Nigeria’s stronger-than-expected economic performance in the second quarter has reinforced its emergence as one of the growth centres of Sub-Saharan Africa, with the country and Ethiopia increasingly positioned to gain economic weight as South Africa struggles with persistent structural constraints.

Nigeria’s Gross Domestic Product (GDP) expanded by 4.4 per cent year-on-year in the second quarter, accelerating from 3.9 per cent in the preceding quarter. The performance, the strongest since the first quarter of 2022, exceeded market expectations and provided fresh evidence that the economy’s recovery is gaining traction.

The improvement was broad-based, with both the oil and non-oil segments recording stronger growth during the period.

The oil sector expanded by 7.3 per cent year-on-year in the second quarter, compared with 2.6 per cent in the first quarter, while the non-oil economy grew by 4.3 per cent, up from 3.9 per cent in the previous quarter.

The sectoral performance also showed a broadening of economic activity. Agriculture grew by 4.4 per cent year-on-year, compared with 3.2 per cent in the first quarter; industry expanded by 4.0 per cent, against 3.5 per cent; while services accelerated to 4.6 per cent from 4.3 per cent.

Nigeria’s position as Africa’s largest oil producer and exporter also provided an important boost to second-quarter activity. Higher crude oil prices, partly supported by disruptions around the Strait of Hormuz, strengthened export receipts while encouraging increased activity in domestic refining, particularly at the Dangote Petroleum Refinery and Petrochemicals complex.

The expansion of the non-oil economy, meanwhile, reflected stronger agricultural and services activity. Crop production, telecommunications, real estate, trade, financial services, cement manufacturing and construction were among the sectors supporting the acceleration.

Agriculture benefited from elevated food prices, which provided incentives for farmers to increase planting and production, although insecurity continued to disrupt farming activities in several key agricultural areas.

The latest growth figures have also strengthened expectations that the recovery could maintain momentum through the second half of the year.

Annual GDP growth is projected to average close to the first-half pace in the second half, supported by increased government expenditure ahead of the January 2027 general elections and a gradual recovery in crude oil production as improvements in pipeline security support output.

However, the outlook remains constrained by elevated domestic fuel prices and restrictive monetary conditions, which could weaken household consumption and limit the ability of businesses to expand.

For the full year, economic growth is expected to remain broadly in line with 2025 and comfortably above the average recorded during the previous decade.

Oxford Economics economist Brendon Verster said higher-for-longer global oil prices would support Nigeria’s economy through stronger export receipts and fiscal inflows.

However, he cautioned that “a prolonged period of elevated local fuel prices will have a more pronounced impact on consumption demand and business activity.”

The Nigerian outlook is unfolding against a broader shift in the economic balance of Sub-Saharan Africa, where faster-growing economies are increasingly gaining ground on traditionally dominant economies.

According to projections cited by economic analysts, Sub-Saharan Africa is expected to become the world’s fastest-growing region from 2027, displacing the Asia-Pacific region, which has traditionally occupied that position.

The region’s growth is expected to be supported by annual population growth of more than two per cent, rapid digital transformation, sustained investment in mining, energy and infrastructure, and deeper intra-African trade under the African Continental Free Trade Area.

Nigeria and Ethiopia are expected to be among the principal beneficiaries of this changing regional landscape. Both economies combine large populations with substantial natural resources and considerable room for expansion across infrastructure, manufacturing, energy, agriculture and services.

The changing economic hierarchy is particularly significant for South Africa, which has historically been the most industrialised economy in Sub-Saharan Africa. Its relative economic weight is projected to decline as growth remains constrained by structural weaknesses.

Analysts at Oxford Economics pointed to high administered prices, persistently high unemployment, relatively tight monetary policy and the prospect of higher inflation as factors constraining both consumer purchasing power and willingness to spend.

They argued that stronger private-sector participation in South Africa’s network industries, including energy, telecommunications, transport and water, would be required to improve competitiveness, strengthen energy security, finance the green transition, create jobs and reduce poverty and inequality.

While Nigeria’s improving growth trajectory offers a more positive outlook, the broader African picture remains complicated by public debt and debt-servicing pressures.

Public and external debt across Sub-Saharan Africa are expected to decline gradually as stronger economic growth and fiscal consolidation improve debt ratios. The trend follows a period of severe debt stress that forced several countries in the region into defaults or restructuring.

The African Development Bank, however, warned that declining debt-to-GDP ratios should not obscure continuing vulnerabilities arising from the changing structure of public debt.

According to the bank’s analysts, the improvement in debt ratios reflects the rebound in economic growth and fiscal consolidation undertaken in several countries. But the changing composition of public debt has increased debt-servicing costs, constraining fiscal space and crowding out government spending on essential social services and infrastructure.

The burden has become particularly evident in external debt servicing. The share of government revenue devoted to external debt service rose from 23.7 per cent in 2017 to 31 per cent in 2024, according to the African Development Bank.

Oracle Intelligence reports that the latest GDP figures represent more than an improvement in quarterly growth statistic. They point to a potentially significant repositioning within an African economy increasingly characterized by divergent growth trajectories.

If Nigeria can sustain stronger oil production, deepen its non-oil expansion, improve infrastructure and security, and contain the impact of high energy and financing costs, its growing economic weight could translate into a stronger position in the emerging Sub-Saharan African growth hierarchy.