Agency Report
Nigeria’s Gross Domestic Product grew by 3.89 per cent year-on-year in real terms in the first quarter of this year recording a slowdown compared to the 4.07% recorded in the last quarter of 2025. A breakdown of the latest report by the National Bureau of Statistics shows during the quarter under review, agriculture sector grew by 3.15 per cent, as well as industry sector recording a 3.5 per cent growth while the services sector recorded a growth of 4.31 per cent. Biodun Adedipe, Founder and Chief Consultant of BAA Consult joins CNBC Africa to unpack the numbers and near-term prospects.
Nigeria $1 trillion economy
Nigeria’s economy expanded by 3.89% year over year in real terms in the first quarter of 2026, easing from the previous quarter’s pace but still posting what analysts say is a historically strong start to the year and a sign that underlying growth drivers may be strengthening.
According to figures discussed from the National Bureau of Statistics, the first-quarter reading marked a slowdown from the 4.07% growth recorded in the fourth quarter of 2025. Still, the latest data showed broad-based expansion across the major sectors of the economy, with agriculture growing 3.15%, industry rising 3.5% and services advancing 4.31%.
Speaking in a television interview, BAA Consult Founder and Chief Consultant Biodun Adedipe said the softer quarter-on-quarter comparison should not be overinterpreted, arguing that Nigeria’s economic history typically shows a slower growth rate in the first quarter before activity accelerates as the year progresses.
Adedipe said the more appropriate benchmark is a year-on-year comparison with the first quarter of the preceding year, rather than against the final quarter of the previous year. On that basis, he described the first-quarter result as especially notable, saying it represents Nigeria’s strongest first-quarter growth performance in a decade.
That interpretation is important for investors and policymakers trying to assess whether the current recovery is durable enough to improve living conditions, create jobs and reduce poverty. While a growth rate below 4% may still fall short of the scale needed to materially transform household welfare across a country facing inflation and structural bottlenecks, Adedipe argued the composition of growth offers reasons for optimism.
A key takeaway from the data is that the non-oil economy continues to dominate output, contributing more than 90% of GDP. Within that mix, telecommunications, trade, crop production, manufacturing and financial services were highlighted as major growth drivers. For a country long seeking to diversify away from oil dependence, that trend suggests the rebalancing effort is gaining traction.
Adedipe pointed in particular to stronger agricultural and manufacturing growth compared with the same period a year earlier. Agriculture, in his view, is especially significant because of its direct links to food supply, rural employment and poverty reduction. Manufacturing, meanwhile, remains central to industrialization and job creation, even as producers continue to grapple with elevated financing costs, exchange-rate pressures and operating constraints.
Construction also emerged as a bright spot, expanding by about 6.38%, a pace Adedipe said underscores the sector’s role as a multiplier for ancillary economic activity. Stronger construction activity can support jobs directly while also stimulating demand across supply chains including cement, metals, transport and services.
Another standout was information and communications technology. Adedipe said ICT growth rebounded sharply to roughly 10.95% in the first quarter, recovering momentum that had weakened in 2025. That rebound matters not only because of the sector’s rising contribution to GDP, but also because digital infrastructure, innovation and tech-enabled services are increasingly seen as critical to Nigeria’s medium-term competitiveness.
The industrial picture, however, remains mixed. Manufacturing growth improved by 3.29% in real terms, but the interviewer noted that nominal growth slowed sharply from a year earlier, reflecting persistent strains on industrial conditions. Nigeria’s manufacturers have repeatedly warned that high interest rates, expensive credit and weak lending appetite to the real sector are constraining expansion.
Adedipe acknowledged those concerns but defended the Central Bank of Nigeria’s decision to leave the monetary policy rate unchanged at 26.5%. In his view, policymakers are balancing domestic growth considerations against heightened global uncertainty, including geopolitical tensions in the Gulf that have affected major commodities such as crude oil, refined petroleum products, fertilizers and liquefied natural gas.
Those shocks, he said, have added to inflation pressures globally, with Nigeria also seeing inflation tick higher in March and April 2026 after a prior downward trend. Against that backdrop, the case for caution has strengthened.
Still, Adedipe argued Nigeria is relatively well-positioned compared with many peers. He said the country now benefits from stronger buffers, including a reduced dependence on imported refined fuel since the Dangote refinery became operational, as well as external reserves that cover more than 12 months of imports based on the liquid portion of reserves. That, he noted, is well above the International Monetary Fund’s three-month benchmark and stronger than several regional peers.
He also said keeping inflation in check may ultimately serve manufacturers better than a premature rate cut would, since runaway price pressures would quickly feed through to input costs and business expenses. Supporting that view, he pointed to Nigeria’s Purchasing Managers’ Index, which remains above the 50-point threshold associated with improving business confidence. In his reading, that suggests manufacturers remain cautiously optimistic about operating conditions over the next six months.
Looking ahead, Adedipe said the first-quarter data point to stronger full-year growth than previously expected. Based on post-Covid trends and his firm’s modeling, he said the latest print implies Nigeria could grow by around 5.3% in 2026, above an earlier estimate of 4.5% and potentially the strongest annual expansion in the past five years.
That forecast also feeds into the broader debate over Nigeria’s ambition to build a $1 trillion economy by 2030. While some analysts have argued that only double-digit real growth can deliver that outcome, Adedipe said exchange-rate stability may be just as important as the pace of output growth. If authorities sustain transparency in the foreign-exchange market, improve price discovery and keep the naira relatively stable within a narrow band, he said Nigeria may not need double-digit growth to reach the target.
The implication is that macroeconomic management, especially around the currency, could prove decisive. A sharp devaluation or another bout of FX instability would complicate the path to a $1 trillion economy, even if real GDP continues to improve. Conversely, if the government maintains focus on agriculture, manufacturing, infrastructure and innovation-led sectors such as ICT, the growth story could broaden further.
For now, Nigeria’s first-quarter GDP report presents a mixed but constructive picture: headline growth slowed from the prior quarter, yet sectoral breadth improved, non-oil activity remained resilient and several key engines of diversification gained traction. For investors, the message is that the economy is not yet firing on all cylinders, but momentum may be stronger than the top-line slowdown initially suggests.