Five things we learned from Nigeria’s Q4 GDP report

Nigeria’s economy remains Africa’s largest

For  full  year  2016,  aggregate  nominal  GDP  stood  at  N101.59 trillion compared to N94.1 trillion in 2015. After dividing minimal GDP by an average exchange rate of N251/$ (in 2016), the economy comes to around $402 billion.

South Africa’s economy, valued at ($301 billion) had been crowned Africa’s largest in dollar terms last year by Bloomberg, as the value of the nations’ currencies moved in opposite directions. Africa’s most industrialised nation is yet to release its Q4 GDP results, but the economy grew 0.7 percent in Q3.

Meanwhile, Nigeria’s economy contracted by 1.51% last year, the worst full-year decline in 25 years.

In  the  fourth  quarter,  the  nation’s GDP contracted by -1.30% (year-on-year) in real terms, from N18.53 trillion in Q4 2015 to N18.29 trillion  in  Q4  2016.  This decline was less severe than the decline recorded in the previous quarter, of -2.24%, but was nevertheless lower than the growth rate recorded in the final quarter of 2015, of 2.11%.

Non-oil back to negative growth in Q4

The  non-oil  sector  declined  by -0.33%  in  real  terms  in  the   fourth quarter  of  2016, as it erased positive growth recorded the previous quarter.

The sector had grown 0.03% in  Q3, after two successive quarters of negative growth of 0.18 and 0.38 percent in the first and second quarters respectively.

For full year 2016, the non-oil sector declined by -0.22% in real terms, compared to a growth rate of 3.75% in 2015, a difference of 3.97% points.

Oil sector GDP contribution down to 8%

For the full year 2016, oil production was estimated to be 1.833mb/day, compared to 2.13mb/day in 2015. This reduction has largely been attributed to vandalism in the Niger Delta region. As a result, the sector contracted by 13.65%; a more significant decline than that in 2015 of -5.45%. This reduced the sector’s share of real GDP to 8.42% in 2016, compared to 9.61% in 2015.

Nigeria wants its vital oil sector to contribute 4.5 percent to GDP in 2018, according to its Economic Recovery and Growth Plan documents.

In the fourth quarter of 2016 the oil sector declined by 12.38% in real terms (year-on-year). This was an improvement relative to the previous quarter, when the sector declined by 22.01%, but nevertheless was a more severe decline than in the fourth quarter of 2015, when a contraction of -8.23% was recorded.

Is Agriculture running out of steam?

Maybe not, given seasonal fluctuations.

Real agricultural GDP growth in the fourth quarter of 2016 was 4.03% (year-on-year), which was an increase of 0.56% points compared to growth in the same quarter of 2015 of 3.48%.

However, it was slightly less  than  the  real  growth  rate  of  4.54%  recorded  in  the  previous quarter.  In  contrast  to  the economy  as  a  whole,  for  full  year  2016, real  GDP  in  agriculture  grew  by  4.11%,  and  this  growth  rate  was higher than that recorded in 2015 of 3.72%.

Manufacturing sees milder contraction in Q4

Real  GDP  growth  in  manufacturing  remained  negative  in  Q4  2016, after  a contraction  of  2.54%  (year-on-year).

This  was  an improvement  relative  to  the  decline  of  4.38%  recorded  in  the  third quarter,  but  still  low  relative  to  the  growth  of  0.38%  recorded  in  the fourth quarter of 2015.

Four of the 13 activities under manufacturing recorded growth in Q4 2016 compared to three in Q3 2016. Seven of the activities nevertheless, performed better than in Q3 2016.

For full year 2016, the manufacturing sector in real terms contracted by 4.32% compared to a decline of 1.46% recorded in 2015.

This reflects a number of challenges face by manufacturing in 2016, such as higher costs  of imported inputs  as  a  result  of  the  exchange  rate,  and  higher energy  costs  as  a  result  of  a  fall  in  electricity  generation,  and  more expensive fuel, the NBS said.

NBS report in quick numbers

Agriculture sector grew by 4.11% in full year 2016 from 3.72% in 2015 and 4.27% in 2014.

Transportation and Storage sector contracted by -5.32% in Q4 2016 from 0.72% in Q3 2016 and 4.39% in Q4 2015.

Road Transport under Transportation and Storage sector contracted by -4.26% in Q4 2016 from 1.26% in Q3 2016 and 4.47% in Q4 2015.

Air Transport under Transportation and Storage sector contracted by -13.25% in Q4 2016 from -3.12% in Q3 2016 and 2.67% in Q4 2015.

Transport Services under Transportation and Storage sector contracted by -2.63% in Q4 2016 from -0.7% in Q3 2016 and 5.14% in Q4 2015.

Information and Communication sector grew by 1.38% in Q4 2016 from 1.11% in Q3 2016 and 4.21% in Q4 2015.

Post and Courier Services under Transportation and Storage sector contracted by -20.19% in Q4 2016 from -1.1% in Q3 2016 and 4.64% in Q4 2015.

Telecommunications under Information and Communication sector grew by 1.03% in Q4 2016 from 0.95% in Q3 2016 and 3.49% in Q4 2015.

Financial and Insurance sector grew by 2.68% in Q4 2016 from 2.64% in Q3 2016 and 6.41% in Q4 2015.

Financial Institutions under Financial and Insurance sector grew by 2.92% in Q4 2016 from 2.85% in Q3 2016 and 6.62% in Q4 2015.

Insurance under Financial and Insurance sector grew  by 1.09% in Q4 2016 from 1.22% in Q3 2016 and 5.07% in Q4 2015.

Real Estate sector contracted by -9.27% in Q4 2016 from 7.37% in Q3 2016 and 0.79% in Q4 2015.

Education sector contracted by -0.09% in Q4 2016 from 0.11% in Q3 2016 and 8.13% in Q4 2015.

LOLADE AKINMURELE