Nigeria’s second-biggest sector by output production (trade) is on the pathway to recovery as it recorded the most growth in 10 years, according to data by the National Bureau of Statistics (NBS).
Data sourced from the NBS showed Nigeria’s trade sector grew year-on-year by 6.54 percent in Q1 2022, the highest when compared to the same period in 2013 (6.24 percent). It grew by 5.34 percent on a quarter-on-quarter basis.
Analysts attributed the improvement to strong base effects and the gradual recovery of the economy from the impact of the COVID-19 pandemic.
“Between Q1 last year and now, a lot of changes have taken place on the impact of the pandemic on the economy. Trading activities have picked up, supply chains have improved and commodities prices have also improved,” Muda Yusuf, the chief executive officer at the Centre for the Promotion of Private Enterprise said.
Ayodeji Ebo, the managing director/chief business officer at Optimus by Afrinvest limited, in the same vein noted that trade activities have fully reopened across the country compared to 2021 when it was still a bit tight. “When you compare on a year-on-year basis, activities have improved significantly.”
In terms of trade contribution to the overall GDP, it was 16.13 percent higher than the 15.61 percent it represented in the previous year and higher than the 15.66 percent recorded in Q4 2021.
The NBS report also highlighted that the country’s overall GDP grew by 3.11 percent (year-on-year) in Q1 2022, showing a sustained positive growth for the sixth consecutive time since the recession witnessed in 2020 when output contracted by -6.10 percent and -3.62 percent in Q2 and Q3 of 2020 under the pandemic.
“The first quarter 2022 growth rate further represents an improvement in economic performance. The observed trend since Q4 2020 is an indication of a gradual economic stability,” the report stated.
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Damilola Adewale, a Lagos-based economic analyst said the numbers sound impressive but it does not really reflect the true state of things in the sector.
The sector which comprises wholesale and retail trade can be likened as the barometer of consumer purchasing power. The higher the level of consumption, the better the sector performs.
And due to this, the sector has been touted by economists as an important tool in the quest for development as it contributes roughly 15-16 percent to the GDP.
But in Africa’s biggest economy, it had been in and out of negative growth territory since 2016 over myriad challenges e.g. macroeconomic volatility, rapid naira depreciation, weak purchasing power and household incomes.
For the next quarter, there are expectations that the sector might contract due to the warying off of the base effect.
“Trade sector will most likely contract because if you look at Q2 2021, the trade sector recorded over 20 percent growth. So if you work it out with Q2 2022, we might see a slowdown in growth,” Adewale said.
