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Nigeria’s GDP Resilient Amid Triple Shocks

Nigeria's GDP grew by 3.46% in Q3 2024, led by services, finance, and telecommunications sectors.
Nigeria's GDP Q3 2024

Nigeria’s Gross Domestic Product (GDP) showcased resilience in the face of triple economic shocks: high inflation, exchange rate depreciation, and elevated interest rates. Despite sectoral disparities, the services sector remained the primary growth driver.

In Q3 2024, GDP growth accelerated to 3.46% from 2.54% in Q3 2023. Key contributors included the Financial and Insurance sector, which surged by 30.83%, driven by increased interest income, digital transactions, and forex revaluation gains in the Banking subsector. Similarly, the Information & Communication sector grew by 5.92%, bolstered by a 6.78% expansion in the Telecommunications subsector due to significant foreign direct investments (FDI) in broadband expansion and 5G deployment. The Mining and Quarrying sector also advanced by 3.27%, led by a 5.17% growth in the Petroleum and Natural Gas subsector, spurred by increased crude oil production and favorable pricing.

Amid ongoing fiscal challenges, tax revenues saw a notable uptick, underpinned by the robust performance of critical sectors. Company Income Tax (CIT) collections rose by 1.7% year-on-year to ₦1.77 trillion in Q3 2024, with Mining and Quarrying, Information & Communications, and Manufacturing sectors driving growth at 200%, 94%, and 48%, respectively. Additionally, Value-Added Tax (VAT) collections increased by 88% year-on-year to ₦1.78 trillion, fueled by Manufacturing (25.47%), Mining and Quarrying (18.37%), and Information & Communications (15.1%) sectors.

The Federation Account Allocation Committee (FAAC) disbursements also surged, rising by 53.1% from ₦1.13 trillion in December 2023 to ₦1.73 trillion in December 2024. This growth was propelled by a 57.2% increase in distributable VAT and a remarkable 99.7% rise in exchange rate gains.

However, Nigeria’s fiscal landscape remains fraught with vulnerabilities. Public debt soared by 34.9% year-on-year to ₦134.3 trillion in Q2 2024, exacerbated by exchange rate depreciation and new borrowings. Addressing these fiscal challenges is essential to sustain economic stability and leverage the promising growth trends observed in key sectors.

As Nigeria continues its economic reforms, the balance between driving growth and mitigating fiscal risks will be critical for long-term resilience.

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