The National Bureau of Statistics on Monday reported that Nigeria’s Gross Domestic Product (GDP) contracted by -6.1% in the second quarter of 2020.
Economic growth during the year was adversely affected by the crash in oil prices in the second quarter of the year as well as the Covid-19 pandemic. Oil GDP contracted by -6.63% while non-oil GDP contracted by -6.05%.
In terms of sub-sectors, the Services sector contracted by -6.78% while Industries performed worse with a contraction of -12.05%. The agriculture sector however reported a tepid growth of 1.58%. Several sub-sectors fell into recessions as other factors such as border closure, import substitutions, and weak purchasing power has also negatively impacted economic growth.
For example, the Trade sector has posted negative GDP growth rates since the second quarter of 2019. The sector has been the hardest hit by border closure policies and lack of forex to import items. In addition, accommodation and Food services, which include hotels and restaurants fell into recession after posting two consecutive quarters of GDP growth rate.
Despite the challenges that have resulted in negative GDP growth rates for key sectors, there are sectors in the economy that escaped avoided a contraction completely and instead recorded GDP growth rate in the second quarter of 2020.
Fastest Growing Sectors
Telecommunications which is a sub-sector under the Information and Communication sector reported an 18.1% GDP growth rate in the second quarter of the year was one of the fastest-growing sectors in the country. The sector nearly doubled the 9.71% GDP growth rate recorded in the first quarter of 2020. The Telecommunications sector includes GSM Giants like MTN and Airtel.
The Financial Institutions sub-sector reported a GDP growth rate of 28.41% one of the fastest in the economy. This sector includes banks and other non-banking financial institutions. The sector recorded a 24$ GDP Growth rate in the first quarter of 2020.
The health sector which many thought will benefit immensely from the Covid-19 Pandemic only reported a GDP growth rate of 1.89% up from 1.06% in the first quarter of the year.
Other sectors with impressive GDP growth rates
What the numbers mean: Businesses in Sectors with the fastest GDP Growth rate suggest areas of growth in a largely battered economy. These are sectors where money is currently being made at a faster rate than inflation. By reporting economic growth these sectors will be able to do the following;
- Attract significant investments
- They will also spend a lot more on capital expenditure which is in line with the growth figures
- The will also be highly considered by commercial banks for loans
- For shareholders and investors, they will be able to pay a dividend and produce a tangible economic growth rate
- Employees in this sector have less pressure for job losses and could in fact attract salary raises.
- These are sectors that will spend significantly on scaling their operations.