Nigeria's Digital Economy Contributes 14.19% to Q1 2025 GDP, Grows 3.13%

The Digital Economy sector in Nigeria contributed N7 trillion to the nation's real Gross Domestic Product (GDP) during the first quarter of 2025, accounting for 14.19% of the total N49.34 trillion. This information was revealed in a report by the National Bureau of Statistics (NBS), which also indicated that the total real GDP grew by 3.13% during the quarter, a slight decrease from the 3.76% growth recorded in the fourth quarter of 2024.

The Digital Economy sector, which includes the Information and Communication (I&C) sector and the Finance Institutions (FI) sector, saw significant contributions. The I&C sector contributed 10.59% to the real GDP, while the FI sector contributed 3.60%. These sectors were among the top 10 performing sectors for the quarter, with the I&C sector ranking fourth and the FI sector ranking eighth. The Digital Economy sector has consistently been a major contributor to the Nigerian economy, driven by telecommunications and the financial industry.

The I&C sector recorded a year-on-year (YoY) growth rate of 7.40% in real terms but a quarter-on-quarter growth rate of -8.86%. Its contribution to the total real GDP during Q1 2025 was 10.59%, higher than the 10.17% contribution in the same quarter of the previous year. The Financial Institution sector, which includes financial institutions and insurance, recorded a 3.60% contribution to Nigeria’s total real GDP in Q1 2025, with a YoY growth rate of 3.23%. Financial institutions such as banks and fintechs contributed 90.74%, while the insurance industry contributed 9.26%.

In monetary terms, the Digital Economy Sector contributed a total of N7 trillion to the nation’s real GDP, with the I&C sector recording N5.2 trillion and the FI sector recording N1.8 trillion during the first quarter of 2025. The telecommunications industry within the I&C sector accounted for N4.2 trillion, representing an 80% share, while the financial institution industry within the FI sector recorded N1.6 trillion, and the insurance industry saw almost N200 billion.

In a broader view, Nigeria saw a YoY real GDP growth rate of 3.31%, higher than the 2.27% recorded in the first quarter of 2024 but lower than the 3.76% recorded in the fourth quarter of 2024. The services and industry sectors contributed more to the real GDP in Q1 2025. The NBS also released the rebased GDP figures, using a base year of 2019. Real GDP growth in 2020 stood at -6.96% and improved to 0.95% in 2021. Higher growth rates were recorded in 2022 and 2023, at 4.32% and 3.04%, respectively. While 2024 recorded a real GDP growth rate of 3.38%.

During the fourth quarter of 2024, the digital economy sector contributed 11.8% to Nigeria’s real GDP, raking in N7.2 trillion of N61.4 trillion. The I&C sector recorded a 9.34% input while the FI sector saw 2.46% of the total real GDP. This means that the digital economy’s contribution to Nigeria’s real GDP dropped by 2.8% from N7.2 trillion in Q4’24 to N7 trillion in Q1’25. This decrease is attributed to the nation’s real GDP dropping from N61.4 trillion in the previous quarter to N49.34 trillion in Q1’25, while the growth rate dropped from 3.76% to 3.13%.

The digital economy sector continues to show an important presence in the Nigerian economy, with a significant impact on foreign trade. In May, the Federal Government revealed that the digital economy sector attracted $191 million in foreign direct investment during Q1 2024, representing a 900% rise from the $22 million in Q1 2023. The Minister of Communications, Innovation, and Digital Economy, Dr. Bosun Tijani, explained that the sector’s significant drive, pushed by major initiatives such as the 3 Million Technical Talent (3MTT) programme, has been instrumental in refining the Nigerian economy for digital transformation. While the sector saw a ninefold increase in foreign direct investment from $22 million in Q1 2023 to $191 million in Q1 2024, the trend continued in Q2 2024, which also increased by 356% to $114 million from $25 million YoY. As Nigeria has witnessed the rise of unicorn companies such as Flutterwave, Jumia, Andela, Moniepoint, and Interswitch, the digital economy holds prospects to generate $18.3 billion by 2026, according to the Minister.