Nigeria’s economy continues to show resilience in the face of myriad global financial pressures, with GDP expansion remaining positive this year. West Africa’s economic giant continues to dominate and define trade and investment trajectories in the region and on the African continent as a whole with several key sectors contributing to GDP growth above 3%.
Five economic sectors stand out as contributors to growth and employment in Africa’s third largest economy. These industries have proved their resilience over the years, withstanding the headwinds of financial crises and global pandemics to report positive growth on a consistent basis:
Agriculture
Nigeria’s agricultural sector is one of the continent’s largest, contributing significantly to farmers’ revenues, jobs, and food security in a nation of 213 million. The country’s size and geographic diversity allows the agricultural sector to successfully cultivate a variety of crops, with both domestic consumption and export demand on the rise.
Agriculture contributes more than 20 percent to Nigeria’s GDP. Despite challenges that are inherent to the commodities sector – like the recent spike in rice prices which is set to continue for the foreseeable future – farmers continue to produce essential food items as they respond to fluctuations in the market and vary their production accordingly.
Trade
It should come as no surprise that an economy which ranks in Africa’s top five and the world’s top forty is a prominent center for trade on the continent. Despite competition from rising regional powers like Ghana, the sheer size of Nigeria’s economy and its import/export infrastructure continues to reserve a special place for the nation on the continents trade and export rankings.
With a N1.2 trillion trade surplus reported recently, Nigeria is on a solid footing. A detailed analysis of the country’s trade reveals that the highest volume of exported goods originates from the manufactured products, solid minerals, agricultural goods, and crude oil sectors respectively.
Telecommunications, digital entertainment, and online gambling
Telephone, mobile, and internet services continued to expand as Nigerians increasingly embraced remote working practices and signed up for online digital services, including streaming sites like Netflix and increasingly popular online gaming websites. The telecommunications sector contributed 14 percent to GDP with a total value of over N2 trillion being added to the economy.
Nigeria’s shift to home entertainment, which intensified during the pandemic, has provided a dynamic growing market for telecommunication services. Families are watching their favorite movies and TV shows, ordering the latest fashions online, and trying their luck at online casinos from the comfort of their homes.
Nigerians with a taste for the excitement of online gambling have become regular patrons of offshore web-based casinos offering video poker and other enticing games. This phenomenon is directly attributable to the realities of online gaming legislation in the country: while sports betting and the national lottery are legally recognized forms of gambling, all others are technically outside the scope of Nigerian law.
To date, the government has adopted a tolerant attitude to Nigerian citizens gambling on overseas online casino websites and citizens have jumped at the opportunity to do so given the range of games and betting options available.
Analysts do not expect a reversal in the digital home entertainment trend, making the telecommunication sector for the scope for growth in the months and years ahead.
Energy extraction
The oil and gas industry currently employs 65,000 Nigerians and adds 6 percent to the country‘s GDP each year. As one of Africa’s most richly endowed oil producing nations, Nigeria has capitalized effectively on a resource which is considered critically important for the functioning of the world economy.
Major oil extraction and processing companies including Shell, Exxon Mobil, and local enterprises like Addax have expanded their footprint in Nigeria over the past few years, with long-term investments in oil refineries and pipelines set to maintain high employment levels in the sector for decades to come.
Real Estate
And the demand for residential and commercial real estate continued to drive steady growth of over 10% percent in the sector. The demographics of Nigeria‘s major cities are still on a generally positive trend, with rising incomes and increased interest in primary residential properties and investment units. Economists are confident that the sector will continue its expansion for the foreseeable future.
Nigeria’s hottest property markets are currently Port Harcort, Lagos, and Benin City respectively. This reflects both migration trends within the country and impressive growth in these regions resulting from investments in IT, the energy sector, and Public Works.
Economic resilience set to continue
Despite international events and the high interest rate environment, Nigeria continues to show impressive resilience. While economic performance across the board may not be ideal, sectors like energy extraction, real estate and telecommunications are geared around long-term capital investment while labor-generating industries like oil refineries and construction should continue to provide a backbone of economic strength. This should give less competitive sectors a chance to adapt and position themselves for future growth too.
Citizens and business owners alike have good reason to share a sense of relief as the country’s major growth industries represent sectors that guarantee the essentials of daily life – including housing, energy, agricultural produce and the connectivity that is required to keep citizens informed and entertained in today’s digital age. If the country’s economy continues on the current trajectory the prosperity that Nigeria has enjoyed over the past few decades stands a good chance of being preserved even as international economic challenges persist.