The newly released GDP report by the National Bureau of Statistics (NBS) shows that Nigeria’s economy grew by 3.4% year-on-year in 2021 with an estimated value of N72.39 trillion in real terms, representing an uptick from the 1.92% contraction recorded in the previous year.
According to the report, Nigeria’s real GDP increased from an estimated N70.01 trillion recorded in 2020 to N72.39 trillion in 2021, representing a recovery from the recession recorded in the second and third quarters of 2020.
It is the first annual growth above 3 percent since 2015, and marks the strongest GDP growth rate recorded in Nigeria in 7 years. The last time Nigeria’s economy grew beyond 3.4% was in 2014, when the real GDP expanded by 6.22% year-on-year.
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“Nigeria Gross Domestic Product (GDP) grew by 3.98%(year-on-year) in real terms in the fourth quarter of 2021, showing a sustained positive growth for the fifth quarter since the recession witnessed in 2020 when output contracted by -6.10% and -3.62% in Q2 and Q3 of 2020 under the Covid pandemic,” the report says, adding that the fourth quarter growth indicates a steady economic recovery accounting for annual growth of 3.40% in 2021.
It is also notable as the growth was mainly buoyed by the non-oil sector due to the drop in oil prices in the period under consideration. The oil sector contracted by 8.06 percent in the fourth quarter and an annual growth rate of -8.30 percent in 2021.
Meanwhile, in nominal terms Nigeria’s GDP grew by 13.92% year-on-year with an estimated value of N173.53 trillion compared to N152.32 trillion recorded in the previous year. The report showed that in Q4, aggregate GDP stood at N49.27 million in nominal terms.
“The 2021 annual nominal growth stood at 13.92%. For better clarity, the Nigerian economy has been classified broadly into the oil and non-oil sectors,” the report says.
In terms of contribution to GDP, Agricultural sector’s contribution dropped from 26.21% recorded in 2020 to 25.88% in 2021, while services accounted for 53.56% of the country’s GDP, representing an uptick compared to 52.44% recorded in 2020. Industrial sector accounted for 20.56% of the total GDP.
Non-oil sector grew by 4.73% in the quarter from a year earlier, bolstered by 3.58 percent growth in agriculture and 5 percent in services. The sector contributed 92.76% to the GDP, increasing from 91.84% recorded in 2020.
However, the non-oil sector growth was spurred by a combination of services like the transportation, storage sector and electricity.
For example, the transportation and storage sector recorded a 16.25% GDP growth in the review year as against the 22.26% contraction recorded in the previous year. Also, electricity, gas, steam, and air conditioning supply recorded a 27.57% growth in real terms, overturning the 2.9% decline recorded in 2020, while the financial and insurance sector grew by 10.07% in 2021 as opposed to 9.37% growth printed in the previous year.
Sadly, the telecommunication sector, which became Nigeria’s economy’s cash cow at the peak of the pandemic, lost its steam, recording a decline in its GDP growth rate at 6.55% in 2021, more than half of 13.18% it recorded in the previous year. The decline is as a result of the Nigerian Communications Commission (NCC) decision to halt purchase or registration of new SIM numbers for the integration of National Identity Numbers (NIN).
The 3.4% growth thus beats the projection of the International Monetary Fund (IMF) for 2021. The IMF had predicted that Nigeria’s economy will grow by 2.6%.