Economy of Nigeria
Encyclopedia
The economy
of Nigeria
is a middle income, mixed economy emerging market with well-developed financial, legal, communications, transport, and entertainment sectors. It is ranked 31st in the world in terms of GDP (PPP) as of 2009, and its emergent, though currently underperforming manufacturing sector is the second-largest on the continent, producing a large proportion of goods and services for the West African region.
Previously hindered by years of mismanagement, economic reforms of the past decade have put Nigeria back on track towards achieving its full economic potential. Nigerian GDP at purchasing power parity more than doubled from $170.7 billion in 2005 to $374.3 billion in 2010, although estimates of the size of the informal sector (which is not included in official figures) put the actual numbers closer to $520 billion. Correspondingly, the GDP per capita doubled from $1200 per person in 2005 to an estimated $2,500 per person in 2009 (again, with the inclusion of the informal sector, it is estimated that GDP per capita hovers around $3,500 per person).
It is the largest economy in the West Africa Region, 3rd largest economy in Africa (behind South Africa and Egypt), and on track to becoming one of the top 30 economies in the world in the early part of 2011.
Although much has been made of its status as a major exporter of oil, Nigeria produces only about 3.3% of the world's supply, and though it is ranked as 15th in production at 2.2 Moilbbl/d (mbpd), the top 3 producers Saudi Arabia
, Russia
, and the United States
produce 10.7 Moilbbl/d (17%), 9.8 Moilbbl/d (15%), and 8.5 Moilbbl/d (13%)respectively, collectively accounting for 63.6 Moilbbl/d (45%) of the world's total production. To put oil revenues in perspective: at an estimated export rate of 1.9 Moilbbl/d, with a projected sales price of $65 per barrel in 2011, Nigeria's anticipated revenue from petroleum is about $52.2 billion. This accounts for less than 14% of official GDP figures (and drops to 10% when the informal economy is included in these calculations). Therefore, though the petroleum sector is important, it remains in fact a small part of the country's overall vibrant and diversified economy.
The largely subsistence agricultural sector has not kept up with rapid population growth, and Nigeria, once a large net exporter of food, now imports some of its food products. In 2006, Nigeria successfully convinced the Paris Club
to let it buy back the bulk of its debts owed to the Paris Club for a cash payment of roughly $12 billion (USD).
”.Although "resource curse" is more widely understood to mean an abundance of natural resources which fuels official corruption resulting in a violent competition for the resource by the citizens of the nation. Nigeria’s exports of oil and natural gas—at a time of peak prices—have enabled the country to post merchandise trade and current account surpluses in recent years. Reportedly, 80 percent of Nigeria’s energy revenues flow to the government, 16 percent cover operational costs, and the remaining 4 percent go to investors. However, the World Bank has estimated that as a result of corruption 80 percent of energy revenues benefit only 1 percent of the population. In 2005, Nigeria achieved a milestone agreement with the Paris Club of lending nations to eliminate all of its bilateral external debt. Under the agreement, the lenders will forgive most of the debt, and Nigeria will pay off the remainder with a portion of its energy revenues. Outside of the energy sector, Nigeria’s economy is highly inefficient. Moreover, human capital is underdeveloped—Nigeria ranked 151 out of 177 countries in the United Nations Development Index in 2004—and non-energy-related infrastructure is inadequate.
From 2003 to 2007, Nigeria attempted to implement an economic reform program called the National Economic Empowerment Development Strategy (NEEDS). The purpose of the NEEDS was to raise the country’s standard of living
through a variety of reforms, including macroeconomic stability, deregulation
, liberalization
, privatization
, transparency, and accountability. The NEEDS addressed basic deficiencies, such as the lack of freshwater for household use and irrigation, unreliable power supplies, decaying infrastructure, impediments to private enterprise, and corruption. The government hoped that the NEEDS would create 7 million new jobs, diversify the economy, boost non-energy exports, increase industrial capacity utilization, and improve agricultural productivity. A related initiative on the state level is the State Economic Empowerment Development Strategy (SEEDS).
