2024

World

<p>Nigeria’s economic landscape has experienced significant shifts for a couple of decades as relatively emerging sectors such as technology (telecom) and digital services gain prominence alongside traditional industries like agriculture, finance and oil.&nbsp;</p> 
<p>For this report, we will examine the evolving contributions of these sectors to the nation’s GDP over the past five years (2019-2024), highlighting the changes in economic power and growth potential that are shaping Nigeria’s future.</p> 
<p>Since independence, Nigeria’s economy has been predominantly driven by agriculture and oil.</p> 
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  <img loading="lazy" decoding="async" width="807" height="455" src="https://technext24.com/wp-content/uploads/2024/09/image-3.png" alt="Telecom takes over oil, traditional sectors in GDP contribution" class="wp-image-235393">
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   Nigeria’s first oil well…
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<p>Agriculture, which <a href="https://oxfordbusinessgroup.com/reports/focus-report-agriculture-at-the-heart-of-nigerias-economic-development-plans-focus-report" target="_blank" rel="noopener">once accounted for over 50% of Nigeria’s GDP</a>, has been the cornerstone of rural life, employing a significant portion of the population.&nbsp;</p> 
<p>Staple crops like yams, cassava, and maize have long been crucial for domestic consumption and export. However, the <a href="https://www.unep.org/topics/disasters-and-conflicts/country-presence/nigeria/ogonilands-oil-history#:~:text=In%20Nigeria%2C%20oil%20was%20reportedly,largest%20producer%20of%20crude%20oil." target="_blank" rel="noopener">discovery of oil in the 1950s</a> dramatically shifted the economic landscape. By the 1970s, oil had become the dominant sector.&nbsp;</p> 
<p>The percentage of GDP from oil production increased steadily from 8.1% in 1970 to a peak of 31.9% in 1974, before fluctuating and declining to 12.9% by 1984, according to data by the <a href="https://documents1.worldbank.org/curated/en/198091468775789095/pdf/multi-page.pdf" target="_blank" rel="noopener">World Bank.</a>&nbsp;</p> 
<p>The share of oil in total exports was very high, reaching over 90% from 1974 onwards, indicating a heavy reliance on oil exports. During this period, Nigeria’s current account balance fluctuated, with significant deficits (negative percentages) in several years, but also a surplus of 16.9% in 1974 during the oil boom.</p> 
<p>The reliance on oil created a mono-economy, leading to fluctuations in economic stability due to global oil price volatility. Despite its significant contributions, the oil sector has been criticised for fostering economic imbalances, neglecting other potentially lucrative sectors like agriculture.</p> 
<p>But, a revolution has happened – A new era of innovation and opportunity.&nbsp;</p> 
<p>The world is witnessing a profound transformation driven by the rapid advancement of technology. Digital services, once considered novelties, are now an integral part of our daily lives. From e-commerce and social media to fintech and artificial intelligence, these emerging sectors are challenging the status quo and reshaping industries across the globe.</p> 
<p>The rise of digital technology has disrupted traditional business models, created new markets, and empowered individuals and businesses alike. It has democratised access to information, communication, and financial services, fostering innovation and entrepreneurship.</p> 
<p>Today, technology – telecom – is breaking ground in its contribution to total real GDP.&nbsp;</p> 
<h4 id="how-telecoms-grew-in-5-years" class="wp-block-heading">How telecoms grew in 5 years&nbsp;</h4> 
<p>Over the past five years, the <a href="https://technext24.com/2024/08/28/telecoms-gdp-2019-to-2024-review/" target="_blank" rel="noreferrer noopener">Telecom sector</a> has transitioned from a supporting role to a central player in the economy. </p> 
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 <p>Starting at 10.30% of GDP in 2019, it surged to 14.38% by 2023, and further to 16.36% by Q2 2024. </p> 
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<p>This remarkable growth trajectory is a testament to the sector’s pivotal role in driving digital connectivity, enhancing communication infrastructure, and supporting the burgeoning digital economy.</p> 
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   Telecommunications in Nigeria
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<p><strong>Key insight</strong>: The Telecom sector’s explosive growth signifies not just the expansion of ICT but a broader digital transformation that is fundamentally altering the economic fabric. As more services move online and connectivity becomes ubiquitous, telecom’s influence is set to grow even further, potentially eclipsing traditional sectors.</p> 
<h4 id="oil-is-not-the-king-it-used-to-be" class="wp-block-heading">Oil is not the king it used to be</h4> 
<p>Contrasting sharply with Telecom’s ascent is the Oil sector’s decline. Once the bedrock of the economy, contributing 8.78% to GDP in 2019, Oil’s share has dwindled to just 5.40% by 2023, with a brief uptick to 6.38% in Q1 2024, before slipping back to 5.70% in Q2 2024. This decline reflects both global shifts towards greener energy sources and domestic diversification efforts.</p> 
