Nigeria’s quest for a return to economic growth got a major boost this week after the National Bureau of Statistics reported that Nigeria’s 2017 third quarter GDP rose by 1.4%. Despite the good news, the report had sour spots which we have analysed here.
Just as the Nigerian economy seems to be improving not every sector of the economy is doing that well. In fact, according to the data released by the National Bureau of Statistics the following sectors have been doing badly for months and has no sign for improving, at least in the short-term.
Manufacturing
This sector consists of Oil Refining, Cement, Pulp-paper & Products, Electrical & Electronics, Motor Vehicles & Assembly etc. These sub-sectors are all currently experiencing weakness and have been contracting for some time. Looking at all the red bars above, reveals quite a sordid image and one the government should be worried about. Should you decide to invest in this sector, then be rest assured that it is a long term investing as growth is not coming back anytime soon. Manufacturing has traditionally not been a strong growth driver in the Nigerian economy, thus pitting any hope here is quite ambitious. Important to note that the food and beverage sector appears to be back to growth. Probably a good time to invest in food processing and manufacturing.
Transportation and Storage
If you are looking at investing in this sector then be ready for some bumps as it is still in a recession. The sector is still in recession and that’s despite recording modest growth in the first quarter of 2017. Ironically, this is one sector that has a lot of growth potentials considering Nigeria’s infrastructural deficit. However, there is a silver lining in the Air Transport and Water Transport sectors which have managed to eke out growth.
Information and Communication
This is one sector that has suffered not just from the bad economy and more importantly government policy. The clampdown on sim card registrations and freeze on tariffs for this sector has also hampered growth such that it is now in a recession. If you choose to invest in this sector, then be wary of the contraction taking place. Growth is hard to come by and it could take two to three quarters more for it to be robust again.
Services
This was one sector we pinned high hopes on, for the great Nigerian recovery. However, as things stand, it is a sector currently reeling from the crash in oil prices. As is clearly stated in the table above, nearly all of the sub-sectors have recorded a contraction this year. This contraction clearly indicates that economic recovery is slow and crawling. Businesses in this sector are finding hard increasing volumes as budgets are still conservative for small businesses and individuals.
