Nigeria’s GDP grows 3.98% as services and agriculture drive expansion

Nigeria’s economy recorded a solid improvement as the nation’s Gross Domestic Product (GDP) expanded by 3.98 percent, driven largely by stronger performances in the services and agriculture sectors. The latest figures reflect a rebound in key non-oil industries and a gradual stabilisation of economic activities following months of policy adjustments, foreign exchange reforms, and shifting global market conditions. Analysts say the growth marks one of the country’s most encouraging quarterly performances in recent years, signalling improving resilience in the face of persistent structural challenges.

The services sector, which continues to be the backbone of Nigeria’s economic activity, contributed significantly to the GDP expansion. Industries such as information and communications technology, finance, entertainment, real estate, trade, and transportation saw notable improvements, reinforcing the sector’s role as a major driver of national output. The ICT subsector maintained its strong momentum, buoyed by increased digital adoption, expanded broadband access, and the rising influence of fintech and e-commerce platforms.

The financial services sector also posted positive growth, supported by improved lending activities, stronger electronic banking services, and heightened investor engagement across the capital markets. Market analysts believe that the combination of regulatory reforms, financial innovation, and rising public interest in digital banking has played a crucial role in boosting sectoral performance. Meanwhile, the entertainment and creative industries continued to thrive, benefiting from growing global recognition of Nigerian music and film, as well as increased local production activities.

Agriculture, another major contributor to the GDP growth, saw a moderate but meaningful improvement. The sector’s performance was boosted by increased crop production, better weather conditions, and targeted interventions aimed at supporting smallholder farmers. Government programmes encouraging large-scale mechanised farming, fertiliser access, and improved seed varieties also played an important role in stabilising agricultural output. Despite ongoing challenges such as insecurity in farming regions and rising input costs, analysts say the sector’s resilience remains essential for food security and employment, especially in rural communities.

Manufacturing recorded mixed outcomes but overall contributed positively to the GDP improvements. Growth in food and beverage production, cement manufacturing, and textiles helped offset declines in segments affected by foreign exchange constraints and high energy costs. Manufacturers continue to grapple with rising import bills, logistics challenges, and fluctuating fuel prices, but the recent policy environment has provided some breathing space for operations to stabilise. Industry experts argue that sustained support for local production could unlock more growth in the coming months.

The oil and gas sector, traditionally Nigeria’s economic mainstay, recorded milder expansion compared with non-oil sectors. Crude oil production saw slight improvements due to better pipeline security, increased investment in upstream activities, and renewed efforts to curb theft and vandalism. However, the sector’s contribution to total GDP continues to shrink as non-oil sectors outperform it, underscoring the gradual shift toward economic diversification. Some analysts view this development positively, noting that Nigeria’s long-term stability depends on reducing dependence on crude oil revenues.

Economists believe that the 3.98 percent GDP growth is partly linked to the impact of recent government reforms aimed at strengthening macroeconomic stability. Policies supporting exchange rate unification, interest rate adjustments, fiscal consolidation, and targeted interventions in productive sectors have contributed to renewed investor confidence. Although these reforms have brought short-term challenges, such as higher costs for households and businesses, experts say they are beginning to yield gradual but visible improvements in economic performance.

Consumer spending also showed signs of recovery as inflation pressures eased slightly, allowing households to adjust their consumption patterns. The retail and trade sector benefited from rising market activity, increased stock availability, and moderate improvements in purchasing power. However, inflation remains one of the biggest challenges facing consumers, particularly as food and transportation costs continue to restrict household budgets.

Despite the positive GDP outcome, analysts caution that Nigeria must address persistent structural challenges to sustain long-term growth. These include inadequate power supply, rising operational costs, security concerns affecting agricultural regions, insufficient infrastructure, and the need for improved ease of doing business. Experts note that the country’s demographic size presents both an opportunity and a risk, depending on how effectively economic growth translates into job creation and poverty reduction.

The outlook for the coming quarters remains cautiously optimistic. Economists expect that continued stability in the services sector, stronger agricultural output, and improving investor sentiment could sustain the growth momentum. Additionally, ongoing reforms in the oil sector and increased investments in gas infrastructure may further support national output. Analysts also highlight the importance of strengthening manufacturing capacity and supporting small and medium enterprises to cushion the economy against external shocks.

In summary, Nigeria’s GDP growth of 3.98 percent reflects a gradually recovering economy bolstered by stronger performances in services and agriculture. While the numbers indicate progress, sustaining this trajectory will require consistent policy implementation, stronger infrastructure development, and continued efforts to promote diversification. With renewed focus on strategic sectors and improving investor confidence, Nigeria appears poised to consolidate these gains and push toward more robust and inclusive growth in the months ahead.