Nigeria’s Financial and Insurance sector grew from 10.1 per cent in 2021 to 31.2 per cent in the first quarter of 2024, according to the newly launched Afrinvest report with the theme ‘Bank Recapitalisation Catalyst for a $1 Trillion Economy’.

The report, which was launched on Wednesday in Abuja, disclosed that the agriculture sector lagged behind other sectors.

Afrinvest, a Nigerian capital market holding company with specialised subsidiaries focusing on the unique but integrated wealth management needs of clients in West Africa, analysed the three-year growth trajectory of Nigeria’s seventh largest sector gross domestic product, revealing a mixed performance across various industries.

It showed that the agriculture sector had experienced a decline, from 2.1 per cent in 2021 to 1.9 per cent and 1.1 per cent in 2022 and 2023, respectively, to 0.2 per cent in Q1 2024.

This trend may be attributed to the sector’s vulnerability to climate change and the challenges posed by rural infrastructure.

According to the report, the mining and quarry sector has struggled, with a decline of 7.8 per cent in 2021 and -18.2 per cent in 2022. However, the sector has shown signs of recovery, with a growth rate of 6.3 per cent predicted for Q1 of 2024.

The real estate sector increased from 2.3 per cent in 2021 3.9 per cent in 2022, 1.7 per cent in 2023 and 0.8 per cent in Q1 2024.

Experts note that this trend may be attributed to the sector’s sensitivity to economic fluctuations and the high cost of housing.

The manufacturing sector has seen a gradual decline, from 3.3 per cent to 2.4 and 1.4 per cent in 2022 and 2023, respectively, in 2021 and to 1.5 per cent in Q1, 2024.

Analysts attributed the decline to the sector’s reliance on imported raw materials and the challenges posed by the country’s infrastructure.

The trade sector has also experienced a decline, from 8.6 per cent to 5.1 and 1.7 per cent 2022 and 2023, respectively, and to 1.2 per cent in Q1, 2024, due to the sector’s vulnerability to global economic trends and the impact of inflation.

The information and communication sector has shown a steady growth rate, increasing from 6.5 per cent in 2021 to 9.8 per cent in 2022 but declining to 7.9 per cent in 2023 and then 5.4 per cent in Q1 of 2024.

According to Afrinvest, Nigeria’s financial institutions have demonstrated remarkable resilience, with the sector expanding by 18.4 per cent in real terms between Q3:2023 and Q1:2024, making it the fastest-growing sector among the country’s seven largest GDP sub-components.

“The financial institutions’ activity has remained resilient, expanding by 18.4 per cent in real terms between Q3:2023 and Q1:2024, to emerge as the fastest growing sector among Nigeria’s seven largest GDP sub-components,” Afrinvest noted.

It attributed the performance to several factors, including “increased investment in vertical and horizontal business expansions, rapid growth in earnings from digital channels (aided by a reduction in physical cash in circulation), a favourable interest rate environment, and a positive spillover effect from naira devaluation (owing to net FCY asset holdings)”.

Looking ahead, Afrinvest noted that it expected growth in the broader economy to range between 3.0 per cent and 4.0 per cent in the near term, owing largely to weak institutional capacity to translate reform goals into visible gains.

However, the company expected the banking sector growth to remain firm over the near term, even as industry players commence capital-raising activities to meet the new recapitalisation requirements.

“We expect growth in the broader economy to range between three per cent and four per in the near term. Meanwhile, we expect banking sector growth to remain firm over the near term,” Afrinvest stated.

Addressing the contribution of agriculture to GDP, the Managing Director of Saro Africa International, Rasheed Sarumi, who spoke at the launch of the report, emphasised the crucial role of agriculture in driving Nigeria’s economy towards achieving a $1tn status.

“To achieve a $1tn economy, we need excess agricultural output, which will drive sustained industrialisation, productivity, and employment,” he noted.

He noted that despite improvements in productivity and production, inflation remained a concern, and the government’s involvement in agriculture over the past 50 years had not yielded significant change.