Against the backdrop provided by the incumbent government's professed ambitions for the country, the 4.43 per cent by which the economy grew on an annualised basis in the second quarter of this year is far from the kind of high-productivity growth trajectory that the country needs. As further evidence, though, of the economy's continued return to normalcy, it is a more than welcome outcome. In this latter sense, it reinforces the messaging from the 3.89 per cent growth recorded in the first three months of this year. And it is also the strongest second quarter performance recorded by the economy in the last three years, up from the 4.23 per cent recorded in the same period, last year.
In the last twenty years, the economy has skittered between the low (about 2--3 per cent average annual growth rates) of the last decade, in which growth was too tepid to raise living standards, even as population growth pressures prevailed, and periods before that, when high oil prices and investment booms produced bursts of 6--7 per cent average annual growth rates. The lessons from the limited reforms put in place by the Tinubu administration go beyond the fact that they have been able to nudge the economy towards a semblance of recovery from yesterday's economic lassitude. These lessons matter more in our present circumstances as an admonitory codicil to the government's current medium-term aspiration of a 7 per cent trend growth rate for the economy.
While this higher growth rate is necessary if the economy is to get ahead of population growth and raise living standards, our policy establishment cannot forget that successive governments in the country have struggled to convert growth episodes into sustained, productivity-driven expansion. Against The Renewed Hope Development Plan's (2026--2030) goals of diversification, productivity, human capital, and private sector-led growth, therefore, the most encouraging part of the second quarter 2026 growth numbers is the extent to which the economy has moved beyond crude oil-led growth. The National Bureau of Statistics (NBS) reports that the non-oil economy (up 4.31 per cent in Q2 this year) accounted for 95.84 per cent of real domestic output.
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Yet, the fact that the economy is no longer waiting for crude oil production to rescue aggregate output, does not mean that it has been transformed. What to make of the fact that industry growth slipped from 7.46 per cent in the second quarter of last year to 3.96 per cent in the same period this year? Or that manufacturing was up 3.24 per cent in real terms in the second three months of this year, while its share of domestic output fell from 7.81 per cent to 7.72 per cent year on year? Or that real electricity, gas, steam output contracted by 10.63 per cent? There are two possible responses to these questions. The first one invites us to recognise a major dilemma confronting efforts to reform this economy. And that is that an economy cannot sustainably grow at a trend rate of 6--7 per cent annually if one of its fundamental productive inputs -- reliable electricity -- is shrinking. The second describes the main deliverable of successful reforms to the way this economy is run: if the Nigerian economy is to transit from its current low-income/low-productivity level to the sort of place envisaged by Nigeria Agenda 2050, industry must become the main transmission mechanism between agriculture and the services sector.
Which of these (the dilemma confronting and the goal of reforms) does the decomposition of the growth story told by the Q2 2026 GDP numbers help? Here, if you separated the beautiful parts of the growth narrative, especially telecommunications and information services from the rest, the picture you are left with is more of an economy recuperating across a broad front with a few highly dynamic modern sectors pulling the average up, rather than one going through a dramatic productivity boom. The fact that despite its impressive growth outcomes in the most recent report on the economy's performance, a quarter of the economy (in agriculture) continues to produce at relatively lowproductivity levels, while employing a large proportion of Nigerians is worrisome. To boost per capita income, agricultural output must not only grow faster than 4 per cent annually, but we must also raise agricultural productivity dramatically and move the labour freed up by this process into economic sectors with higher returns to invested funds.
If nothing else, therefore, the domestic output numbers for the second quarter of this year show that the structural transformation problem that the economy has long faced, and which the Nigeria Agenda 2050 pays eloquent lip-service to has not been resolved. Thus, while there are three reasons from the report to remain upbeat about the economy's trajectory (acceleration of growth, strengthening of the non-oil economy, and oil production recovery), there are four arguably weightier reasons for worry (growth is still beyond the trend rate that we all know is necessary for the economy's sustainable development, industry is losing momentum, the manufacturing sector's underperformance is worrying, and we cannot ignore the fact that electricity is shrinking).
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All of this leads to the one question that accompanied me through every page of the report: Is Nigeria's economy now growing faster because the reforms put in place by the incumbent federal government have removed the macroeconomic constraints on growth, or is it growing faster because the economy is recovering from the extraordinary disruption of the Buhari/Emefiele diarchy?
Uddin Ifeanyi, a journalist manqué and retired civil servant, can be reached @IfeanyiUddin.
