Nigeria Economy Facts
Economical overview
Nigeria has Africa’s largest population and is expected to have the continent’s second largest economy, after South Africa. The oil sector is a central component that generates large government revenue. But it has relatively few links with the economy in general; the country is in many ways a typical African development economy. Most of the population depends on traditional agriculture, small-scale trade and simple manufacturing industry for their livelihoods.
Nigeria was once also one of Africa’s richest countries, measured in terms of GDP per capita. Now many African states have moved on, even though the development of the large oil resources could have been quite different. This is especially true as the oil is of very high quality and things a high price. Another competitive advantage is the relative proximity to Europe and North America – about half of the oil is sold to the United States. But a very small part of the income from the oil has benefited the people. Instead, oil dependency has created a culture of corruption, inefficiency and waste. Many Nigerians have come to regard the oil as a curse rather than a blessing for the country.
- Countryaah.com: Major imports by Nigeria, covering a full list of top products imported by the country and trade value for each product category.
When oil recovery accelerated in the 1970s, the future looked promising. The government made major investments in important infrastructure but also in clean boasting projects. A modern economy based on the oil industry grew, while other industries were neglected. Nigeria’s economy became very sensitive to fluctuations in the world market price of oil. When revenues plummeted in the early 1980s, the governing bodies were unable to slow down the investment plans they had begun. They were forced to borrow money abroad and thus created a debt crisis.
Political instability, increasingly degraded infrastructure and galloping corruption contributed to the failure of the military regimes that dominated the 1980s and 1990s in their attempts to reduce oil dependency. The oil normally accounts for around 70 percent of the state’s revenue and over 90 percent of exports. However, its share of the total economy was not calculated at more than 14 percent in 2013 and does not make a major impact on employment.
- Abbreviationfinder.org: Check this abbreviation website to find three letter ISO codes for all countries in the world, including NG which represents the country of Nigeria. Check findjobdescriptions to learn more about Nigeria.
Debt relief
After the return to civilian government in 1999, the government tried to reform the economy in a market liberal direction but also wanted to make social initiatives. Oil money began to be invested in roads, schools, water supply and health care. In addition, international lenders granted debt relief of $ 18 billion in 2005, in exchange for Nigeria repaying bilateral debt of $ 12 billion. Thanks to the settlement, Nigeria’s external debt fell from 36 to 4 per cent of GDP between 2004 and 2007. The total government debt was around 10 percent in 2014.
Annual growth was around 2 percent in the late 1990s and just over 4 percent in the first years after the turn of the millennium. In recent years, it has been more robust and has been around an average of around 7 percent for a decade. The oil industry benefited, among other things, from more peaceful conditions in the Niger Delta from 2009 (see Modern History). However, the collapse in the world market price of oil that started in 2014 has led to a slowdown with shrinking foreign exchange reserves as a result. The state has been forced to increase foreign loans in order to pay salaries to public employees, which has contributed to a sharp increase in the budget deficit. In 2016, the economy was in a deep recession and growth was negative.
The previous growth was otherwise mainly due to good development in areas other than the oil and gas sector. Not least, agriculture has gone well. In the service sector, the telecom industry has given an important boost.
However, the problems remain great even when growth is strong. According to the organization Transparency International’s index, Nigeria is among the most corrupt countries in the world, even though the country has stepped up a bit from the absolute bottom. An international accounting firm estimated in 2015 that the state could lose about a third of national income due to corruption.
The VAT rate is only 5 percent, one of the lowest in the world, and covers only one third of all transactions.
Big black economy
The informal sector is extensive, which means that figures relating to the economy are not very reliable. The informal sector also contains organized crime. The so-called Nigerian letters – scams by e-mail or letters addressed to foreigners – are considered to be an important source of foreign currency. Up to a tenth of the oil is expected to disappear before it reaches the export terminals. Nigeria is also a transit country in the international trade in drugs. Industrial and agricultural goods are smuggled across borders and are not reported in any statistics.
