March 10, 2023/Coronation Research

The latest national accounts released by the National Bureau of Statistics (NBS) show that GDP grew by 3.5% y/y in Q4 ’22 compared with 2.3% y/y recorded in Q3 ’22. For FY ’22, GDP grew by 3.1% y/y vs 3.9% y/y recorded in 2021. On a q/q basis, the oil economy contracted by -13.4% y/y while the non-oil economy grew by 4.4% y/y in Q4 ’22.

For FY2022, the oil sector contracted by -19.2% y/y vs -8.3% y/y, largely reflecting the impact of oil theft, vandalism, divestments of IOCs from onshore oil exploration as well as infrastructure deficit. Over the past eight quarters, oil contracted by an average of -13.4% y/y. On a q/q basis, Bonny Light declined by -7.1% to USD81.9/b at end-Q4.

Based on data from the NBS, average crude oil production (condensates inclusive) in Q4 ’22 was 1.34mbpd vs 1.20mbpd recorded in the previous quarter. This is lower than the OPEC production quota for Nigeria, pegged at 1.8mpbd, and the FGN’s oil production benchmark of 1.7mbpd. Industry sources suggest that increased oil production was recorded across select terminals in Q4. They include Bonny, Brass, Forcados and Escavros. However, Qua-Iboe recorded relatively lower production in the same quarter.

Turning to the non-oil economy, agriculture grew by 2.1% y/y vs 1.3% y/y recorded in the previous quarter. The sector accounted for 26.5% of total GDP in Q4 ’22. For FY2022, agriculture grew by 2.1y/y. Crop production remained the sector’s major driver accounting for 91% of agriculture GDP and it grew by 2.4% y/y in Q4 ’22. Meanwhile, the forestry segment grew by 1.6% y/y. However, livestock and fisheries contracted by -1.6% y/y and -3.0% y/y, respectively.

Regarding financial interventions geared towards agriculture, as at October ’22, the CBN had disbursed N745bn to finance large-scale agricultural projects under the Commercial Agricultural Credit Scheme (CACS).

The manufacturing sector grew by 2.8% y/y in Q4 ’22 compared with a contraction of -1.9% y/y recorded in the previous quarter. The current CBN de-monetization policy which has led to cash shortages, is adversely impacting manufacturers. We understand that manufacturers are experiencing lower output levels due to dampened consumer spending, this would reflect in the Q1 ’23 national accounts. A deeper dive into the manufacturing sector shows that the food and beverages and cement segments posted growth of 4.9% y/y and 3.9% y/y, respectively in Q4. Meanwhile, the textile, apparel, and footwear segment contracted by -1.2% y/y.

Telecommunications remained one of the fastest growing segments. It posted growth of 11.2% y/y and accounted for 13.5% of total GDP in Q4. Data from the Nigerian Communications Commission (NCC) show that internet subscriptions increased by 9.1% y/y in Q4 22.

Trade slowed to 4.5% y/y compared with 5.1% y/y recorded in Q3 ’22. The segment accounted for 15.8% of total GDP in Q4 ’22. Domestic trade which relies heavily on cash transactions continues to face disruptions due to the recent cash crunch associated with the naira redesign policy. Cash remains the preferred means of payment given the very low tolerance for electronic transaction glitches.

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