Nigeria’s economy is currently on a rebound, all thanks to the growth of some industries performing excellently. Data shows that these fastest growing industries currently offer more opportunities and an increased rate of profitability when compared with others, making them very investor-friendly. They have also continued to contribute massively to the general performance of the nation’s economy, Quarter after Quarter.
According to the National Bureau of Statistics, Nigeria’s economy grew by 5.01% year-on-year in the Second Quarter of 2021, marking a consistent growth quarter after Quarter following the negative growth rates hitherto recorded in the second and third quarters of 2020. The performance of the fastest growing industries in Nigeria powered the country’s economic growth within this period, data shows.
The Q2 2021 growth rate was higher than the -6.10% growth rate recorded in Q2 2020 and 0.51% recorded in Q1 2021 year-on-year, indicating that businesses and economic activities have now picked up and are moving close to the level of activity recorded before pre-COVID-19 restrictions.
The economy advanced by 4% year-on-year in the Third Quarter of 2021, with a 5% growth in the previous period. This is the strongest since the last Quarter of 2021. The growth recorded in this Quarter is the fourth in a continuous growth rate witnessed Quarter after Quarter since the recession. The growth has been largely driven by the non-oil sector, which contracted by 5.4% as opposed to 6.7% recorded in Q2.
This growth, powered by Nigeria’s fastest-growing industries, is expected to improve in the new year as Nigerians expect balance and continuous economic gains.
Among these fastest-growing industries are the nation’s top earners and sectors that should interest anyone looking to make plans for the future, either in terms of career or investment purposes. In this article, we review these fastest-growing industries.
Information and communication technology
According to the data available, information and communication technology is one of the fastest-growing sectors. The sector comprises four sub-sectors; Publishing, Motion Picture, Sound Recording and Music Production and Broadcasting.
Data from the Nigerian Communications Commission (NCC) shows that the sector contributed about 12.45% to the nation’s GDP in the last Quarter of 2020, a switch up from 10.60% of the same Quarter of the previous year. This growth is closely linked to an increase in demand and investment drive witnessed in the sector.
Nigeria’s ICT market is regarded as Africa’s largest, taking as much as 82% of the continent’s telecoms subscribers and 29% of internet usage.
In 2021, the sector contributed 17.92 percent to GDP in Q2, 2021 compared to 14.91 percent it recorded in Q1 2021 and 17.83 percent in the previous year. Although it declined in Q3 by 3.72 percent from 17.92 percent recorded in the preceding Quarter, the sector is still on a comfortable growth trajectory.
Meanwhile, it recorded a growth rate of 9.66% in real terms in the third Quarter of 2021 year-on-year. From the rate recorded in the corresponding period of 2020, there was a decrease of 4.89% points.
Quarter on Quarter, the sector exhibited a growth of -11.99 percent in real terms.
The reason for the sector’s high performance is not far-fetched. Communication and data consumption rank high on the daily expendables list among Nigerians; as such, it translates into positive markings for the nation’s economic indices.
According to the Nigerian Communications Commission, the country has about 76 million subscriptions on broadband penetration and 187 million lines in the voice segment as of May 2021, representing 97.9% teledensity.
The Energy and Power Sector
The Nigerian energy and power sector comprising gas, steam and air conditioning has been identified as one of Nigeria’s fastest-growing sectors. It recorded a 78.16% year-on-year GDP growth within the second Quarter of 2021, which is by far the highest rate recorded by any other sector within the same period.
According to the National Bureau of Statistics, Nigeria’s non-oil sector has been largely driven by growth recorded within the trade, telecommunication electricity, crop production, road transport and food production.
A half-year analysis of the sector shows that it grew by 56.58% year-on-year in 2021 when compared to the contraction of 2.78% in the same period of 2020. On the other hand, when compared to the previous Quarter, the sector recorded a growth of 264.23% to a real aggregate of N134.19 billion in Q2 2021, as opposed to N36.84 billion recorded in Q1 2021.
This increase is largely driven by the increase in electricity tariff, which the Discos arising from a directive from the Nigerian Electricity Regulatory Commission (NERC) implemented.
This performance is expected to be better this year as significant developments arise within the sector.
According to Trading Economics, projections for the GDP from the manufacturing sector in 2022 is expected to be 1715494.00 NGN Million by the end of the First Quarter.
In the long-term, Nigeria’s GDP from the manufacturing sector is projected to trend around 1753150.00 NGN Million in 2023 and 1798732.00 NGN Million in 2024, according to the platform’s econometric models.
The sector maintained a steady growth rate through 2021. In the second Quarter, the sector’s real GDP grew by 3.49% y/y, the highest since Q1 2015.
Data from the National Bureau of Statistics reveal that nominal GDP growth of the sector in the Second Quarter of 2021 stood at 38.33%, a 38.47% points higher when compared to the figure recorded in the corresponding period of 2020 (-0.14%) and 6.23% points higher than the preceding quarter figure of 32.10%.
The outbreak of the coronavirus pandemic dealt negatively with the sector as many manufacturing activities wind down, going to a record low of -8.78% in Q2 2020.
The subsector is responsible for about 10% of the total GDP annually. In terms of employment generation, manufacturing activities account for about 12 per cent of the labour force in the formal sector of the nation’s economy.
Nigeria undeniably possesses the largest economy in Africa. The manufacturing sector became the largest on the continent in 2013, and it produces a large proportion of goods and services for the region of West Africa. It comprises of thirteen broad categories, namely Oil Refining; Cement; Food, Beverages and Tobacco; Textile, Apparel, and Footwear; Wood and Wood Products; Pulp Paper and Paper products; Chemical and Pharmaceutical products; Non-metallic Products, Plastic and Rubber products; Electrical and Electronic, Basic Metal and Iron and Steel; Motor Vehicles and Assembly; and Other Manufacturing.
Sewerage, Waste Management and Remediation
The Sewage, Waste management and remediations sector is another fast growing sector in the Nigerian system.
The sector growth rate in the first Quarter of 2021 was put at 14.75% compared to 1.92% in Q4 2020 and -0.18% in Q1 2020.
Since 2020, the sector has witnessed an upward trend except for a slight dip in Q4 of 2020 of 1.94 from 2.1 recorded the previous Quarter. The sector is expected to build on the reported progress and continue to witness growth this year.
Quarrying and Mining Sector
According to the National Bureau of Statistics Mineral Production Report for 2019-2020, mineral production in the quarrying and mining sector rose by 17.95%, amounting to 64.3 million tons in 2020 from the previously recorded 54.5 million tons in 2019.
The report shows that most mined minerals in 2020 were limestone, sand, and granite, while limestone, granite, and laterite were the top three largest minerals in 2019.
Nigeria is endowed with over forty (40) types of minerals, including marble, coal, iron ore, gold, silica, lead, zinc, tin ore, manganese, granite, laterite, limestone etc.
ALSO READ: 5 Best African Countries to Invest in 2022
According to the NBS, mineral production in the quarrying and mining sector rose by 17.95% in 2020, amounting to 64.3 million, a significant increase from the 54.5 million tons recorded in 2019.
The domestic mining industry (excluding crude petroleum and natural gas) accounts for just 0.2% of Q2 ’21 GDP.
Nigeria’s mining sector is still largely undermined thus still has a lot of potential in terms of possible revenue, fx generation and job creation. There is still plenty of room for more players, which hopefully will happen with the government’s encouragement and the proper regulatory framework that will engender interest from investors.