Nigeria’s GDP Slumps Further

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Nigeria’s GDP Slumps Further
Nigeria’s real GDP sustained a frail
trend, with the year on year (YoY)
growth climbing marginally to 2.11% in
Q4:2015, down from 5.94% recorded in
the corresponding period of 2014. This
also implies a 0.73% quarter on quarter
(Q-o-Q) decline compared to 2.84%
growth recorded in Q3:2015.
With aggregate real GDP measured at
NGN69.02tn (vs. NGN67.15tn in FY2014)
as at FY2015, aggregate real GDP grew
by 2.79% YoY (vs. 6.23% in FY2014).
Bearing in mind that the economic
headwinds that pressured Nigeria’s
GDP growth in 2015 still subsist, we
expect the weak GDP growth trend to
persist in the first quarter of 2016.

Pricing & Lower Productivity Pressures Oil
Revenue
Following a drop in oil production in
Q4:2015 to 2.16mbpd (vs. 2.17mbpd and
2.19mpbd in Q3:2015 and Q4:2014
respectively), real growth in the oil
sector slowed by 19.10% (Q-o-Q) and
8.28% (YoY) accordingly.
In addition to a significant 46% decline
in average Brent price to c. USD54pb
(vs. USD100pb average in 2014) in 2015,
aggregate oil sector contribution to total
GDP in 2015 trimmed to 9.61%, down
from 10.44% in 2014.
Given the ongoing events in the global
oil space (including the lifting of ban of
Iran) we expect the Nigeria’s oil
sector’s contribution to GDP to remain
weak. However, global oil price
increase, following anticipated
reduction in oil supply in the long-run,
could spur oil-sector growth.

Non-Oil Sector Remains Economic Driver
The Agric. (23.11%), Trade (16.95%),
Services (12.04%) and ICT (11.37%)
remain the major drivers of both non-
oil sector and Nigeria’s GDP growth.
Collectively, the aforementioned sectors
account for c.64% of the total real GDP
in 2015. Based on quarterly figures, with
NGN17.04tn real GDP in Q4:2014, the
non-oil sector recorded a 5.64% (Q-o-Q)
and 3.14% (YoY) growth respectively.
The non-oil sector also account for
c.90% (NGN62.39tn) of total GDP as at
FY2015. Considering the government‘s
agenda and need to diversify the mono-
dependent oil economy, we expect the
non-oil sector (especially agriculture,
mining and construction) to remain the
major driver of growth in 2016.
We however acknowledge that
government’s ability to improve foreign
capital inflows and raise required funds
to kick-start its proposed capital
expenditure will be a major
determinant for plausible GDP growth
in 2016.
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