Services, Farming Drive Nigerian Economic Growth by 3.89% in Q1’26 – NBS

Nigeria’s economy expanded by 3.89 per cent in real terms during the first quarter of the year, driven by a sharp rebound in agricultural output and sustained momentum in the services sector. Fresh data released on Monday by the National Bureau of Statistics shows a notable acceleration from the 3.13 per cent growth recorded during the corresponding period last year. However, the performance marks a slight deceleration from the 4.07 per cent growth achieved in the final quarter of last year. The headline figures show that recent currency adjustments and policy tightening are yielding erratic results across the domestic economy. Aggregate nominal output for the quarter rose to N110.79 trillion, presenting a headline expansion of nearly eighteen per cent.

The agricultural sector provided the most significant positive surprise of the quarter by staging a vital structural recovery. Crop production and farming activities grew by 3.15 per cent, completely reversing the stagnant 0.07 per cent expansion recorded twelve months ago. Rural security interventions and stable early rainfall patterns helped farming communities expand their cultivation areas across the middle belt. Despite this agricultural recovery, high food distribution costs continue to limit the financial benefits for urban consumers. The sector remains highly vulnerable to logistics bottlenecks and high seasonal transport inflation.

The sprawling services sector maintained its position as the primary engine of the domestic economy. Services expanded by 4.31 per cent during the three-month window, capturing a dominant 57.73 per cent share of total real output. Growth inside this sector remains heavily concentrated in telecommunications, banking, and digital financial transactions. This persistent concentration highlights a structural imbalance that economic planners in Abuja have struggled to address for years. While software and financial desks flourish, they fail to generate enough blue-collar employment to absorb the expanding urban workforce.

Conversely, the vital oil sector suffered a noticeable slump, dragging down the pace of the overall economic expansion. Real growth in oil extraction dropped sharply to 2.57 per cent, falling from the 6.79 per cent pace recorded last quarter. The contraction follows a decline in average daily crude production to 1.55 million barrels per day, down from 1.62 million barrels last year. Technical leaks, localized pipeline vandalism, and a lack of fresh upstream investment continue to cap national output well below statutory targets. The state remains dangerously reliant on this single volatile commodity to generate foreign exchange reserves.

The non-oil sector continues to carry the weight of national economic expansion by contributing ninety-six per cent of total output. Industrial manufacturing recorded an uninspiring 3.50 per cent expansion, constrained by high credit costs and energy tariff hikes. Business managers are deliberately scaling back expansion plans as the central bank maintains its hawkish interest rate structure. President Bola Tinubu faces an uphill battle to hit his ambitious annual growth targets before the next election cycle. For now, the latest statistics indicate an economy that is merely stabilizing rather than transforming.