In the third quarter of 2024, Nigeria’s economy expanded by 3.46% year-on-year, an improvement from the 3.19% growth recorded in the second quarter.
The services sector emerged as the primary driver of growth, posting a 5.19% increase and boosting its contribution to GDP by 88 basis points to 53.58%, compared to 52.70% in Q3 2023. Business activities across agriculture, industries, and services have demonstrated steady growth throughout the first three quarters of 2024.
Drawing on data from the National Bureau of Statistics (NBS) for Q1, Q2, and Q3, BusinessDay examines the fastest-growing sectors in Nigeria’s economy so far this year.
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1. Metal Ores
In 2024 so far, the business of metal ores has grown by an average of 65 percent in 2024, with the most growth coming in the first quarter when the sub-sector grew by 114.35 percent. This business sector was also the fastest-growing business in 2023, growing by 50.32 percent.
Metal ores involve the mining of iron ore, gold as well as other solid minerals and is a part of the activities sector. Despite the intense growth in the sector, its contribution to national GDP in the Q3 2023 was just 0.02%.
2. Rail Transport and Pipelines
The rail transport and pipelines business has grown by an average of 48 percent in 2024. In Q3 2024, the business sector grew by 19.68 percent year-on-year, however, an 8 percent decline from Q2 2024.
The rail transport sector remains one of the smallest contributors to Nigeria’s GDP. However, rising road transport costs have shifted preferences toward rail. Also, the launch of the Blue Line rail in Lagos and the Abuja Metro rail has further boosted activity in the sector.
3. Financial Institutions
Financial institutions include commercial banks, development finance institutions, asset management companies, microfinance banks, capital market operators, pension fund administrators, and Fintechs. These businesses were the major source of growth in the services sector this year.
Between Q1 and Q3 2024, financial institutions have grown by an average of 32 percent. In 2023, financial institutions were the second fastest-growing businesses in the country. In Q3 2024, financial institutions contributed 4.33 percent to the national GDP.
4. Water Transport
With an average growth rate of 14.6 percent, the water transport business is the fourth fastest growing business activity this year. There was a surge in the second quarter of the year, as the business grew by 33.05 percent year-on-year.
The growth in the water transport business is linked to the hike in water transport fares in 2024.
5. Insurance
In 2024, the insurance business in Nigeria is on an average growth rate of 13.8 percent. Growth in the insurance business as well as financial institutions drove the financial services sector to an average growth of 30.29 percent in 2024.
The growth in the insurance business is linked to returns on investment assets owned by insurance companies, as well as a spike in premiums received by these companies.
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6. Crude Petroleum and Natural Gas
This year, the crude oil and natural gas business sector has grown by an average of 7 percent. In Q3 2024, the business grew by 19.8 percent year-on-year, and it grew 70 percent quarter-on-quarter from Q2 2024.
The growth in the crude petroleum and natural gas business is linked to the growth in Nigeria’s oil output in Q3 2024, as well as the depreciation in the Naira’s value, since the sector is a USD-exposed business.
7. Telecommunications and Information Services
Telecommunications and information services have recorded an average growth of 6 percent. Following a challenging first half of 2024, during which Nigeria’s telecommunications giants faced losses from the Naira’s devaluation, the sector rebounded in the third quarter, achieving its highest growth of the year with a 6.93% year-on-year increase.
Telecommunications and information services include mobile network operators (MTN Nigeria, Airtel Nigeria, Globacom, and 9Mobile), internet service providers, and cloud service providers. In Q3, their contribution to national GDP fell to 9.18 percent in Q3 2024, from 11.26 percent in Q2.
8. Transport Services
Within the context of Nigeria’s GDP, transport services include storage and transportation activities such as logistics and freight services, as well as special mobility services such as chartered transport, and ambulance and medical transport services.
Ride hailing services are also included in the measurement for transport services. This year, transport services have grown by 4 percent, in line with the 4.16 percent growth recorded in 2023.
9. Chemical and Pharmaceutical Products
The chemical and pharmaceutical products business category has grown by 2.96 percent this year. However, the sector’s growth has slowed down from 2023 when it recorded a 6.40 percent growth.
This sector features the pharmaceutical companies and chemical makers in the Nigerian economy. During the year, there were new business additions such as the Blue Seal Chemical production plant which opened in Lagos.
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10. Forestry
Forestry, a subset of the agriculture sector, appears on the list of the fastest-growing business activities in 2024, with an average growth rate of 2.58 percent. The sector’s growth rate so far exceeds that of 2023, as we witness a rise in wood logging in Nigeria.
The growth of Nigeria’s wood logging sector has raised concerns about the sustainability of the country’s forestry resources. Industry stakeholders, however, appear to be capitalizing on weak regulatory oversight to expand their operations unchecked.
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