A longer-term economic development program is the United Nations (UN)-sponsored National Millennium Goals for Nigeria. Under the program, which covers the years from 2000 to 2015, Nigeria is committed to achieve a wide range of ambitious objectives involving poverty reduction, education, gender equality, health, the environment, and international development cooperation. In an update released in 2004, the UN found that Nigeria was making progress toward achieving several goals but was falling short on others. Specifically, Nigeria had advanced efforts to provide universal primary education, protect the environment, and develop a global development partnership. However, the country lagged behind on the goals of eliminating extreme poverty and hunger, reducing child and maternal mortality, and combating diseases such as human immunodeficiency virus/acquired immune deficiency syndrome (HIV/AIDS) and malaria.
A prerequisite for achieving many of these worthwhile objectives is curtailing endemic corruption, which stymies development and taints Nigeria’s business environment. President Olusegun Obasanjo’s campaign against corruption, which includes the arrest of officials accused of misdeeds and recovering stolen funds, has won praise from the World Bank
. In September 2005, Nigeria, with the assistance of the World Bank, began to recover US$458 million of illicit funds that had been deposited in Swiss banks by the late military dictator Sani Abacha, who ruled Nigeria from 1993 to 1998. However, while broad-based progress has been slow, these efforts have begun to become evident in international surveys of corruption. In fact, Nigeria's ranking has consistently improved since 2001 ranking 147 out of 180 countries in Transparency International’s 2007 Corruption Perceptions
.
For purchasing power parity comparisons, the US Dollar is exchanged at 75.75 Nigerian Naira only.
Current GDP per capita] of Nigeria expanded 132% in the Sixties reaching a peak growth of 283% in the Seventies. But this proved unsustainable and it consequently shrank by 66% in the Eighties. In the Nineties, diversification initiatives finally took effect and decadal growth was restored to 10%.
Due to inflation, per capita GDP today remains lower than in 1960 when Nigeria declared independence. About 57 percent of the population lives on less than US$1 per day. In 2005 the GDP was composed of the following sectors: agriculture, 26.8 percent; industry, 48.8 percent; and services, 24.4 percent.
In 2005 Nigeria’s inflation rate was an estimated 15.6 percent. Nigeria’s goal under the National Economic Empowerment Development Strategy (NEEDS) program is to reduce inflation to the single digits.
In 2005 Nigeria’s central government had expenditures of US$13.54 billion but revenues of only US$12.86 billion, resulting in a budget deficit of 5 percent. Nigerian tax authorities face the challenge of widespread tax evasion, which is motivated by complaints about corruption and the poor quality of services.
Mean wages were $1.11 per manhour in 2009.
Agriculture has suffered from years of mismanagement, inconsistent and poorly conceived government policies, and the lack of basic infrastructure. Still, the sector accounts for over 26.8% of GDP and two-thirds of employment. Nigeria is no longer a major exporter of cocoa, groundnuts (peanuts), rubber, and palm oil. Cocoa production, mostly from obsolete varieties and overage trees, is stagnant at around 180,000 tons annually; 25 years ago it was 300,000 tons. An even more dramatic decline in groundnut and palm oil production also has taken place. Once the biggest poultry producer in Africa, corporate poultry
output has been slashed from 40 million birds annually to about 18 million. Import constraints limit the availability of many agricultural and food processing inputs for poultry and other sectors. Fisheries are poorly managed. Most critical for the country's future, Nigeria's land tenure system does not encourage long-term investment in technology or modern production methods and does not inspire the availability of rural credit.
Agricultural products include cassava (tapioca), corn, cocoa, millet, palm oil, peanuts, rice, rubber, sorghum, and yams. In 2003 livestock production, in order of metric tonnage, featured eggs, milk, beef and veal, poultry, and pork, respectively. In the same year, the total fishing catch was 505.8 metric tons. Roundwood removals totaled slightly less than 70 million cubic meters, and sawnwood production was estimated at 2 million cubic meters. The agricultural sector suffers from extremely low productivity, reflecting reliance on antiquated methods. Although overall agricultural production rose by 28 percent during the 1990s, per capita output rose by only 8.5 percent during the same decade. Agriculture has failed to keep pace with Nigeria’s rapid population growth, so that the country, which once exported food, now relies on imports to sustain itself.
