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Contrary to our previous report on the slowdown, Nigeria’s real GDP actually grew by 3.89% year-on-year in the first quarter of 2026, an acceleration from 3.13% in the first quarter of 2025, according to a report from the National Bureau of Statistics, NBS.
The expansion was driven by a recovery in agriculture and stronger non-oil activity, while oil production and electricity supply contracted.
Nominal GDP reached ₦110.79 trillion, up 17.79% year-on-year, reflecting both real growth and inflation pass-through.
THE CONCLAVE reports that the story is one of resilient non-oil sectors supporting the economy while oil continues to underperform.
Services remain dominant but have lost some momentum, raising questions about the sustainability of growth without greater support for the industrial and energy sectors.
—-Sector Breakdown: What Drove Growth—
Services remain the engine, but growth has slowed
– Contributed 57.73% to real GDP, up from 57.50% in Q1 2025.
– Growing 4.31% year-on-year, slightly slower than the previous year’s 4.33%.
– Keys: ICT/Telecommunications at 10.98%, Finance & Insurance at 8.54% and Arts, Entertainment & Leisure at 11.25%.
– Weaknesses: Electricity, gas, steam and air conditioning contracted by 15.30%* in real terms, the steepest decline across all sectors. Accommodation and food services grew 4.36%, but far below the nominal increase of 60.33% in the first quarter of 2025.
—Non-oil sector remains dominant—
– Grew 3.94% year-over-year, compared to 3.19% in the first quarter of 2025.
– It accounted for 96.08% of GDP, with agricultural production, trade, manufacturing, real estate, construction and road transport as the main contributors.
– Agriculture recorded a strong rebound to 3.15% from 0.07% in the first quarter of 2025, although it contracted by 35.24% on a quarterly basis due to seasonality. Agricultural production remains equal to 66.76% of the sector’s nominal value.
—Sector growth remained stable—
– Expanded 3.50% year-over-year versus 3.42% in Q1 2025.
– Manufacturing improved to 3.29% from 1.69% a year earlier, led by cement and food/beverage.
– Construction accelerated to 6.38%, the strongest year-on-year pace in recent quarters, supported by public and private projects.
—The oil sector continues to act as a drag on production volume—
– Average production fell to 1.55 mbpd from 1.62 mbpd in the first quarter of 2025.
– Real growth was 2.57%, up from 1.87% year-over-year, but down sharply from 6.79% in the fourth quarter of 2025.
– Oil’s share in GDP fell to 3.92% from 3.97% a year ago. The mining and quarrying sector as a whole grew just 1.89% in real terms, despite a nominal 16.37% increase in crude oil activity, indicating that price effects masked weak volumes.
—Structural changes in the first quarter of 2026—
1. Deepening non-oil dependency: The non-oil sector contributed 96.08% to GDP, the highest first-quarter share since at least 2025. The economy is less dependent on crude oil volumes but is still exposed to swings in oil prices and foreign exchange through tax revenues.
2. The recovery of agriculture is fragile: the growth of 3.15% represents a positive break from near stagnation, but the decline of -35.24% on a quarterly basis shows strong seasonal dependence and limited irrigation capacity in the dry season.
3. The energy sector remains a bottleneck: the 15.30% real contraction in electricity supply directly limits the productivity of the manufacturing and services sectors. It is the only major sector in negative territory.
4. Finance and ICT continue to outperform: Finance and Insurance grew 8.54% year-on-year, with 90.6% driven by financial institutions. ICT at 10.98% confirms telecommunications and digital services as the most dynamic sector of the economy.
—Implications—
For growth prospects:
The 3.89% result puts Nigeria on track to surpass 3.13% in 2025, but reaching 4%+ for the year requires oil production to stabilize above 1.6 mbpd and electricity supply to recover. Without this, growth will remain driven by consumption and services, with limited job creation in the tradable goods sector.
For inflation and exchange rate:
Nominal GDP growth of 17.79% far exceeds real growth, implying high persistence of inflation. Trade grew 38.15% in nominal terms but only 2.08% in real terms, a sign that exchange rate pass-through is still influencing prices.
For politics:
– Energy sector reform is urgent: the collapse of electricity production undermines gains in manufacturing and ICT.
– Agriculture requires irrigation and support to mitigate seasonal volatility.
– Oil sector governance and security remain key to unlocking the 1.7-1.8 mbpd target in Budget 2026.
—Risks and Control Points for Q2 and Q4 2026—
– Oil production security: any further decline below 1.5 mbpd will bring overall growth below 3.5%.
– Fiscal pressure: Lower oil volumes mean tighter fiscal space, even if prices hold up.
– Base effects in services: Strong growth in the ICT and financial sectors could moderate as the base normalizes.
– Seasonality in agriculture: The second and third quarters will determine whether the first quarter recovery translates into full-year gains.
-Conclusion-
The first quarter of 2026 shows an economy growing faster but on a narrow basis. Non-oil sectors, particularly ICT, finance, agriculture and construction, are bearing the brunt. Until oil production stabilizes and the energy sector recovers, Nigeria’s growth will remain below potential and highly exposed to external shocks.
