LCCI Applauds Nigeria’s Q2 2024 Economic Growth and Calls for Sustained Measures to Enhance Future Performance

The Lagos Chamber of Commerce and Industry (LCCI) commends the impressive performance of Nigeria’s economy in the second quarter of 2024, as evidenced by a 3.19% year-on-year growth in Gross Domestic Product (GDP) in real terms. This robust growth outpaces the 2.51% growth recorded in Q2 2023 and the 2.98% seen in Q1 2024, demonstrating resilience in the face of ongoing global and domestic challenges.

The Q2 2024 economic expansion was predominantly driven by the Services sector, which achieved a remarkable growth rate of 3.79% and contributed 58.76% to the overall GDP. Additionally, the industry sector made a significant recovery, posting a 3.53% growth compared to the -1.94% decline in Q2 2023. While the agriculture sector continued to grow, it showed a modest increase of 1.41%, slightly down from the 1.50% recorded in the same period last year.

Notably, the oil sector, a vital component of Nigeria’s economy, surged by 10.15% in real terms, rebounding from a -13.43% contraction in Q2 2023. However, the sector’s quarter-on-quarter performance saw a dip of -10.51%, reflecting the inherent volatility of global oil markets and ongoing domestic production challenges. Meanwhile, the non-oil sector, which constitutes the majority of Nigeria’s GDP, grew by 2.80%, buoyed by sectors such as Financial and Insurance Services, Information and Communication, Agriculture, Trade, and Manufacturing.

While the overall economic growth in Q2 2024 is commendable, the LCCI emphasizes the need for sustained and strategic efforts by the government to ensure continued progress in the remaining months of 2024. To this end, the LCCI recommends the following key focus areas:

Strengthening the Industrial Sector: The recent return to growth in the industrial sector is a positive sign, but maintaining this momentum requires targeted interventions. The LCCI urges the government to continue implementing reforms and initiatives in the power sector to enhance electricity supply. Although there was a 3.3% month-on-month increase in the number of newly provided electricity meters to consumers, reaching 6.1 million in July 2024 from 5.9 million in June, there are still approximately 13.1 million registered unmetered users as of July. This underscores the need for increased efforts to address power supply and metering challenges.
Enhancing Agricultural Productivity: The agriculture sector’s growth remains modest. To unlock its full potential and drive increased agricultural production, it is essential to maintain the recent interventions, such as import waivers for agricultural inputs and improving security around crop production areas. Moreover, investing in rural infrastructure to reduce post-harvest losses and enhance market access is crucial.
Addressing Volatility in the Oil Sector: Despite the oil sector’s impressive year-on-year growth, the quarter-on-quarter decline highlights its vulnerability. Recent developments in the sector point to the need for stronger regulatory measures to address issues such as divestments, crude supply to local refineries, resurging oil theft, and pipeline vandalism. The ongoing privatization of the Kaduna and Warri refineries and the commencement of refining operations at the Port Harcourt Refinery are critical to the sector’s performance. The LCCI calls on the government to fully implement the Petroleum Industry Act (PIA) to provide a robust regulatory framework for the oil and gas sector.
Boosting the Trade Sector: The Trade sector has shown positive performance, growing by 0.7% year-on-year in Q2 2024, although slightly down from 1.2% in the previous quarter. The depreciation of the Naira against major currencies should ideally support export growth while curbing imports, thus improving the balance of trade. To enhance export capacity, there is a need for increased investment in port infrastructure.
Supporting the Services Sector: As the backbone of Nigeria’s GDP, particularly in Information and Communication and Financial Services, the Services sector requires ongoing support for digital transformation, financial inclusion, and fintech innovations. Strengthening regulatory frameworks that promote fair competition and consumer protection will be vital to sustaining the sector’s growth.

The LCCI recognizes the government’s efforts to guide the economy towards growth amidst global uncertainties. However, a sustained focus on these highlighted areas will be essential for stabilizing the economy and fostering long-term development.