The oil boom of the 1970s led Nigeria to neglect its strong agricultural and light manufacturing bases in favor of an unhealthy dependence on crude oil. In 2000, oil and gas exports accounted for more than 98% of export earnings and about 83% of federal government revenue. New oil wealth, the concurrent decline of other economic sectors, and a lurch toward a statist economic model fueled massive migration to the cities and led to increasingly widespread poverty, especially in rural areas. A collapse of basic infrastructure and social services since the early 1980s accompanied this trend. By 2000, Nigeria's per capita income had plunged to about one-quarter of its mid-1970s high, below the level at independence. Along with the endemic malaise of Nigeria's non-oil sectors, the economy continues to witness massive growth of "informal sector" economic activities, estimated by some to be as high as 75% of the total economy.
Nigeria's proven oil reserves
are estimated to be 35 Goilbbl; natural gas reserves are well over 100 Tcuft. Nigeria is a member of the Organization of Petroleum Exporting Countries (OPEC), and in mid-2001, its crude oil production was averaging around The types of crude oil exported by Nigeria are Bonny light oil
, Forcados crude oil, Qua Ibo crude oil and Brass River crude oil. Poor corporate relations with indigenous communities, vandalism of oil infrastructure, severe ecological damage, and personal security problems throughout the Niger Delta
oil-producing region continue to plague Nigeria's oil sector. Efforts are underway to reverse these troubles. In the absence of government programs, the major multinational oil companies have launched their own community development programs. A new entity, the Niger Delta Development Commission
(NDDC), has been created to help catalyze economic and social development in the region. Although it has yet to launch its programs, hopes are high that the NDDC can reverse the impoverishment of local communities. The U.S. remains Nigeria's largest customer for crude oil, accounting for 40% of the country's total oil exports; Nigeria provides about 10% of overall U.S. oil imports and ranks as the fifth-largest source for U.S. imported oil.
The United Kingdom is Nigeria's largest trading partner followed by the United States. Although the trade balance overwhelmingly favors Nigeria, thanks to oil exports, a large portion of U.S. exports to Nigeria is believed to enter the country outside of the Nigerian government's official statistics, due to importers seeking to avoid Nigeria's excessive tariffs. To counter smuggling and under-invoicing by importers, in May 2001, the Nigerian government instituted a full inspection program for all imports, and enforcement has been sustained. On the whole, Nigerian high tariffs and non-tariff barriers are gradually being reduced, but much progress remains to be made. The government also has been encouraging the expansion of foreign investment, although the country's investment climate remains daunting to all but the most determined. The stock of U.S. investment is nearly $7 billion, mostly in the energy sector. Exxon Mobil and Chevron
are the two largest U.S. corporations in offshore oil and gas production. Significant exports of liquefied natural gas started in late 1999 and are slated to expand as Nigeria seeks to eliminate gas flaring by 2008.
Oil dependency, and the allure it generated of great wealth through government contracts, spawned other economic distortions. The country's high propensity to import means roughly 80% of government expenditures is recycled into foreign exchange. Cheap consumer imports, resulting from a chronically overvalued Naira, coupled with excessively high domestic production costs due in part to erratic electricity and fuel supply, pushed down utilization of industrial capacity to less than 30%. Many more Nigerian factories would have closed except for relatively low labor costs (10%–15%). Domestic manufacturers, especially pharmaceuticals and textiles, have lost their ability to compete in traditional regional markets. However, there are signs that some manufacturers have begun to improve competitiveness.
In April 2006, Nigeria became the first African country to fully pay off its debt owed to the Paris Club
. However, this was structured as a debt writeoff of approximately $18 billion and a cash payment of approximately $12 billion.
In the light of highly expansionary public sector fiscal policies in 2001, the government sought ways to head off higher inflation, leading to the implementation of stronger monetary policies by the Central Bank of Nigeria
(CBN) and underspending of budgeted amounts. As a result of the CBN's efforts, the official exchange rate for the Naira has stabilized at about 112 Naira to the dollar. The combination of CBN's efforts to prop up the value of the Naira and excess liquidity resulting from government spending led the currency to be discounted by around 20% on the parallel (non-official) market. A key condition of the Stand-by Arrangement has been closure of the gap between the official and parallel market exchange rates. The Inter Bank Foreign Exchange Market (IFEM) is closely tied to the official rate. Under IFEM, banks, oil companies, and the CBN can buy or sell their foreign exchange at government influenced rates. Much of the informal economy, however, can only access foreign exchange through the parallel market. Companies can hold domiciliary accounts in private banks, and account holders have unfettered use of the funds.
