Nigeria's economy expanded by 2.01% y/y in the first quarter of 2019 (Q1'19) from growth of 1.89% (Q1'18) in the corresponding quarter, on the back of improved aggregate demand underpinned by election spending within the period under review. The Q1'19 growth was the best first quarter performance of the economy since 2015. However, the GDP growth result was below the 2.38% growth recorded in Q4'18, consequently dampening the upward growth trajectory of the economy since Q2'18.

1. Nigeria
Economic Alert
GDP growth advanced in Q1'19 on increased
election spending
Nigeria's economy expanded by 2.01% y/y in the first quarter of 2019
(Q1'19) from growth of 1.89% (Q1'18) in the corresponding quarter, on the
back of improved aggregate demand underpinned by election spending
within the period under review. The Q1'19 growth was the best first quarter
performance of the economy since 2015.
However, the GDP growth result was below the 2.38% growth recorded in
Q4'18, consequently dampening the upward growth trajectory of the
economy since Q2'18.
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Q1'19 GDP report: Economic
growth moderate as GDP per
capita declines…
www.pwc.com/ng
GDP per capita declining as economic growth
remains marginal
The economy is expanding at a slower rate than the population growth.
Nigeria's population growth rate stands at 2.6% yet the GDP growth
increased by 2.01%, which could explain the rise in poverty and
unemployment level.
For instance, income per capita has been shrinking since 2015. It fell to
1
approximately N340,000 in 2018 from its peak of N370,185 in 2014 .
The free-fall in Nigeria's GDP per capita since 2015 coupled with the
double-digit inflation rate, as reflected by food prices, has impacted living
standards.
South Africa's population in 2017 was 30% the size of Nigeria's. Yet, in
terms of GDP per capita, South Africa's is 3.1 times larger than Nigeria.
-3
-2
-1
0
1
2
3
-30
-20
-10
0
10
20
30
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2016 2017 2018 2019
Non-oil Oil Real GDP
Source: NBS, PwC analysis
Real GDP, oil and non-oil growth rates (%)
300
310
320
330
340
350
360
370
380
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Nigeria's real GDP per capita (N'000)
Source: NBS, PwC analysis
550
894
1,169
1,756
2,412
2,785
3,289
3,414
4,820
7,525
Ethiopia
Tanzania
Kenya
Ghana
Nigeria
Egypt
Morocco
Angola
Algeria
South Africa
Real GDP per capita (PPP) of top ten African economies (US$), 2017
Source: World Bank, PwC analysis *PPP = Purchasing Power Parity
1. Income per capital figures are adjusted for inflation
All data used in the report sourced from NBS and the World Bank

2. Oil sector growth still negative while non-oil
sustains positive performance
The oil sector continues its negative growth trend (Q1'19: -2.4% y/y) in the
last four quarters, even as oil production increased to 1.96 million barrels
per day (mbpd) with oil price averaging US$67.47 in the same period.
The non-oil sector, on the other hand, grew by 2.47% in Q1'19 (Q1'18:
0.76%, Q4'18:2.7%), driven by positive performances in key segments like
Information & Communications Technology (ICT), Agriculture and
Transportation & Storage.
Agricultural output growth still driven by crop
production
The agriculture sector experienced growth of 3.17% y/y in Q1'19 (Q1'18:
3%). Crop production continues to drive agricultural growth, accounting for
85% of the agriculture GDP.
Overall, the agriculture sector's contribution to GDP increased marginally to
21.9% compared to 21.7% in the corresponding quarter of 2018 and
26.2% in Q4'18.
Manufacturing activities dampened by
lackluster performance of oil refining
The manufacturing sector grew by 0.81% y/y in Q1'19, below GDP growth
of 2.35% in the preceding quarter (Q1'19) and 3.39% in the corresponding
quarter of 2018. Recovery in key subsectors like the cement industry,
which posted 2.81% growth (Q4'18: 0.98%), was dampened by lackluster
growth in the oil refining segment with negative growth of -49.62% in
Q1'19, the largest single decline since Q1 2016.
While FX liquidity and exchange rate stability have had a positive knock-on
effect on manufacturing activities, challenges such as high energy costs
and interest rates, policy reform uncertainties, among others, continue to
hamper growth across key manufacturing sub-sectors.
Reforms needed to drive growth in the economy
Slow reforms in the power sector, absence of full deregulation in the
petroleum sector value-chain, multiplicity of exchange rates, among other
factors, are key downside risks that constrain investments and long term
growth. In our previous economic report, we stated that the prolonged
delay in implementing overdue reforms in the economy will continue to
hamper growth.
We do believe that the economy remains fragile given the susceptibility to
shocks from the global oil market, which has direct impact on the
government's fiscal obligations.
To insulate the economy from externally and internally induced shocks,
government needs to implement far-reaching policy strategies that
prioritize growth in key non-oil sectors like agriculture, manufacturing and
technology, as well as pass the Petroleum Industry Governance Bill (PIGB)
to provide much-needed reforms in the oil sector.
Intensifying focus on the implementation of the Economic Recovery and
Growth Plan (ERGP), as well as enhanced investment in key infrastructural
projects like transportation and power will improve non-oil sector growth,
particularly in manufacturing, which will in turn improve productivity and
stimulate macro-economic growth.
© 2019 PricewaterhouseCoopers Limited. All rights reserved. In this document, PwC refers to PricewaterhouseCoopers Limited (a Nigerian limited liability company), which is a
member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity.
1.98
1.84
1.94
1.91
1.96
1.75
1.8
1.85
1.9
1.95
2
58
60
62
64
66
68
70
72
74
76
78
Q1'18 Q2'18 Q3'18 Q4'18 Q1'19
Oil production (mbpd) Oil price (US$/barrels)
Source: NBS, PwC analysis
Nigeria's crude oil production vs oil price
-8
-6
-4
-2
0
2
4
-60
-40
-20
0
20
40
60
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2016 2017 2018 2019
Oil refining Manufacturing
Manufacturing growth vs oil refining growth
Contacts
Andrew S. Nevin
Partner & Chief Economist
andrew.x.nevin@pwc.com
Omomia Omosomi
Senior Industry Analyst
omomia.omosomi@pwc.com
Kelvin Umweni
Industry Analyst
kelvin.umweni@pwc.com
Oyinkansola Ilupeju
Analyst
oyinkansola.ilupeju@pwc.com