Nigeria’s 3.89% GDP growth masks deepening cost-of-living strain

Nigeria’s economy grew by 3.89 per cent in the first quarter of 2026, buoyed by strong performances in agriculture, telecommunications, financial services, construction and trade, but the latest growth figures continue to sit uneasily with the harsh economic realities facing households across the country.

Data released by the National Bureau of Statistics showed that the economy expanded at a faster pace than the 3.13 per cent recorded in the corresponding period of 2025, underscoring sustained momentum in the non-oil sector even as crude oil output declined.

The bureau stated that “Gross Domestic Product grew by 3.89 per cent year-on-year in real terms in the first quarter of 2026, higher than the 3.13 per cent recorded in the first quarter of 2025.”

On the surface, the numbers suggest a steady recovery. In reality, however, many Nigerians say the improvement has not eased the rising cost of living, with food inflation, transport fares, rent and utility costs still stretching household budgets.

In cities and rural communities alike, the disconnect between macroeconomic indicators and everyday survival remains stark, with consumers and small businesses still struggling under persistent price pressures.

The report showed that agriculture grew by 3.15 per cent during the quarter, a significant improvement from the near-stagnant 0.07 per cent recorded in the same period of 2025. Industry expanded by 3.50 per cent, while the services sector posted a 4.31 per cent growth rate.

The services sector remained the backbone of the economy, accounting for 57.73 per cent of total GDP in Q1 2026.

In nominal terms, total GDP rose to N110.79 trillion, up from N94.05 trillion recorded a year earlier, reflecting broad-based expansion in key sectors.

However, crude oil production declined during the period. Average output fell to 1.55 million barrels per day, down from 1.62 million barrels per day in Q1 2025.

Despite the drop in production volumes, the oil sector still recorded modest real growth of 2.57 per cent, though its contribution to GDP slipped slightly to 3.92 per cent.

The non-oil sector remained the main driver of growth, expanding by 3.94 per cent and contributing 96.08 per cent of total GDP.

According to the NBS, growth was driven largely by telecommunications, crop production, trade, construction, financial services, real estate and transportation.

The Information and Communication sector was among the strongest performers, growing by 10.98 per cent and accounting for 11.31 per cent of GDP, while finance and insurance expanded by 8.54 per cent.

Construction also recorded solid growth of 6.38 per cent, reinforcing its role in infrastructure development and job creation.

Trade remained the single largest contributor to the economy at 17.89 per cent, followed by crop production at 17.38 per cent and real estate at 13.10 per cent.

Other sectors, including transportation, hospitality, entertainment and water management services, also posted positive growth, helping to sustain overall economic expansion.

However, not all sectors performed positively. Electricity, gas and steam supply contracted sharply by 15.30 per cent, reflecting ongoing structural challenges in Nigeria’s power sector that continue to affect productivity and industrial competitiveness.

Economists note that while headline GDP growth signals resilience, it does not necessarily translate into improved welfare for citizens, especially in an economy still battling high inflation and weak purchasing power.

For many Nigerians, wage earnings have failed to keep pace with rising prices, leaving households to adjust spending habits or cut back on essential consumption.

Markets across the country continue to reflect this pressure, with food prices remaining high and transportation costs fluctuating due to fuel and energy challenges.

Small and medium-sized businesses also report rising operating costs, particularly from electricity shortages, logistics expenses and exchange rate volatility.

The figures also fell slightly below projections from the World Bank, which had expected stronger growth for Nigeria in 2026.

In its April 2026 Africa’s Pulse report, the World Bank projected Nigeria’s economy would expand by 4.1 per cent in 2026 and 4.2 per cent in 2027, though it revised earlier estimates downward due to global uncertainties and oil market volatility.

The lender warned that while Nigeria’s non-oil sector continues to show resilience, external shocks and domestic structural weaknesses could limit the pace of recovery.