According to data from the National Bureau of Statistics, Nigeria’s real GDP growth rate in the first quarter of 2021 was 0.51%. This comes after a 0.11% GDP growth rate in the fourth quarter of 2020, which effectively pulled Nigeria out of recession. Hence, it would be prudent to access the fastest growing sectors in the Nigerian economy.
Agriculture increased by 2.28% compared to 3.42% in the previous year. Manufacturing has recovered from the recession, rising at a rate of 3.4%. Trade contracted more slowly. Construction increased by 1.42% in the fourth quarter of 2020, compared to 1.21% in the previous quarter. According to Nairametrics, Nigeria could have achieved a GDP growth rate of at least 1.7% if the Agriculture and Information and Communication sectors had maintained their growth paths into the fourth quarter of 2020.
The performance of the Communications industry was the cause for the weak GDP growth in the first quarter of the year. In the previous three quarters, Nigeria’s telecommunication industry has been the main engine of economic development and has played a key role in bringing the country out of recession. However, the bullish momentum of oil bolstered Nigeria’s recovery and economy.
Here are the fastest-growing sectors in Nigeria in Q1 2021.
Information and Communication sector
Telecommunications and information services, publishing, motion picture, sound recording, music production, and broadcasting are the six activities that comprise the Information and Communication sector. In the first quarter of 2021, the sector grew at a real-term pace of 6.47 % year over year. From the rate reported in the equivalent period of 2020, there was a decline of -1.18 % points in the quarter. In real terms, the sector grew at a pace of -14.80% in the third quarter. In addition, the industry contributed 14.91% to aggregate real GDP in Q1 2021, more than in the same quarter of the previous year in which it was 14.07%, which was lower than the previous quarter’s figure of 15.06 %.
Electricity, Gas, Steam and Air Conditioning Supply sector
From -2.51% in Q4 2020 to -2.31% in Q1 2021, this sector grew by 8.66 % in Q1 2021. This indicates a positive trend in this sector; however, the Nigerian power outage epidemic is a large enough gap to be filled and could be very profitable for those who invest in a solution. Furthermore, analysts remain sceptical of the sector’s ability to maintain its rapid growth.
Water supply, Sewerage, Waste Management and Remediation
Water Supply, Sewerage, Waste Management and Remediation sector grew by an outstanding 14.75% in Q1 2021 when compared with 1.92% in Q4 2020 and -0.18% in Q1 2020. The sector has seen an upward trend with a slight dip in 2020 Q4 of 1.94 from its 2.1 in the previous quarter. This sector has been revamped as regulation around the covid-19 pandemic vanishes and the economy returns to normal.
Mining and quarrying
The Mining and Quarrying sector grew by –2.19% (year-on-year) in the first quarter of 2021. Compared to the same quarter of 2020, the sector growth rate was lower by –6.77% points but higher by 16.25% points when compared to the fourth quarter of 2020. Quarter on quarter, the growth rate recorded was 31.15%. The contribution of Mining and Quarrying to real GDP in the quarter under review stood at 9.28%, lower than the rate of 9.54% recorded in the corresponding quarter of 2020 but higher than the 6.09% recorded in the fourth quarter of 2020. The major contributor is the Metal Ores under Mining and Quarrying Sector which grew by 28.83% in Q1 2021 from -9.38% in Q4 2020 and -4.10% in Q1 2020.
What this means
Businesses with the fastest-growing GDP contribution offer regions of growth in an otherwise devastated economy. These are industries where profits are now being earned at a significant rate when compared to the base year of 2010 in real terms. These sectors are eye candy to investors and the economic growth in them presents the following potentials:
- They can attract significant investments into these sectors
- Commercial banks can use them for further loan considerations into these sectors
- Shareholders and investors can choose to reposition their portfolio and benefit from the recovery
- There are more opportunities for job growth and new job creation from the sector