Expanded government spending also has led to upward pressure on consumer prices. Inflation which had almost disappeared in April 2000 reached 14.5% by the end of the year and 18.7% in August 2001. In 2000, high oil prices resulted in government revenue of over $16 billion, about double the 1999 level. State and local governments demanded access to this "windfall" revenue, creating a tug-of-war between the federal government, which sought to control spending, and state governments desiring augmented budgets, preventing the government from making provision for periods of lower oil prices.
Since undergoing severe distress in the mid-1990s, Nigeria's banking sector has witnessed significant growth over the last few years as new banks enter the financial market. Harsh monetary policies implemented by the Central Bank of Nigeria to absorb excess Naira liquidity in the economy has made life more difficult for banks, some of whom engage in currency arbitrage (round-tripping) activities that generally fall outside legal banking mechanisms. Private sector-led economic growth remains stymied by the high cost of doing business in Nigeria, including the need to duplicate essential infrastructure, the threat of crime and associated need for security counter measures, the lack of effective due process, and nontransparent economic decisionmaking, especially in government contracting. As of 2007, 29% of Nigerians in urban areas did not own bank accounts.
While corrupt practices are endemic, they are generally less flagrant than during military rule, and there are signs of improvement. Meanwhile, since 1999 the Nigerian Stock Exchange has enjoyed strong performance, although equity as a means to foster corporate growth remains underutilized by Nigeria's private sector.
(Apapa
and Tin Can Island), Port Harcourt, and Calabar
. Docking fees for freighters are among the highest in the world. Of the 80,500 kilometers (50,000 mi.) of roads, more than 15,000 kilometers (10,000 mi.) are officially paved, but many remain in poor shape. Extensive road repairs and new construction activities are gradually being implemented as state governments, in particular, spend their portions of enhanced government revenue allocations. The government implementation of 100% destination inspection of all goods entering Nigeria has resulted in long delays in clearing goods for importers and created new sources of corruption, since the ports lack adequate facilities to carry out the inspection. Four of Nigeria's airports—Lagos, Kano
, Port Harcourt and Abuja
--currently receive international flights. Government-owned Nigeria Airways
ceased operations in December 2002. Virgin Nigeria Airways
started operations in 2005 as a replacement and serves domestic and international routes. There are several domestic private Nigerian carriers, and air service among Nigeria's cities is generally dependable. The maintenance culture of Nigeria's domestic airlines is not up to internationally accepted standards.
According to the International Organization for Migration
, the number of immigrants residing in Nigeria has more than doubled in recent decades – from 477,135 in 1991 to 971,450 in 2005. The majority of immigrants in Nigeria (74 per cent) are from neighbouring Economic Community of West African States (ECOWAS), and that this number has increased considerably over the last decade, from 63 per cent in 2001 to 97 per cent in 2005. In spite of Nigeria's importance as a destination for migrants in the region, more people are emigrating from, than immigrating to, Nigeria with the negative net migration rate (per 1,000 people) steadily increasing in recent years, from -0.2 in 2000 to -0.3 in 2005, and this trend is expected to continue. According to recent estimates, the net migration rate could reach -0.4 in 2010.
and has begun extensive economic reform efforts. Although the government's anti-corruption campaign has so far been disappointing, progress in injecting transparency and accountability into economic decisionmaking is notable. The dual exchange rate mechanism formally abolished in the 1999 budget remains in place in actuality. During 2000 the government's privatization program showed signs of life and real promise with successful turnover to the private sector of state-owned banks, fuel distribution companies, and cement plants. However, the privatization process has slowed somewhat as the government confronts key parastatals such as the state telephone company NITEL
and Nigerian Airways. The successful auction of GSM telecommunications licenses in January 2001 has encouraged investment in this vital sector.
Although the government has been stymied so far in its desire to deregulate downstream petroleum prices, state refineries, almost paralyzed in 2000, are producing at much higher capacities. By August 2001, gasoline lines disappeared throughout much of the country. The government still intends to pursue deregulation despite significant internal opposition, particularly from the Nigeria Labour Congress
. To meet market demand the government incurs large losses importing gasoline to sell at subsidized prices.
