Shrinking Industrial Base, Dominant Informal Sector Undermine Economic Growth, NESG Warns

The Nigerian Economic Summit Group (NESG) has raised severe considerations over the nation’s weakening industrial capability and the overwhelming dominance of the casual sector, warning that these structural deficiencies are threatening Nigeria’s long-term financial progress and growth.

Presenting findings from a brand new analysis research on Wednesday, the Group disclosed that regardless of a number of guarantees and coverage pronouncements by successive administrations on industrialisation, Nigeria’s financial system stays casual, primarily posing vital challenges to income mobilisation, efficient coverage planning, and sustainable growth.

In line with the report, the casual sector at the moment accounts for 54.4 per cent of the financial system, whereas the formal sector lags behind at 45.6 per cent. Audio system on the on-line occasion stated this imbalance makes it troublesome for the federal government to adequately collect knowledge, gather taxes effectively, and implement broad-based fiscal planning methods.

The NESG’s evaluation additionally revealed that Nigeria’s industrial base continues to contract, with actual Gross Home Product (RGDP) declining over the past six years. Particularly, the nation’s RGDP dropped from N43.1 billion in 2019 to N35.5 billion by 2024, which the Group described as alarming.

“This pattern signifies a steady erosion of productive capability inside key sectors, notably trade, which has lengthy been thought-about essential to financial diversification and resilience,” the report acknowledged in a presentation titled “X-rqying the Knowledge Insights from the Rebased GDP.”

Talking through the presentation, the NESG senior economist and analysis crew lead,

Dr. Religion Iyoha famous that whereas the companies sector has overtaken agriculture and trade in contributing to GDP, this progress provides restricted inclusive advantages on account of its focus in low-productivity, casual enterprises.

The report additionally highlighted the affect of naira depreciation on family welfare. Dr. Iyoha defined that though latest devaluation measures have helped stabilise the international alternate market, they’ve additionally considerably eroded customers’ buying energy.

“Foreign money depreciation and falling buying energy have dampened welfare positive aspects,” she stated, noting that many Nigerians battle to afford important items and companies.

Supporting this statement, the analysis confirmed that Nigeria’s per capita GDP has plummeted from $2,777 in 2019 to $1,036 in 2024, reflecting a pointy decline in particular person financial well-being and widening poverty ranges.

Ekundayo Mesagan stated the rebased GDP will give Nigeria a extra strong, diversified GDP going ahead, and assist her to focus on the sectors that may guarantee inclusive progress and job creation. “It would give us sector specifics to put money into,” he states. Meagan acknowledged that with the rebasing, the federal government can now be extra centered on essential micro segments of society. “It’s going to enhance the fiscal area and there will likely be sector knowledge availability,” he stated.

In response to the challenges, NESG is urging policymakers to redirect consideration towards high-impact, productivity-driven sectors that may foster inclusive progress and job creation. The Group burdened that structural transformation is urgently required to shift the financial system away from low-productivity, casual actions towards extra formalised, industrialised, and innovation-led progress.

“Nigeria’s financial system is structurally concentrated in low-productivity and extremely casual sectors,” NESG famous, warning that failure to deal with these bottlenecks may stall the nation’s aspirations for sustainable progress and growth.

The financial think-tank stated industrial, commerce and funding insurance policies have to be casual sector centric, particularly due to MSMEs.

However, it stated agriculture progress at 1.7 per cent implies meals costs will stay elevated on the again of demand stress.

NESG stated the rise in GDP per capita clouds the extent of inequality and poverty that exists in actual phrases. “To replicate true welfare dynamics there’s want for an up to date family survey knowledge and complementary metrics past GDP,” it acknowledged, including that productiveness stays structurally weak whereas highlighting the necessity for sector-specific interventions—expertise, vitality entry, mechanisation, and innovation.

“Exposes weak social protection with hundreds of thousands of Nigerians nonetheless missing medical insurance, entry to high quality schooling and unemployment profit. State of emergency response within the industrial sector. Nationwide Industrial Coverage is important to make sure coordinated and strategic industrial interventions,” NESG stated within the analysis doc.