Services again the driver of growth

From the national accounts for Q3 2018 we highlight the five best performing sectors among those accounting for at least 1% of GDP at constant basic prices. The tertiary (services) sector, which provides four of the top five, again posted the best performance, with growth of 2.6% y/y after 2.1% the previous quarter. The primary sector (agriculture) pushed up its growth to 1.9% y/y from 1.2%.  The secondary sector, dragged down by crude oil and gas, achieved just 0.1% y/y. Nigeria is a services economy on the basis that it accounts for 49% of output.

                                                                                                                  

  • The best performer was information and communications. This is borne out by data from the industry regulator, which show that the number of mobile and internet (via mobile) subscribers expanded by 16.0% y/y and 13.6% respectively in Q3.
  • Transportation and storage grew at a double-digit rate for the fourth quarter in succession. The driver was again road transport, its largest segment. The growth is coming off a low base due to long-term neglect by successive administrations. The sector represented just 1.2% of GDP in Q3, which compares with 8.0% for its counterpart in Kenya in 2017. Credit is surely due in large part to the capital spending programmes of the FGN and some state governments.
  • Manufacturing features in fifth place, and tells several different stories. Growth in its largest segment (food, beverages and tobacco) picked up from 1.2% y/y to 2.9%, which, taken in conjunction with our manufacturing PMI reports in the period, offers some encouragement for household demand.
Five best performing sectors (% chg; y/y)

Sources: National Bureau of Statistics (NBS); FBNQuest Capital Research

 

  • Cement, the third largest segment, expanded by 8.1% y/y in Q3 (after 3.8%). This supports the narrative for government spending although we have to note that construction growth declined to near zero.
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