Companies interested in long-term investment and joint ventures, especially those that use locally available raw materials, will find opportunities in the large national market. However, to improve prospects for success, potential investors must educate themselves extensively on local conditions and business practices, establish a local presence, and choose their partners carefully. The Nigerian Government is keenly aware that sustaining democratic principles, enhancing security for life and property, and rebuilding and maintaining infrastructure are necessary for the country to attract foreign investment.
The stock market capitalisation of listed companies in Nigeria was valued at $97.75 billion on February 15, 2008 by the Nigerian Stock Exchange.
sought by the Economic Community of West African States
(ECOWAS), and encourage inflows of foreign portfolio and direct investment. In October 2005, Nigeria implemented the ECOWAS common external tariff
, which reduced the number of tariff bands. Prior to this revision, tariffs constituted Nigeria’s second largest source of revenue after oil exports. In 2005 Nigeria achieved a major breakthrough when it reached an agreement with the Paris Club to eliminate its bilateral debt through a combination of write-downs and buybacks. Nigeria joined the Organization of the Petroleum Exporting Countries in July 1971 and the World Trade Organization
in January 1995.
In 2005, Nigeria imported about US$26 billion of goods. In 2004 the leading sources of imports were China (9.4 percent), the United States (8.4 percent), the United Kingdom (7.8 percent), the Netherlands (5.9 percent), France (5.4 percent), Germany (4.8 percent), and Italy (4 percent). Principal imports were manufactured goods, machinery and transport equipment, chemicals, and food and live animals.
In 2005, Nigeria exported about US$52 billion of goods. In 2004, the leading destinations for exports were the United States (47.4 percent), Brazil (10.7 percent), and Spain (7.1 percent). In 2004 oil accounted for 95 percent of merchandise exports, and cocoa and rubber accounted for almost 60 percent of the remainder.
In 2005, Nigeria posted a US$26 billion trade surplus, corresponding to almost 20 percent of gross domestic product. In 2005, Nigeria achieved a positive current account balance of US$9.6 billion. The Nigerian currency is the naira (NGN). As of mid-June 2006, the exchange rate
was about US$1=NGN128.4.
In recent years, Nigeria has expanded its trade relations with other developing countries such as India. Nigeria is the largest African crude oil supplier to India — it annually exports 400000 oilbbl/d to India valued at US$10 billion annually.
India seeks expansion of oil trade with Nigeria, as it is the second largest purchaser of Nigeria's oil which fulfills 20 to 25 percent of India's domestic oil demand. Indian oil companies are also involved in oil drilling operations in Nigeria and have plans to set up refineries there.
, Nigeria witnessed a dramatic increase from USD 2.3 billion in 2004 to 17.9 billion in 2007, representing 6.7 per cent of GDP.The United States accounts for the largest portion of official remittances, followed by the United Kingdom, Italy, Canada, Spain and France. On the African continent, Egypt, Equatorial Guinea, Chad, the Libyan Arab Jamahiriya and South Africa are important source countries of remittance flows to Nigeria, while China is the biggest remittance-sending country in Asia.
(FDI), much of which came from Nigerians in the diaspora. Most FDI is directed toward the energy and banking sectors.
were used properly in his homeland. The authorities were responding to allegations that $200 million (SFr240 million) of $700 million handed back by the Swiss Banks to Nigeria had been misappropriated.
The United States assisted with Nigeria's economic development
from 1954 through June 1974, when concessional assistance was phased out because of a substantial increase in Nigeria's per capita income resulting from rising oil revenue. By 1974, the United States had provided Nigeria with approximately $360 million in assistance, which included grants for technical assistance, development assistance
, relief and rehabilitation, and food aid. Disbursements continued into the late 1970s, bringing total bilateral economic assistance to roughly $445 million.
The sharp decline in oil prices, economic mismanagement, and continued military rule characterized Nigeria in the 1980s. In 1983, USAID began providing assistance to the Nigerian Federal and State Ministries of Health to develop and implement programs in family planning and child survival. In 1992, an HIV
/AIDS
prevention and control program was added to existing health activities. USAID committed $135 million to bilateral assistance programs for the period of 1986 to 1996 as Nigeria undertook an initially successful Structural Adjustment Program, but later abandoned it. Plans to commit $150 million in assistance from 1993 to 2000 were interrupted by strains in U.S.-Nigerian relations over human rights abuses, the failed transition to democracy, and a lack of cooperation from the Nigerian Government on anti-narcotics trafficking issues. By the mid-1990s, these problems resulted in the curtailment of USAID activities that might benefit the military Government. Existing health programs were re-designed to focus on working through grassroots Nigerian non-governmental organizations and community groups. As a response to the Nigerian military government's plans for delayed transition to civilian rule, the Peace Corps
closed its program in Nigeria in 1994.
