The Nigerian economy concluded 2024 with measured yet noteworthy progress, recording a real GDP growth of 3.84% in Q4 2024 – the most robust expansion observed since Q4 2021 (3.98%). This uptick in economic activity was supported by an interplay of drivers, including seasonal consumer spending and remittance inflows from returning diasporans. Notably, however, the growth narrative diverges from assumptions of heavy reliance on the much-vaunted cultural phenomenon known as “Detty December,” a month-long Lagos-based festival renowned for its concerts, tourism, and vibrant nightlife.

Detty December’s economic imprint on Lagos is indisputable: the 2024 MO Africa Report highlights $71.6 million in direct revenue generated across entertainment, hospitality, retail, and transportation sectors, reinforcing its role as a microeconomic catalyst. Yet, its broader macroeconomic influence remains circumscribed as the current national accounts framework does not fully capture the economic contributions of these December-specific activities. This nuance underlines a critical issue: while traditional sectors, particularly services, are registering significant gains, the festive season’s broader economic contributions remain strikingly underreported. This is not merely a statistical oversight, but a fundamental gap in economic measurement. The predominantly informal yet highly dynamic economic activities that surge during the festive period are systematically excluded from official assessments, thereby distorting the true scale of consumer spending and cultural economic contributions that drive Nigeria’s growth. Such underrepresentation not only risks misinforming policy decisions but also undervalues sectors that play a crucial role in shaping a more comprehensive and accurate economic narrative.

Figure 1: Real GDP Growth (%)

Source: NBS

Sectoral Performance: Services Lead, Real Sectors Lag

The services sector once again shone as the primary growth engine, expanding by 5.37% and contributing a substantial 57.38% to the nation’s GDP. Financial services and telecommunications spearheaded this expansion, indicating Nigeria’s ongoing transition towards a digitally-driven and service-driven economy. The financial sector, experienced a remarkable surge of 27.78%. Transportation and storage also demonstrated a strong rebound, growing by 18.61% after a contraction of 29% in Q4 2023, which is likely attributable to improved internal mobility following the disruptive impact of the substantial escalation of transportation costs in 2023.

In contrast, the oil sector continued to underperform, contributing a mere 4.60% to GDP amidst persistent production challenges. Despite the increase in daily crude oil production, including condensates, to an average of 1.54 million barrels per day (mbpd) in Q4 2024, up from 1.49 mbpd in Q3 2024, output registered a marginal decline compared to 1.56 mbpd recorded in Q4 2023. While production levels approached OPEC’s allocated quota of 1.5 mbpd, they remained significantly below the Nigerian government’s target of 2.1 mbpd).

 Figure 2: Crude Oil Production (mbpd)

Source: NBS

Although annual growth in the oil sector showed improvement at 5.54% (2023: -2.22%), its quarterly performance dipped to 1.48%, highlighting its ongoing vulnerability to pipeline vandalism and aging infrastructure. The non-oil sector, however, remained a relative bright spot, growing by 3.96% and contributing a dominant 95.40% to the overall GDP.

Figure 3: Contribution to GDP in Q4 2024 (%)

Source: NBS

Agriculture: Stagnant Productivity

Agriculture, a historically critical sector (24.6% of GDP) for employment (70% of rural population) and food security, continued to decelerate – slowing to 1.76% in Q4 2024 (Q4 2023: 2.10%). With crop production constituting over 90% of agricultural output, this sluggish growth signals persistent low productivity and limited modernisation within the sector. This stagnation is likely to exacerbate food inflation, and strain the affordability of essential staples as demand continues to outpace supply. Compounding the situation, food production remains constrained by climate change-induced floods, security challenges, and the continued dominance of subsistence-level agricultural practices. Infrastructure deficits, particularly the lack of reliable electricity to power silos and storage facilities, further aggravate this, resulting in considerable post-harvest losses, reaching as high as 40% for some crops.

