Telecommunications lifts Nigeria’s Q1 GDP to highest in 7 years

According to data from National Bureau of Statistics (NBS).

Industry, which grew 14.5% from 7.69% in the same period last year, contributed the most to GDP in the first quarter.

“The telecom industry has witnessed strong growth based on increasing revenue base due to improved mobile phone penetration,” said Omotola Abimbola, senior portfolio manager at the investment bank. based in Lagos, Chapel Hill Denham.

Despite the contraction in growth in the oil sector, growth in the non-oil sector was sufficient to support the economy in the first quarter, although there was a slowdown compared to the fourth quarter of 2021, the drop in production of oil having appeared in the economy. performance.

“The non-oil sector performed much better than expected, especially thanks to the telecommunications sector, thus absorbing the shock from the oil sector,” Abimbola said.

The oil sector contracted by 26.04% (year-on-year) in the first quarter of 2022, indicating a decline of 23.83 percentage points compared to the rate recorded in the corresponding quarter of 2021, while the non-oil sector contracted. increased by 6.08%.

Analysts, however, said the high growth rate seen in the first quarter of this year is due to weak COVID 19-induced growth in the corresponding quarter of 2021, when the economy was still reeling from the pandemic. .

“Weak GDP growth in the first quarter of 2021, while the economy was still recovering from COVID-19, provided huge support for the seemingly high growth seen this year,” said Olaolu Boboye, economist and SSA strategist at Cardinal. Stone. .

According to the BNS, the non-oil sector was driven in the first quarter of 2022 mainly by the information and communication sector, trade, finance and insurance, agriculture and manufacturing industry.

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The information and communication sector in real terms increased by 12.07% in the first quarter of 2022, an increase of 5.06% compared to 7.28% in the same period last year, while that quarter over quarter, the sector was up 9.09% from 5.03. percent. The sector was mainly driven by the telecommunications industry.

The trade sector increased by 8.97 percentage points to 6.54% in the first quarter of 2022, compared to a contraction of 2.43% during the same period last year, and 1.20 percentage points percentage more than in the previous quarter when a growth rate of 5.34 was recorded. The contribution of trade to GDP was 16.13% compared to the 15.61% contribution of the previous year, and higher than the 15.66% recorded in the previous quarter.

The financial services sector grew by 23.24 percentage points in the first quarter of 2022, up 23.70 percentage points from a contraction of 0.46 recorded in the first quarter of 2021 and down 0.90 points percentage compared to the 24.14% recorded in the previous quarter.

The contribution of finance and insurance to real GDP totaled 4.51%, higher than the 3.77% contribution recorded in the first quarter of 2021

The agricultural sector in the first quarter of 2022 grew by 3.16 percentage points, an increase of 0.88 percentage points compared to the corresponding period of 2021 when a growth of 2.28% was recorded, and a decrease of 0.42 percentage point compared to the previous quarter where a growth rate of 3.58 percent were recorded.

However, the sector contributed 22.36% to the overall GDP in real terms in the first quarter of 2022, which is higher than the contribution of 22.35% in the first quarter of 2021 and lower than the contribution of 26.84% in the fourth quarter of 2021.

Real GDP growth in the manufacturing sector in the first quarter of 2022 was 5.89%, higher than that of the same quarter of 2021 by 2.49 points and higher than that of the previous quarter by 3.61 percentage points.

Its contribution to GDP in the first quarter of 2022 was 10.20%, higher than the 9.93% recorded in the first quarter of 2021 and higher than the 8.46% recorded in the fourth quarter of 2021.

“We expect growth to moderate to 2% in the second quarter when there could be 3% growth for the full year,” Boboye said.

Telecom Stars

Nigeria’s two largest telecommunications companies, MTN and Airtel, recorded outstanding performance in the first quarter of 2022.

According to Airtel Nigeria financial report, Airtel Nigeria’s total customer base increased to 44.4 million from 42.4 million the previous year, while data customer base increased by 14.9% to 20.3 million against 17.7 million the previous year.

Data collected from Nigerian Exchange Limited (NGX) showed that Airtel Africa’s share price rose 53.93% year-to-date (YTD) from N1050.5 on 5 January 2022 to N1470 on May 23, 2022.

On the other hand, MTN Nigeria, the country’s largest company by revenue, has also recorded remarkable growth.

Since a public offering last year, the company’s share price has increased by 26.4% to N249 as of May 23, 2022, from N197 on January 4, 2022.

“Approval of the payment services banking license for MTN and Airtel could well see both stocks continue to outperform throughout the year,” said Tajudeen Ibrahim, research director at the based investment bank. in Lagos, Chapel Hill Denham.

According to MTN Nigeria’s first quarter financial report ending March 2022, it recorded revenue growth of 22.2% to N470.98 billion from N388.32 billion in the same period last year .

Unlike Airtel Africa, which recorded total revenue of $1.22 billion, or 41.5% of Airtel Nigeria revenue, the first quarter financial report showed that MTN Nigeria recorded a growth of 22.2% to 470.98 billion naira from 388.32 billion naira in the same period last year.