Onome Amuge
Nigeria’s economy expanded by 4.23 percent in the second quarter of 2025, its strongest performance in four years, according to the National Bureau of Statistics (NBS). But while the headlines are dominated by the oil sector’s rebound, the underlying story of Nigeria’s economy lies in the steady but less flashy rise of services, real estate, ICT, and financial intermediation, which together are reshaping Africa’s fourth largest economy in the aftermath of GDP rebasing.
The new figures, released Monday, show a country at an inflection point. Growth has accelerated, but the composition of that growth, and what it means for businesses and households, is shifting in ways that are easy to miss behind the rebound in crude output.
In real terms, Nigeria’s GDP grew by 4.23 percent year-on-year in Q2 2025, up from 3.48 percent in the same quarter of 2024 and 3.13 percent in the first quarter of this year. Nominal GDP hit N100.73 trillion, almost 20 percent higher than in Q2 2024, reflecting both real expansion and inflationary pressures.
The industry sector was the standout performer, posting 7.45 percent growth, driven overwhelmingly by oil. Crude oil production rose to an average of 1.68 million barrels per day, its highest since 2020. The oil sector grew by 20.46 percent, compared with just 10 percent in Q2 2024.
However, beneath the oil story is the quieter effect of Nigeria’s GDP rebasing. Earlier this year, the NBS switched its base year from 2010 to 2019, recalculating the structure of the economy. This resulted in oil’s weight in GDP shrinking further, while services, real estate, ICT, and financial institutions grew stronger.
The services sector, which accounts for over half of GDP, grew by 3.94 percent in Q2, only slightly higher than the 3.83 percent recorded a year earlier. At first glance, this appears merely notable. But the sector’s breadth is where the real story lies.
Telecommunications and information services continue to expand, powered by rising mobile data consumption and fintech innovation. Real estate has also become one of the economy’s largest subsectors post-rebasing, supported by urban expansion and a growing mortgage market. Financial services are also consolidating their role, with banks and payment platforms driving digital inclusion.
For businesses, this shift means the fastest-growing opportunities are often outside oil and heavy industry. Startups in payments, logistics, and e-commerce are tapping into a consumer economy that, while squeezed by inflation, is still expanding in volume.
Agriculture, which still employs the majority of Nigerians, expanded by 2.82 percent in Q2, slightly better than the 2.60 percent growth a year earlier. Crop production was the main driver, reflecting ongoing demand for staples despite high food inflation.
Despite its rebound, oil contributed only 4.05 percent of real GDP in Q2. Oil’s small direct share but outsized macro influence is considered a paradox that underscores Nigeria’s economic dilemma.
According to analysts, higher oil output brings in more foreign exchange, strengthens fiscal revenues, and boosts overall GDP growth. Yet it does little for job creation or consumer welfare, given the capital-intensive nature of the industry.
Structural shifts: what rebasing revealed
The rebasing of GDP has changed not just the numbers but Nigeria’s economic identity. Oil, once thought to dominate GDP, is now a much smaller part of the picture. Real estate, financial services, and ICT are far larger than previously captured.
This recalibration matters for investors. For businesses, rebasing underscores the sectors to watch. Housing demand is rising in major cities. Telecoms are driving consumer behavior. Financial technology is reshaping payments. According to analysts, these shifts, though gradual, may prove more decisive for Nigeria’s long-term growth than the next oil production bump.
Despite the encouraging headline growth, the economic reality indicates that Nigeria’s recovery remains uneven. This is as inflation above 20 per cent erodes real incomes. Credit to the private sector is constrained. Power supply remains erratic.
Consumer spending is flat in real terms, with many households trading down to cheaper products. Retailers say volume growth is slow. Manufacturers complain about weak demand and high input costs.
For the business community, the Q2 data offer both reassurance and caution. The economy is seen expanding faster than last year. Oil has provided breathing space. Services remain resilient.
But the rebound is fragile, and sectoral opportunities are uneven. Exporters and oil-linked firms are optimistic. Consumer-facing companies are cautious. Agriculture-linked businesses are constrained.
Looking ahead, the government targets oil production of 2 million barrels per day by year-end. If achieved, GDP growth could stay above 4 percent for the rest of 2025. But sustaining momentum will depend on broader reforms.
According to analysts, to translate growth into jobs and prosperity, Nigeria must tackle structural bottlenecks including; insecurity, power supply, logistics, and inflation. Without these fixes, the economy risks remaining a story of numbers without impact.
For now, Nigeria’s Q2 rebound shows that growth is possible. But for businesses and households, the real question is whether this growth will finally trickle down.