Structural Barriers Slowing Down Heavyweights

Notably, the seven largest sectors, which collectively contribute 76.45% of Nigeria’s GDP, experienced growth slowdowns during the quarter. This trend underscores the prevailing constraints within the business environment and, in some cases, highlights deep-rooted structural challenges that continue to hinder sectoral expansion and overall economic resilience.

Figure 4: GDP Growth of Top Seven Sectors (%)

Source: NBS

Manufacturing: Constrained by Cost Pressures

Manufacturing also experienced marginal growth, inching up by just 1.79%, largely due to crippling energy costs, unreliable power supply, and prohibitively high borrowing rates. This, in turn, amplifies the challenges associated with investing in modern technologies, upgrading essential infrastructure, and pursuing operational expansion, consequently stifling long-term industrial growth prospects. Adding to these woes, the electricity sector itself contracted by 5.04%, reversing the strong gains of Q4 2023 (6.17%) and further underscoring the infrastructure deficits hindering real sector growth.

Domestic Refining Resurgence

Nigeria’s oil refining sub-sector recorded a real GDP growth of 9.59% in Q4 2024, marking its first positive performance in six years – since Q4 2018. This improvement is directly linked with the commencement of petrol sales from the Dangote Refinery, Africa’s largest single-train refinery, which began refining petrol in September 15, 2024. While the impact of the refinery’s output remains in its early stages, the positive growth signals a shift toward domestic refining capacity expansion, potentially reducing Nigeria’s dependence on imported petroleum products over the coming quarters. This could ease Nigeria’s foreign exchange burden by curbing fuel import dependence, stabilising domestic fuel prices, and enhancing the value-added contribution of the petroleum industry to GDP.

Macroeconomic Context: Bridging the Gap – Real vs Nominal Growth

While nominal GDP growth surged by 18.91% year-on-year to reach ₦78.37 trillion in Q4 2024, the real GDP growth of 3.84% reflects the substantial erosion of purchasing power due to a 34.42% inflation rate (average in Q4 2024). This discrepancy underscores why the tangible benefits of headline GDP growth figures for the majority of Nigerians remain elusive. This disconnect is starkly illustrated by the GDP per capita, which plummeted to an all-time low of $835.49 as at December 2024, compared to $2,019.66 recorded in 2020 – a steep drop of 58.6%. Declining real wages amid rising costs for essentials continues to strain household budgets and limits discretionary spending declines. The growing gap between nominal and real GDP underscores the urgent need for coordinated monetary and fiscal policies to rein in inflation and restore economic stability.

The Path Forward: Re-basing and Real Sector Focus

Looking ahead, the NBS is poised to rebase Nigeria’s GDP – the first rebasing exercise in over a decade. This crucial update, involving a change in the GDP reference year and the inclusion of previously undercounted sectors like the ‘orange economy’ (creative and cultural industries) and parts of the informal economy, aims to provide a more accurate and contemporary depiction of Nigeria’s economic structure. We anticipate that enhanced transparency and clarity in national accounts will refine economic policy-making and foster a more resilient economic framework. Our outlook for 2025 is one of cautious optimism. We project a rise in GDP growth to between 4.0% and 4.2% in an optimistic scenario. This forecast is underpinned by renewed investor confidence, enhanced naira stability, and moderating inflation. However, we acknowledge that this forecast may be revised once the re-based GDP figures are released.

Seizing the Opportunity for Inclusive Growth

Nigeria’s Q4 2024 GDP figures paint a picture of resilience amid structural constraints, with the services sector driving growth while real sectors continue to struggle. However, the disconnect between headline economic expansion and declining real incomes underscores the urgent need for deeper structural reforms. As Nigeria prepares for its long-overdue GDP rebasing, policymakers must seize this opportunity to recalibrate economic strategies – prioritising productivity-driven growth, investment in critical infrastructure, and measures to curb inflation. Without bold and coordinated interventions, economic gains will remain fragile, and the path to sustainable, inclusive growth will continue to face significant headwinds.