Nigeria’s GDP Grows, Rates Drop, Yet Businesses Face Hurdles as Exporters Thrive

Written By: Flipbz.org

Despite Nigeria’s GDP climbing to 3.46% in Q3 2024 and interest rates easing from a peak of 27.25%, local businesses are grappling with persistent challenges, while exporters are reaping significant gains. Data from Drinks and MICS, a Lagos-based market intelligence firm, paints a complex picture of Nigeria’s economic landscape, where growth in certain sectors contrasts sharply with ongoing struggles for others.

The National Bureau of Statistics reported a GDP uptick from 2.98% in Q2 2024, driven largely by a robust services sector, which grew by 4.32%. Non-oil activities, particularly agriculture and ICT, contributed 53.69% to GDP, signaling a shift from oil dependency. However, soaring production costs—fueled by a 31.9% inflation rate and naira depreciation—continue to squeeze manufacturers and SMEs. Many businesses face tight credit conditions and elevated borrowing costs, stifling expansion despite the Central Bank of Nigeria’s rate cuts.

Exporters, meanwhile, are riding a wave of opportunity. The naira’s weakened value has made Nigerian goods, such as agro-products and processed foods, more competitive globally. Drinks and MICS noted a surge in export revenues, with firms in agriculture and consumer goods reporting profit margins up to 20% higher than in 2023. This export boom, however, offers little relief to domestic-focused businesses battling high energy costs and supply chain disruptions.

Analysts at Drinks and MICS point to structural issues, including inconsistent power supply and logistical bottlenecks, as key barriers to broad-based growth. While the government touts reforms like subsidy removal and forex market liberalization, these measures have yet to translate into tangible relief for most enterprises. SMEs, in particular, struggle to access affordable financing, with commercial bank loans often carrying interest rates above 30%.

The report underscores a stark divide: exporters capitalize on global demand, while domestic businesses face an uphill climb. Policymakers are urged to prioritize infrastructure upgrades and targeted support for SMEs to balance the economic scales. As Nigeria navigates this uneven recovery, the resilience of its entrepreneurs remains a critical asset, but systemic reforms are needed to unlock broader prosperity.