Can Nigeria sustain GDP growth?

Nigeria's Gross Domestic Product (GDP) saw a growth of 3.19% year-on-year in real terms in the second quarter of 2024, as per data from the National Bureau of Statistics. This growth was primarily driven by the Services sector, which grew by 3.79% and contributed significantly to the aggregate GDP. Paul Alaje, a Senior Economist at SPM Professionals, delved into the details of the report in an exclusive interview with CNBC Africa. The discussion focused on the nuances between the non-oil and oil sectors, the impact of currency devaluation on GDP, and the trajectory of Nigeria's economic growth moving forward. Alaje highlighted the stagnation in the oil sector, which saw minimal growth from 5.34% in 2023 to 5.7% in 2024. In contrast, the non-oil sector maintained a high contribution to GDP, with a slight decrease from 94.6% in 2023 to 94.3% in 2024. The nominal GDP also displayed a marginal uptick from N52 to N60.93 trillion, reflecting a growth from 2.98 to 3.19. Despite the positive growth, Alaje emphasized the need for significant improvements to elevate the GDP further. The conversation shifted towards the impact of currency devaluation on GDP comparisons with global peers. Alaje noted that evaluating Nigeria's GDP in Naira could be misleading and emphasized the importance of assessing the country's performance against global currencies like the US Dollar. The discussion underscored the challenges posed by currency devaluation and the necessity of adopting a broader perspective towards economic assessment. Furthermore, Alaje drew parallels with historical economic reforms in countries like Russia, Germany, and Japan to highlight the potential ramifications of policy decisions on economic growth. He cautioned against impulsive reforms that prioritize short-term gains over long-term sustainability, citing examples of countries like Argentina, Venezuela, and Zimbabwe that struggled due to hasty economic policies. Alaje emphasized the significance of data-driven and thoughtful policy measures to steer the Nigerian economy towards sustainable growth. As the conversation steered towards growth forecasts, Alaje projected a modest GDP growth rate of 2% to 3% for Nigeria in the upcoming quarters. He underscored the importance of aligning growth rates with population growth to achieve meaningful economic progress. While occasional spikes in growth may occur, the overall trajectory is expected to remain constrained by the population growth rate, signaling a need for holistic strategies to boost economic performance. In conclusion, the discussion with Paul Alaje shed light on the complexities of Nigeria's GDP growth trajectory, emphasizing the importance of comprehensive and sustainable economic policies to propel the country towards lasting prosperity.