 signals a gradual easing of the severe shocks caused by the twin policy reforms of fuel subsidy removal and exchange rate unification,” Uwaleke stated.

“However, while crude oil output has improved, the real sectors of the economy, particularly agriculture and industry, continue to struggle.”

The underperformance of these critical sectors, he explained, is particularly concerning given their potential for job creation and economic stability. He emphasized that sustained growth in the economy requires targeted fiscal policies to stimulate productivity in these sectors.

“In view of their job-creating potential, a raft of fiscal incentives is required at this time to boost the productive sectors of the economy.

“Strategic interventions such as tax reliefs, access to affordable credit, and infrastructural support will be crucial in enhancing the contribution of agriculture and industry to overall economic growth,” he added.

Nigeria’s Gross Domestic Product (GDP) growth of 3.84 per cent in the fourth quarter of 2024 is a positive signal that the economy is beginning to rebound from the impacts of recent economic reforms, according to the Managing Director of Arthur Steven Asset Management Limited, Mr. Olatunde Amolegbe.

Amolegbe described the GDP growth as an encouraging development, reflecting the early gains of policy adjustments by the current administration.

He noted that the service sector remained the key driver of the expansion, aligning with previous economic trends. However, with growing stability in the foreign exchange (FX) market and the possibility of a lower interest rate in the near future, he expressed optimism that other sectors, including industrials and consumer goods, could contribute more robustly to GDP growth in the coming quarters.

“The growth in GDP is a sign that the economy is turning a corner from the pains of the reforms implemented by the government.

“The service sector has been the primary contributor, but with the recent FX market stability and a potential decline in interest rates, we could see stronger performances from lagging sectors such as industrials and consumer goods,” Amolegbe stated.

Looking ahead, he projected that if current economic conditions hold, Nigeria’s economy might outperform analysts’ expectations for 2025. Given the improving macroeconomic indicators, Amolegbe suggested that there might be a need for a further upward revision of economic projections.

A senior broker on condition of anonymity said that the report by the National Bureau of Statistics (NBS), which indicates a 3.84 per cent growth in Nigeria’s Gross Domestic Product (GDP) for the fourth quarter of 2024, is a positive development that underscores the resilience of the economy despite prevailing macroeconomic challenges.

The increase, which surpasses the 3.46 per cent recorded in both Q4 2023 and Q3 2024, suggests a sustained recovery trajectory.

“This growth can be attributed to several factors, including increased productivity across key sectors, policy interventions aimed at stabilizing the forex market, and a gradual improvement in investor confidence.

The government’s ongoing structural reforms, particularly in fiscal management and monetary policy, have played a role in ensuring economic stability. Additionally, sectors such as agriculture, services, and telecommunications have continued to show strong performance, contributing to overall GDP expansion,” he said.

However, while the positive growth rate is commendable, he noted that it is important to analyze the underlying fundamentals.

“Inflationary pressures remain high, currently exceeding 34 per cent, and the cost of borrowing has been significantly affected by the 27.5% interest rate set by the Central Bank of Nigeria.

These factors could dampen growth prospects if not carefully managed. The devaluation of the naira, while improving export competitiveness, has also raised input costs for businesses relying on imported raw materials, which could impact industrial output in subsequent quarters,” he said.

He noted that to sustain this growth momentum, the government must prioritize policies that enhance ease of doing business, reduce structural bottlenecks, and attract more foreign and domestic investments.

“Targeted interventions in infrastructure, power supply, and technology-driven industries will be key to fostering a more diversified and resilient economy. Additionally, inflation control measures and exchange rate stability will be crucial in maintaining investor confidence and improving consumer purchasing power,” he said.

The Nigerian economy has faced multiple headwinds in recent years, including inflationary pressures, currency volatility, and high interest rates. However, the latest indicators suggest a positive trajectory, with economic expansion signaling a potential turnaround.

Analysts believe that if the government implements policies that encourage investment and productivity in key sectors, Nigeria could achieve more sustainable and inclusive growth in the coming years.

The Managing Director, Highcap Securities Limited, Mr. David Adonri, said he believes the economy grew year on year (YoY) because of growth in the energy sector, but that he is not convinced that the magnitude of growth is as high as stated.

“Secondly, I seriously doubt if the growth is real. I believe it is primarily an inflationary growth considering what the inflation rate was during the period under review. Other than banks, real sector enterprises continued to reel in losses during the period,” he said.

Drop In Agric, Industry Sectors GDP Threat To FG’s Job-Creation Drive-Experts is first published on The Whistler Newspaper