Report Reveals Decline in Real Sector Growth in 2024

A new report has shown that the growth of Nigeria’s real sector, which encompasses industries such as manufacturing, agriculture, construction, and services, has significantly declined in 2024. This downturn signals a worrying trend for the country’s economic diversification efforts, which have long relied on strengthening the real sector to reduce dependence on oil revenues.

According to the report, the slowdown can be attributed to a combination of factors, including inflationary pressures, high energy costs, inadequate infrastructure, and a challenging macroeconomic environment. Businesses in key industries have faced rising production costs, lower demand, and reduced access to capital, all of which have hindered their ability to expand and create jobs.

The manufacturing sector, a central component of the real economy, has been particularly hard-hit. Many factories are operating below capacity due to persistent power outages, high fuel prices, and fluctuating raw material costs. While some industries, such as agriculture, have seen slight growth, the overall contribution of the real sector to Nigeria’s GDP has contracted.

The construction industry, which has historically been a driver of economic growth, is also grappling with challenges. Increased costs of building materials, coupled with a slowdown in public infrastructure projects, have led to a decline in the sector’s output. These challenges are compounded by political and policy uncertainties, which have deterred both local and foreign investment.

The report highlights that these economic difficulties are exacerbated by the country’s struggle with inflation, which has eroded consumer purchasing power and led to reduced domestic consumption. As a result, many businesses are unable to expand, and some have even been forced to reduce their workforce or close operations altogether.

Moreover, the report underscores the need for urgent structural reforms in the real sector to address these challenges. Key recommendations include improving infrastructure, particularly power and transportation networks, enhancing access to finance for small and medium-sized enterprises (SMEs), and providing incentives for local production.

Experts warn that if the decline in real sector growth continues, it could have broader implications for job creation, poverty reduction, and Nigeria’s overall economic stability. With a large portion of the population dependent on informal and low-productivity sectors, the underperformance of the real economy could lead to a rise in unemployment and inequality.

To reverse the trend, economists argue that Nigeria must prioritize diversification away from oil dependency by nurturing non-oil sectors. This includes investing in industrial parks, providing vocational training, and creating a more favorable business environment that can attract investment and support local industries.

The report’s findings are a wake-up call for policymakers, who must act swiftly to address the structural challenges within the real sector. Failure to do so could hinder Nigeria’s long-term growth prospects and impede efforts to build a more resilient economy.