Nigeria’s trade sector turns positive after 8 quarters of negative growth

The trade sector, Nigeria’s second-biggest by contribution to GDP, returned to positive growth in the second quarter (April-June) of 2021, ending eighth consecutive quarters of contraction, thereby escaping an economic depression.

According to the 2021 second quarter GDP report by the National Bureau of Statistics (NBS), activities in the sector rose massively quarter-on-quarter by 22.49 percent from -2.49 percent in Q1 2021.

The positive growth recorded in Q2 which is the first one since Q2 2019 is no surprise to analysts as they had earlier predicted that the sector could return to positive growth in Q2.

“The biggest driver of growth that we will see in the second quarter across boards will be because of low base effect, the tendency of a small absolute change from a low initial amount to be translated into a large percentage change,” Ayorinde Akinloye, a consumer analyst at United Capital Plc earlier told BusinessDay.

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Similarly, Omotola Abimbola, a macro and fixed-income analyst at Lagos-based Chapel Hill Denham predicted an expansion as the economy is slowly opening up and the effect of the further reopening of the economy.

The sector contributes roughly 16 percent to the GDP and thus has been touted by economists as an important tool in the quest for development.

In the next quarter, Moses Ojo, a Lagos-based economic analyst believes that the sector will still be in the positive territory but might be a bit lower or roughly the same figure as that of Q2.

“It shows that activities in that sector will start picking up as operators in that space will start smiling to the bank and it is expected to continue that way but the challenges are still there,” Ojo said.

The trade sector, which can be likened to the barometer of consumer purchasing power, has been in and out of negative growth territory since 2016, but at a marginal level over myriad challenges ranging from unpredictable government policies to weak consumer demand.