<p>The fall in Oil’s contribution underscores a significant pivot away from fossil fuels. As Telecom and other ICT-related industries rise, the economy is gradually reducing its dependence on oil, mirroring global energy trends.</p> 
<h4 id="agriculture-can-still-boast-if-not-for-slight-strains" class="wp-block-heading">Agriculture can still boast if not for slight strains</h4> 
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 <p>Agriculture has been a consistent high contributor to GDP, maintaining around 25% for most of five years. </p> 
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<p>However, the first two quarters of 2024 have seen a notable dip, with contributions dropping to 21.07% in Q1 and recovering slightly to 22.61% in Q2. Despite this, the sector remains a critical part of the economy, though external factors increasingly challenge its stability.</p> 
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  <img loading="lazy" decoding="async" width="1280" height="720" src="https://technext24.com/wp-content/uploads/2024/09/image-5.png" alt="Nigeria's Telecom 5-year GDP growth to 58.83% outpaces Agriculture sector" class="wp-image-235398">
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<p>While Agriculture remains vital, its recent fluctuations highlight potential vulnerabilities. In contrast, Telecom’s steady rise suggests a shift towards a more tech-driven economy, where traditional sectors must innovate to remain competitive.</p> 
<h4 id="finance-insurance-are-the-underdogs" class="wp-block-heading">Finance/Insurance are the underdogs</h4> 
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 <p>The Finance and Insurance sector has quietly but steadily grown, from 3.01% of GDP in 2019 to 4.97% in 2023, with a significant leap to 6.81% in Q1 2024, followed by a slight dip to 6.57% in Q2. </p> 
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<p>This sector’s growth is indicative of increased financial inclusion, digital banking innovations, and the rise of fintech solutions—areas that are increasingly intertwined with the ICT sector.</p> 
<figure class="wp-block-image aligncenter size-full">
 <img loading="lazy" decoding="async" width="3000" height="2000" src="https://technext24.com/wp-content/uploads/2024/09/35262247_8292064.jpg" alt="2019-2024 GDP contribution: Finance and Insurance soar 118.26%, Telecom grows 58.83%, while Oil shrinks by 35.10%
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  2019-2024 GDP contribution: Finance and Insurance soar 118.26%, Telecom grows 58.83%, while Oil shrinks by 35.10% 
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<p>The intersection of finance, insurance, and telecom points to a future where digital services dominate. As financial services become more digitised, the boundary between these sectors is blurring, with telecom playing an increasingly critical role.</p> 
<h4 id="seeing-the-big-picture" class="wp-block-heading">Seeing the Big Picture</h4> 
<p>When viewed together, the data reveals a compelling narrative: Telecom is not just another growing sector—it’s at the forefront of a digital revolution that is reshaping the economic landscape. </p> 
<p>While traditional sectors like Oil and Agriculture face challenges and Finance and Insurance steadily climb, Telecom is rapidly accelerating, reflecting the economy’s broader shift towards digitalisation.</p> 
<p>For emphasis, the rise of Telecom relative to traditional sectors signals a transformative economic shift. Digital infrastructure is the backbone of modern economies, and sectors tied to this transformation will likely outpace those bound by physical resources.</p> 
<p>The past five years have seen a dramatic reconfiguration of GDP contributions, with Telecom leading the charge in the digital disruption of the economy. But, how is the government responding to this?</p> 
<h4 id="summary-of-growth-dynamics" class="wp-block-heading">Summary of growth dynamics</h4> 
<p><strong>Telecom</strong>’s 58.83% growth positions it as a key engine of economic transformation, although not as steep as the growth seen in Finance and Insurance, it’s still a clear indicator of the digital sector’s rising influence.</p> 
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<p>Oil’s 35.10% decline marks a significant reduction in its economic dominance, reinforcing the narrative of a transition away from traditional energy sources.</p> 
<p>Agriculture’s 10.13% decline suggests that while still crucial, the sector faces challenges that could be exacerbated by climate change and other global pressures.</p> 
<p>Finance and Insurance’s 118.26% growth underscores the sector’s rapid expansion, driven by increased financial inclusion and the growth of fintech, often in synergy with Telecom.</p>
<p>The post <a href="https://technext24.com/2024/09/04/nigerias-telecom-5-year-gdp-growth/">Nigeria’s telecom 5-year GDP growth of 58.83% outpaces oil, agric, finance</a> first appeared on <a href="https://technext24.com">Technext</a>.</p>

Nigeria’s telecom 5-year GDP growth of 58.83% outpaces oil, agric, finance

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