Dare Babalola
The Centre for the Promotion of Private Enterprise has described Nigeria’s 3.89 per cent real GDP growth in the first quarter of 2026 as a sign of gradual economic recovery, while warning that weak electricity supply and fragile industrial productivity remain major threats to sustainable growth.
In a policy brief issued on Wednesday, the Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Dr. Muda Yusuf, said the latest GDP report released by the National Bureau of Statistics reflected improving macroeconomic stability, stronger business confidence and resilience in key non-oil sectors.
The growth rate represents an increase from the 3.13 per cent recorded in the corresponding period of 2025, although slightly below the 4.0 per cent posted in the fourth quarter of 2025.
According to Yusuf, the services sector remained the major driver of growth, contributing 57.73 per cent to GDP and expanding by 4.31 per cent, with ICT, financial services, trade, entertainment and construction recording strong performances.
He noted that the ICT sector grew by 10.98 per cent, financial services by 8.54 per cent, while the entertainment industry expanded by 11.25 per cent despite prevailing macroeconomic challenges.
The CPPE also highlighted the emergence of the trade sector as the largest contributor to GDP at 17.89 per cent, attributing the performance to improved exchange rate stability, better foreign exchange liquidity and easing inflationary pressures.
However, Yusuf warned that commerce alone could not deliver long-term economic transformation without stronger industrial capacity and increased domestic value addition.
The manufacturing sector grew by 3.29 per cent in the quarter, up from 1.13 per cent in Q4 2025, driven mainly by petroleum refining, food and beverages, cement, chemicals and pharmaceuticals.
Despite the improvement, the CPPE said manufacturing’s contribution to GDP remained below 10 per cent due to persistent structural challenges such as high energy costs, weak infrastructure, logistics bottlenecks and elevated interest rates.
The policy brief also identified the oil refining sector as the fastest-growing segment of the economy after it expanded by 37.46 per cent in the quarter.
Yusuf attributed the strong performance largely to the operations of the Dangote Refinery, which he said was helping to strengthen domestic value addition, reduce reliance on imported petroleum products and conserve foreign exchange.
The organisation further noted strong growth in quarrying and minerals at 23.41 per cent and cement production at 11.53 per cent, reflecting sustained construction activities across the economy.
However, the CPPE expressed concern over the sharp contraction of the electricity and gas sector by 15.30 per cent, describing it as the weakest-performing sector and a major threat to industrial productivity and economic competitiveness.
According to Yusuf, the continued dependence of businesses on diesel and petrol-powered generators is worsening operating costs across manufacturing, hospitality, agro-processing and digital sectors.
He called for urgent reforms in the power sector, including stronger investment in transmission infrastructure, improved market liquidity, accelerated metering and governance reforms to restore investor confidence.
The policy brief also noted contractions in the aviation and textile sectors, citing rising operating costs, exchange rate pressures and deindustrialisation concerns.
While describing the overall GDP report as encouraging, Yusuf stressed that economic growth must translate into improved living standards, stronger purchasing power and better welfare outcomes for Nigerians.
He urged the government to focus future reforms on industrialisation, power sector improvements, export competitiveness and productivity enhancement to achieve sustainable and inclusive economic growth.
