Over 3% growth in first quarter of Nigerian’s economy

By Philippine Duru

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Nigeria’s economy recorded a 3.89 per cent year-on-year growth in the first quarter of 2026, reflecting continued resilience despite persistent inflationary pressures and global economic uncertainties, according to the latest national accounts data.

The growth performance was largely driven by the services sector, which maintained its position as the biggest contributor to economic expansion, although the overall GDP growth rate was slightly lower than the level recorded in the preceding quarter.

Economic analysts described the latest figures as evidence that ongoing reforms and increased activity in non-oil sectors are helping to support the country’s economic recovery, even as businesses and households continue to grapple with elevated costs and tight financial conditions.

The services sector, which accounts for more than half of Nigeria’s economic output, led growth during the quarter through strong performances in telecommunications, financial services, information technology, trade, transportation, entertainment and professional services. Increased digital adoption, rising demand for financial technology solutions and expanding telecommunications services continued to boost economic activity across the sector.

Industry experts noted that Nigeria’s growing digital economy remains one of the strongest pillars of growth, attracting investment and creating new opportunities despite broader macroeconomic challenges.

The financial services industry also posted robust growth as banks, fintech firms and other financial institutions benefited from increased transaction volumes, greater digital banking penetration and continued reforms within the financial system.

While the economy expanded during the quarter, the pace of growth moderated slightly compared to the previous quarter, reflecting the impact of inflation, high interest rates and subdued consumer spending. Rising production costs continued to affect manufacturers and small businesses, while households faced pressure from higher food, transportation and utility expenses.

Economists said the marginal slowdown does not necessarily indicate weakening economic fundamentals but rather highlights the challenges associated with the country’s ongoing economic adjustment process.

“The economy is still expanding, but growth remains uneven across sectors. Services continue to carry much of the burden, while other segments of the economy are still recovering from the effects of inflation and structural constraints,” said a Lagos-based economic analyst.

The oil sector also contributed positively to growth as production levels improved compared to previous periods. Government efforts to tackle crude oil theft, pipeline vandalism and operational disruptions have helped stabilize output, supporting export earnings and fiscal revenues.

However, analysts stressed that Nigeria’s long-term economic sustainability will depend on reducing its dependence on oil by accelerating growth in manufacturing, agriculture and other productive sectors.

The agricultural sector recorded moderate growth during the quarter, supported by increased cultivation activities and government interventions aimed at improving food production. Nevertheless, insecurity in some farming regions, climate-related challenges and high input costs continued to constrain the sector’s full potential.

Manufacturing activity showed signs of recovery but remained under pressure from elevated energy costs, exchange-rate volatility and expensive borrowing conditions. Many manufacturers have continued to advocate for policies that lower production costs and improve access to foreign exchange.

The latest GDP data comes as the administration of President Bola Ahmed Tinubu intensifies efforts to implement economic reforms designed to strengthen public finances, attract investment and diversify the economy.

Government officials have repeatedly pointed to improvements in revenue generation, foreign exchange market reforms and infrastructure investments as foundations for stronger medium-term growth. International financial institutions have also projected continued expansion for Nigeria over the next two years, although they caution that inflation, debt servicing costs and global commodity price volatility remain significant risks.

Market observers believe that sustaining growth above 4 per cent will require deeper structural reforms, improved power supply, enhanced security and greater support for private-sector investment.

For investors, the latest GDP figures provide a measure of confidence that Africa’s largest economy remains on a growth trajectory despite ongoing challenges. The strong performance of services highlights the increasing importance of technology, finance and consumer-oriented industries in shaping Nigeria’s economic future.

As policymakers seek to build on recent gains, attention will now turn to whether stronger economic growth can translate into lower inflation, higher employment and improved living standards for millions of Nigerians. While the first-quarter figures suggest continued resilience, economists agree that the ultimate test of economic success will be how quickly growth impacts businesses, jobs and household incomes across the country.