February 23, 2024/Coronation Research

• The national accounts for Q4 ‘23 by the National Bureau of Statistics (NBS) show that GDP grew by +3.46% y/y compared with the +2.54% y/y recorded in Q3 ’23.  Surprisingly, on a q/q basis it grew by +36.2%. A deeper dive shows that the service sector grew by +3.98% y/y.

• For FY2023, GDP grew by 2.74%, which is just 14bps higher than our projection of 2.6% y/y but lower than 3.1% recorded in the previous year (2022). The slower growth reflects macroeconomic headwinds experienced in 2023.

• It is worth highlighting that the oil economy grew by 12.1% y/y in Q4 ’23. Over the past 14 quarters (i.e., 3+ years), the oil sector has posted contractions. This recorded growth can be partly hinged on relatively better production levels. However, on a q/q basis, it contracted by -3.8% y/y. Based on data from the NURPC, average crude oil production in Q4 ’23 was 1.52mbpd compared with 1.43mbpd recorded in the previous quarter. 

• The non-oil economy grew by 3.1% y/y in Q4 ’23 compared with 2.75% y/y recorded in Q3 ’23. Key drivers within the non-oil economy include finance and insurance (29.8% y/y), telecoms (6.9% y/y), construction (3.7% y/y), real estate (1.3% y/y), agriculture (2.1% y/y) and trade (1.4% y/y), Combined, these sectors accounted for 70% of total GDP in Q4 ’23.
• Agriculture grew by 2.1% y/y vs 1.3% y/y recorded in Q3 ’23. Crop production remained the major driver of agriculture and accounted for 91.4% of agriculture GDP; it grew by 2.4% y/y. The forestry segment grew by 1.7% y/y. However, the livestock and fishing segments recorded contractions of -2.1% y/y and -0.1% y/y respectively. Agriculture accounted for 26% of total GDP in Q4 ’23.
• Telecommunications grew by 6.9% y/y vs 7.7% recorded in Q3 ’23 and accounted for 14% of total GDP. Internet subscriptions remain resilient despite visible changes in consumption patterns. The importance of social connectivity remains high, even in times of economic challenges. Social media platforms, messaging apps, and online communities continue to be crucial for maintaining connections, sharing information, and staying informed, driving sustained internet usage and driving revenue growth for telecommunications companies.
• The manufacturing sector grew by 1.38% y/y vs 0.48% y/y recorded in Q3 ’23. Within the sector, the food, and beverages segment grew by 2.93%y/y and accounted for 50% of total manufacturing GDP. Meanwhile, textile, apparel, and footwear segment contracted by -1.6% y/y. The cement segment posted growth of 3.2% y/y.
• Trade grew by 1.4%y/y in Q4 ’23 vs 1.5%y/y recorded in the preceding quarter. Ideally, the current fx dynamics (persistent depreciation of the NGN/USD) should impact the balance of trade account and stimulate export growth while curbing import volumes.
• Finance and Insurance grew by 29.7% y/y in Q4 ’23 compared with 28.2% y/y recorded in Q3 ’23.
• For FY2024, there are a handful of projections that indicate a promising trajectory, such as the FGN’s GDP growth forecast of 3.76% y/y. However, this differs from our in-house 2024 projection for GDP growth (in our base-case scenario) which is currently at 3% y/y.

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