Nigeria’s Financial and Insurance sector grew from 10.1 per cent in 2021 to 31.2 per cent in the first quarter of 2024, according to the newly launched Afrinvest report with the theme ‘Bank Recapitalisation Catalyst for a $1 Trillion Economy’.
The report, which was unveiled in Abuja on Wednesday, revealed that the agriculture sector lagged behind other sectors.
The report revealed that the agriculture sector had decreased, going from 2.1% in 2021 to 1.9% in 2022 and 2023, respectively, to 0.2% in the first quarter of 2024.
The sector’s susceptibility to climate change and the inadequate rural infrastructure may be the linked to the trend.
According to the report, the mining and quarry sector has struggled, with a decline of 7.8 per cent in 2021 and -18.2 per cent in 2022. However, the sector has shown signs of recovery, with a growth rate of 6.3 per cent predicted for Q1 of 2024.
The real estate sector increased from 2.3 per cent in 2021 3.9 per cent in 2022, 1.7 per cent in 2023 and 0.8 per cent in Q1 2024.
Analyst point out that the high cost of housing and the sector’s susceptibility to changes in the economy may be to blame for this tendency.
The manufacturing sector has seen a gradual decline, from 3.3 per cent to 2.4 and 1.4 per cent in 2022 and 2023, respectively, in 2021 and to 1.5 per cent in Q1, 2024.
Analyst ascribed the decrease to the industry’s dependence on imported raw materials and the obstacles presented by the nation’s infrastructure.
The trade sector has also experienced a decline, from 8.6 per cent to 5.1 and 1.7 per cent 2022 and 2023, respectively, and to 1.2 per cent in Q1, 2024, due to the sector’s vulnerability to global economic trends and the impact of inflation.
The growth rate of the technology and communication sector has been consistent, rising from 6.5% in 2021 to 9.8% in 2022 before contracting to 7.9% in 2023 and 5.4 percent in the first quarter of 2024.
Nigeria’s financial institutions have shown to be remarkably resilient, according to Afrinvest, with the industry rising by 18.4% in real terms between Q3:2023 and Q1:2024, making it the fastest-growing sector among the seven main GDP sub-components in the nation.
“The financial institutions’ activity has remained resilient, expanding by 18.4 per cent in real terms between Q3:2023 and Q1:2024, to emerge as the fastest growing sector among Nigeria’s seven largest GDP sub-components,” Afrinvest noted.
It attributed the performance to several factors, including “increased investment in vertical and horizontal business expansions, rapid growth in earnings from digital channels (aided by a reduction in physical cash in circulation), a favourable interest rate environment, and a positive spillover effect from naira devaluation (owing to net FCY asset holdings)”.
Looking ahead, Afrinvest noted that it expected growth in the broader economy to range between 3.0 per cent and 4.0 per cent in the near term, owing largely to weak institutional capacity to translate reform goals into visible gains.
Meanwhile, the company anticipated that the growth of the banking sector will continue to be stable in the foreseeable future, even as industry stakeholders started raising capital to comply with the new recapitalisation requirements.