In response to the increasingly repressive political situation, USAID established a Democracy and Governance (DG) program in 1996. This program integrates themes focusing on basic participatory democracy
, human rights
and civil rights
, women's empowerment, accountability, and transparency with other health activities to reach Nigerians at the grassroots level in 14 of Nigeria's 36 states.
The sudden death of General Sani Abacha
and the assumption of power by General Abdulsalami Abubakar
in June 1998, marked a turning point in U.S.-Nigerian relations. USAID provided significant support to the electoral process by providing some $4 million in funding for international election observation, the training of Nigerian election observers and political party polling agents, as well as voter education activities. A Vital National Interest Certification was submitted to Congress in February 1999 by President Clinton
to lift restrictions on U.S. Government interaction with and support to the Government of Nigeria.
Since that time, USAID has supported Nigeria to sustain democracy and to improve governance by providing training on the roles and responsibilities of elected officials in a representative democracy for newly elected officials at the federal, state, and local levels prior to their installation in May 1999 and assisting with conflict prevention and resolution in the Niger Delta, civil military relations, civil society, and political party development. In the economic area USAID supports programs in strengthening economic management and coordination, encouraging private sector development and economic reform, helping Nigeria reap the benefits of AGOA, improved agricultural technology and marketing and smallscale and microenterprise development. In addition, health assistance, focusing on HIV/AIDS, nutrition, and immunization, education, transportation and energy infrastructure, are priorities for bilateral assistance.
GDP:
purchasing power parity – $459.4 billion (2009 est.)
GDP – real growth rate:
7% (July 2006 est.)
GDP – per capita:
purchasing power parity – $3460 (2009 est.)
GDP – composition by sector:
agriculture:
26.8%
industry:
48.8%
services:
24.4% (2005 est.)
Population below poverty line:
78.98%(2000 est.)
Household income or consumption by percentage share:r
lowest 10%:
2.6%
highest 10%:
35.8% (1996–97)
Inflation rate (consumer prices):
7% (2006 est.)
Labor force:
57.21 million
Labor force – by occupation:
agriculture 70%, industry 10%, services 20% (1999 est.)
Unemployment rate:
2.9% NA (2005 est.)
Budget:
revenues:
$17 billion
expenditures:
$13.54 billion including capital expenditures of $NA (2005 est.)
Industries:
crude oil, coal
, tin
, columbite
, palm oil
, peanut
s, cotton
, rubber
, wood, hides and skins, textiles, cement
and other construction materials, food products, footwear, chemicals, fertilizer, printing, ceramic
s, steel
, small commercial ship
construction
and repair
Industrial production growth rate:
2.4% (2005 est.)
Electricity – production:
15.59 billion kWh (2003)
Electricity – production by source:
fossil fuel:
61.69%
hydro:
38.31%
nuclear:
0%
other:
<.1% (1998)
Electricity - consumption:
14.46 billion kWh (2003)
Electricity - exports:
40 million kWh (2003)
Electricity - imports:
0 kWh (1998)
Oil - production:
2.35 Moilbbl/d (July 2006 est.)
Oil - consumption:
310000 oilbbl/d (2003 est.)
Agriculture – products:
cocoa, peanut
s, palm oil
, maize
, rice
, sorghum
, millet
, cassava
(tapioca
), yams
, rubber
; cattle
, sheep
, goat
s, pig
s; timber
; fish
Exports:
$72.16 billion f.o.b. (2005 est.)
Exports – commodities:
petroleum
and petroleum products 95%, cocoa, rubber
Exports – partners:
United States 47.4%, Brazil 10.7%, Spain 7.1%(2004)
Imports:
$45.95 billion f.o.b. (2005 est.)