Much of what is smuggled is oil products, such as gasoline. The government has several times tried to eliminate the extensive fuel subsidies that make gasoline so cheap in Nigeria but which cost the state multibillion. It has been stopped every time by extensive protests. An attempt was made at New Year 2012, but the government was forced back as strikes and protests paralyzed the country and several people were killed in clashes between protesters and police.
Another major challenge in the process of accelerating growth is the large lack of electricity, transport opportunities and communication services.
The large informal economy means, among other things, that the state loses large tax revenues. Many employees have very low wages and survive by, as in old times, growing their own food. The system paves the way for corruption at all levels, from lost oil billions at the top to bribes paid at the grassroots level in business, justice, schools and communica- tions.
In February 2020, the government announced that special investments would be made to small farmers and young entrepreneurs. $ 248 million is allocated to loans for small-scale agricultural projects and $ 20 million goes to young entrepreneurs in the technology industry.
FACTS – FINANCE
GDP per person
US $ 2,028 (2018)
Total GDP
US $ 397,270 million (2018)
GDP growth
1.9 percent (2018)
Agriculture’s share of GDP
21.2 percent (2018)
Manufacturing industry’s share of GDP
7.8 percent (2018)
The service sector’s share of GDP
52.0 percent (2018)
Inflation
11.3 percent (2019)
Government debt’s share of GDP
27.3 percent (2018)
External debt
US $ 40,238 million (2017)
Currency
Nairas
Merchandise exports
US $ 45,742 million (2017)
Imports
US $ 32,616 million (2017)
Current account
US $ 10,381 million (2017)
Commodity trade’s share of GDP
26 percent (2018)
Main export goods
oil, liquefied natural gas
Largest trading partner
USA, China, India, Brazil, Spain, Netherlands, France
2008
December
The result of the presidential election determined
The Supreme Court affirms, with the votes 3-4, the final result of the 2007 presidential election. Yar’Adua’s counter-candidates Buhari and Abubakar had argued that cheating had occurred.
More violence in Jos
Hundreds of people die over a weekend in continued clashes between Christians and Muslims.
November
Over 360 dead in Jos
Clashes occur between Christians and Muslims in connection with municipal elections, and both churches and mosques are burned down.
October
Half the government dismissed
Yar’Adua also announces that major cuts are to be expected due to falling oil revenues.
September
Redeployment in the defense leadership
Yar’Adua replaces the country’s defense chief and the chiefs of the army, the air force and the navy. According to media speculation, the reason would be that the government is threatened, but it is rejected by the president.
New violence in the Niger Delta
After an army operation in the state of Rivers, Mend proclaims an “oil war” and carries out a number of attacks on plants and pipelines for a week. Then Mend again announces a cease-fire.
August
The baking peninsula is handed over to Cameroon
Nigeria’s formal surrender of control points to the conflict with the neighboring country (see Foreign Policy and Defense).
June
Attack at sea hits hard on oil production
When Mend attacks Shell’s oil platform Bonga, twelve miles offshore, all of Nigeria’s oil production falls by ten percent at a time. This is the first time an attack has been carried out so far out at sea.
April
Nigeria originated as Africa’s largest oil producer
Angola is now reported to be the African country that pumps up the most oil, despite significantly less oil reserves.
Two ministers resign
They have been accused of stealing state funds in the first corruption scandal of Yar’Adua’s government.
Governor’s election annulled
An appeal court orders re-election in Sokoto and Bayelsa within three months. In both cases, PDP governors are thus forced to leave their post.
March
Mend leader prosecuted
Okah and his comrade are being charged with treason (see February 2008).
February
Mend leader extradited to Nigeria
The leader of the Nigerian militant group, Henry Okah, is extradited together with another leader from Angola where he was arrested a few months earlier.
Violence in the Niger Delta
The military seizes 24 barges with stolen crude oil, triggering new violence. Shell oil company is forced to shut down its operations following pipeline attacks.
