Year in Review: Financial Sector Leads Nigerian Economy Top-Performing Sectors in 2023
Legit.ng journalist Dave Ibemere has over a decade of experience covering tech, energy, stocks, investments, and the economy.
Nigeria's economy witnessed fluctuating growth in 2023 as businesses grappled with many challenges.
The National Bureau of Statistics (NBS) recently released Nigeria's Gross Domestic Product (GDP) report for the third quarter of 2023.
The report indicated that the economy grew by 2.54% year-on-year in real terms, a slight increase from the 2.51% growth recorded in the second quarter of 2023.
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While in the first quarter, the Nigerian economy achieved a growth rate of 2.31%.
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The fourth-quarter GDP growth rate is yet to be released.
The overall performance suggests that the Nigerian economy will likely experience a slower growth rate in 2023 compared to 2022.
Throughout 2022, the growth rates for the four quarters were 3.11%, 3.54%, 2.25%, and 3.52% respectively.
Best performing sectors in 2023
Legit.ng presents the best-performing sectors in the Nigerian economy IN 2023, based on data from the National Bureau of Statistics GDP reports.
Ist- Financial and insurance (28.21%)
The financial and insurance sector, as of Q3 2023, tops the list of the best-performing sectors in the Nigerian economy with real growth of 28.21%.
This marks an increase compared to the 12.70% recorded in the previous year (2022).
The sector benefited from President Bola Tinubu's naira floating policy, as reflected in the stock performance of publicly traded financial institutions on the NGX.
Furthermore, the financial institution's subsector recorded a positive growth rate of 29.66% in the year under review, compared to the 12.03% recorded in 2022(Q3).
It was, however, a different story for the insurance sector, which slowed down in terms of growth rate to 15.21% from 19.09 % captured in Q3, 2022.
2nd - Water and waste management(11.93%)
The waste management sector, which involves water supply, sewage, waste management and sewage, grew by 13.6% in Q3, 2023, representing the 2nd best performing for the year.
Compared to the previous year, the sector improved significantly compared to the 3.89% reported in the same period in 2022.
3rd- Information and communication (6.69%)
The information and communication sector is the third-best-performing sector in 2023 at the end of the third quarter.
Although the sector's growth rate slowed to 6.69% in Q3, 2023, compared to 10.53 % in Q3, 2022, it still outperformed most sectors to secure its post among the best.
For the sub-sectors, the telecommunications and information services subsector, which includes some of the largest companies in Nigeria, such as MTN and Airtel, grew by 7.74% in Q3 2023, showing a slowed growth from the 10.06% recorded during the same period in 2022.
Other subsectors, such as publishing, motion pictures, sound recording and music production, and broadcasting, recorded 3.10%, -1.01%, and 3.18% growth rates as of Q3, 2023.
4th- Arts, entertainment, and recreation (4.45%)
Arts, Entertainment, and Recreation made it among the top performing sectors after a growth rate of 4.45% as of Q3, 2023.
This represents a slower growth rate compared to the 7.79% reported in the same period of 2022.
5th- Construction (3.89%)
Just like most sectors, activities in the construction sector slowed no thanks to the various policies introduced in the year, which made imports more expensive and cut down on companies' budgets.
NBS reports that construction sectors recorded a 3.89% growth rate as of the third quarter, slower than the 5.52% reported in the same period of 2022.
Other sectors' performance as of Q3, 2023
- Accommodation and Food Services - 3.57%
- Human Health and Social Services - 2.93%
- Administrative & Support Services - 2.77%
- Professional, Scientific, and Technical Services - 2.15%
- Public Administration - 2.05%
Expert speaks
Reacting to Nigeria's economic performance, economist Kelvin Emmanuel explained that the GDP growth rate reflects the capital squeeze resulting from various factors.
He also noted that Nigeria has a weak balance of payment position and it has impacted foreign investments.
Emmanuel added:
“Another is the government's failure to settle unresolved FX forwards has also contributed to the situation.
"Moreover, the high inflation and high-interest rate environment has reduced corporate incentives to borrow from the banking system.
"As capital per unit of labor decreases and employment growth stagnates, the GDP growth rate is inevitably impacted."
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