Nigeria’s economy recorded flat growth in the third quarter, as the oil sector contracted at a slower pace while the impact of government reforms aimed at boosting output was yet to take effect.
Its economy grew by 2.54%, up from the 2.51% posted in the second quarter, but far from President Bola Tinubu’s ambition to expand the economy by at least 6% a year, which he promised during his inauguration in May.
The oil and gas sector contracted 0.85% in the third quarter, a big improvement from the 13.43% contraction recorded in the third quarter. the sector accounts for 90% of foreign exchange reserves and the bulk of government revenue.
Tinubu vowed to lift barriers to investment, create jobs and tackle insecurity. He has embarked on Nigeria’s boldest reforms in decades to try to boost output, which has been sluggish for about a decade. But they have yet to impact growth. “The performance of the GDP in the third quarter of 2023 was driven mainly by the services sector, which recorded a growth of 3.99% and contributed 52.7% to the aggregate GDP,” the National Bureau of Statistics (NBS) said.
Nigeria’s dominant oil sector, which accounts for the bulk of government revenue and 90% of foreign-exchange reserves, contracted 0.85% in the third quarter, a rise of 12.6% from the second quarter when the sector shrank by 13.43%.
Daily average oil output (NGOIL=ECI) stood at 1.45 million barrels per day (mbpd) in the three months to September, up from 1.20 mbpd in the same period last year.
Tinubu in May scrapped a petrol subsidy and lifted currency controls, which he said was to save the country from going under.
But his actions have worsened inflation currently in double-digits, fuelling anger and frustration for a population grappling with a cost of living crisis.
The NBS said the agriculture and industrial sectors, which create jobs, contributed less to GDP in the third quarter of 2023, compared with the same quarter a year ago.
Nigeria and Angola have announced plans to boost oil production significantly in the coming years, something that might not go down well with other OPEC+ members as Saudi Arabia looks forward to starting to unwind its voluntary production cuts.