Imports – commodities:
machinery, chemicals, transport equipment, manufactured goods, food and live animals
Imports – partners:
the People's Republic of China 9.4%, United States 8.4%, United Kingdom 7.8%, Netherlands 5.9%, France 5.4%, Germany 4.8%, Italy 4% (2004)
Debt – external:
$3.3 billion with London Club(2006 est.)
Economic aid – recipient:
IMF $250 million (1998)
Currency:
1 Naira (NGN) = 100 kobo
Exchange rates:
Naira (NGN) per US$1 – 149.5 (2009), 120 (2006), 128 (2005), 132.89 (2004), 129.22 (2003), 120.58 (2002), 111.23 (2001)
External Reserves:
$59 billion ( 2008)
Fiscal year:
calendar year 2009
Economy
An economy consists of the economic system of a country or other area; the labor, capital and land resources; and the manufacturing, trade, distribution, and consumption of goods and services of that area...
of Nigeria
Nigeria
Nigeria , officially the Federal Republic of Nigeria, is a federal constitutional republic comprising 36 states and its Federal Capital Territory, Abuja. The country is located in West Africa and shares land borders with the Republic of Benin in the west, Chad and Cameroon in the east, and Niger in...
is a middle income, mixed economy emerging market with well-developed financial, legal, communications, transport, and entertainment sectors. It is ranked 31st in the world in terms of GDP (PPP) as of 2009, and its emergent, though currently underperforming manufacturing sector is the second-largest on the continent, producing a large proportion of goods and services for the West African region.
Previously hindered by years of mismanagement, economic reforms of the past decade have put Nigeria back on track towards achieving its full economic potential. Nigerian GDP at purchasing power parity more than doubled from $170.7 billion in 2005 to $374.3 billion in 2010, although estimates of the size of the informal sector (which is not included in official figures) put the actual numbers closer to $520 billion. Correspondingly, the GDP per capita doubled from $1200 per person in 2005 to an estimated $2,500 per person in 2009 (again, with the inclusion of the informal sector, it is estimated that GDP per capita hovers around $3,500 per person).
It is the largest economy in the West Africa Region, 3rd largest economy in Africa (behind South Africa and Egypt), and on track to becoming one of the top 30 economies in the world in the early part of 2011.
Although much has been made of its status as a major exporter of oil, Nigeria produces only about 3.3% of the world's supply, and though it is ranked as 15th in production at 2.2 Moilbbl/d (mbpd), the top 3 producers Saudi Arabia
Saudi Arabia
The Kingdom of Saudi Arabia , commonly known in British English as Saudi Arabia and in Arabic as as-Sa‘ūdiyyah , is the largest state in Western Asia by land area, constituting the bulk of the Arabian Peninsula, and the second-largest in the Arab World...
, Russia
Russia
Russia or , officially known as both Russia and the Russian Federation , is a country in northern Eurasia. It is a federal semi-presidential republic, comprising 83 federal subjects...
, and the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
produce 10.7 Moilbbl/d (17%), 9.8 Moilbbl/d (15%), and 8.5 Moilbbl/d (13%)respectively, collectively accounting for 63.6 Moilbbl/d (45%) of the world's total production. To put oil revenues in perspective: at an estimated export rate of 1.9 Moilbbl/d, with a projected sales price of $65 per barrel in 2011, Nigeria's anticipated revenue from petroleum is about $52.2 billion. This accounts for less than 14% of official GDP figures (and drops to 10% when the informal economy is included in these calculations). Therefore, though the petroleum sector is important, it remains in fact a small part of the country's overall vibrant and diversified economy.
The largely subsistence agricultural sector has not kept up with rapid population growth, and Nigeria, once a large net exporter of food, now imports some of its food products. In 2006, Nigeria successfully convinced the Paris Club
Paris Club
The Paris Club is an informal group of financial officials from 19 of some of the world's biggest economies, which provides financial services such as war funding, debt restructuring, debt relief, and debt cancellation to indebted countries and their creditors...
to let it buy back the bulk of its debts owed to the Paris Club for a cash payment of roughly $12 billion (USD).
Overview
Nigeria’s economy is struggling to leverage the country’s vast wealth in fossil fuels in order to displace the crushing poverty that affects about 57 percent of its population. Economists refer to the coexistence of vast wealth in natural resources and extreme personal poverty in developing countries like Nigeria as the “resource curseResource curse
The resource curse refers to the paradox that countries and regions with an abundance of natural resources, specifically point-source non-renewable resources like minerals and fuels, tend to have less economic growth and worse development outcomes than countries with fewer natural resources...
