Nigeria's annual economic growth rate slowed to 2.3% in the first quarter, data showed on Wednesday, hurt by a government plan to swap old banknotes for newly designed ones that disrupted trade and payments.

The gross domestic product (GDP) data came hours before a central bank interest rate announcement and next week's swearing-in of President-elect Bola Tinubu, who has pledged to revive growth.

Africa's largest economy has now grown for 10 consecutive quarters after a severe recession in 2020 linked to the COVID-19 pandemic.

GDP posted annual growth of 3.1% in the first three months of 2022.

"The reduction in growth is attributed to the adverse effects of the cash crunch experienced during the quarter," the National Bureau of Statistics (NBS) said.

Nigeria launched the newly designed banknotes with the aim of controlling liquidity, curbing inflation and moving towards a cashless economy.

But the move disrupted payments in a country where cash is dominant. Full implementation of the policy has been moved to the end of the year.

The NBS said first-quarter growth was driven by the services sector, which grew 4.4% year on year.

The oil sector which accounts for around two-thirds of government revenue and 90% of foreign-exchange reserves, contracted 4.2%.

Nigeria, Africa's top oil producer, recorded average daily oil output (NGOIL=ECI) of 1.51 million barrels per day (mbpd) in the first quarter, up from the daily average of 1.49 mbpd registered in the same quarter of 2022.

Analysts said the slowdown in the growth rate could prompt the central bank to hold interest rates at its policy meeting on Wednesday, despite double-digit inflation.

[Reuters]