”.Although "resource curse" is more widely understood to mean an abundance of natural resources which fuels official corruption resulting in a violent competition for the resource by the citizens of the nation. Nigeria’s exports of oil and natural gas—at a time of peak prices—have enabled the country to post merchandise trade and current account surpluses in recent years. Reportedly, 80 percent of Nigeria’s energy revenues flow to the government, 16 percent cover operational costs, and the remaining 4 percent go to investors. However, the World Bank has estimated that as a result of corruption 80 percent of energy revenues benefit only 1 percent of the population. In 2005, Nigeria achieved a milestone agreement with the Paris Club of lending nations to eliminate all of its bilateral external debt. Under the agreement, the lenders will forgive most of the debt, and Nigeria will pay off the remainder with a portion of its energy revenues. Outside of the energy sector, Nigeria’s economy is highly inefficient. Moreover, human capital is underdeveloped—Nigeria ranked 151 out of 177 countries in the United Nations Development Index in 2004—and non-energy-related infrastructure is inadequate.
From 2003 to 2007, Nigeria attempted to implement an economic reform program called the National Economic Empowerment Development Strategy (NEEDS). The purpose of the NEEDS was to raise the country’s standard of living
Standard of living
Standard of living is generally measured by standards such as real income per person and poverty rate. Other measures such as access and quality of health care, income growth inequality and educational standards are also used. Examples are access to certain goods , or measures of health such as...
through a variety of reforms, including macroeconomic stability, deregulation
Deregulation
Deregulation is the removal or simplification of government rules and regulations that constrain the operation of market forces.Deregulation is the removal or simplification of government rules and regulations that constrain the operation of market forces.Deregulation is the removal or...
, liberalization
Liberalization
In general, liberalization refers to a relaxation of previous government restrictions, usually in areas of social or economic policy. In some contexts this process or concept is often, but not always, referred to as deregulation...
, privatization
Privatization
Privatization is the incidence or process of transferring ownership of a business, enterprise, agency or public service from the public sector to the private sector or to private non-profit organizations...
, transparency, and accountability. The NEEDS addressed basic deficiencies, such as the lack of freshwater for household use and irrigation, unreliable power supplies, decaying infrastructure, impediments to private enterprise, and corruption. The government hoped that the NEEDS would create 7 million new jobs, diversify the economy, boost non-energy exports, increase industrial capacity utilization, and improve agricultural productivity. A related initiative on the state level is the State Economic Empowerment Development Strategy (SEEDS).
A longer-term economic development program is the United Nations (UN)-sponsored National Millennium Goals for Nigeria. Under the program, which covers the years from 2000 to 2015, Nigeria is committed to achieve a wide range of ambitious objectives involving poverty reduction, education, gender equality, health, the environment, and international development cooperation. In an update released in 2004, the UN found that Nigeria was making progress toward achieving several goals but was falling short on others. Specifically, Nigeria had advanced efforts to provide universal primary education, protect the environment, and develop a global development partnership. However, the country lagged behind on the goals of eliminating extreme poverty and hunger, reducing child and maternal mortality, and combating diseases such as human immunodeficiency virus/acquired immune deficiency syndrome (HIV/AIDS) and malaria.
A prerequisite for achieving many of these worthwhile objectives is curtailing endemic corruption, which stymies development and taints Nigeria’s business environment. President Olusegun Obasanjo’s campaign against corruption, which includes the arrest of officials accused of misdeeds and recovering stolen funds, has won praise from the World Bank
World Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
. In September 2005, Nigeria, with the assistance of the World Bank, began to recover US$458 million of illicit funds that had been deposited in Swiss banks by the late military dictator Sani Abacha, who ruled Nigeria from 1993 to 1998. However, while broad-based progress has been slow, these efforts have begun to become evident in international surveys of corruption. In fact, Nigeria's ranking has consistently improved since 2001 ranking 147 out of 180 countries in Transparency International’s 2007 Corruption Perceptions
Macro-economic trend
This is a chart of trend of gross domestic product of Nigeria at market prices estimated by the International Monetary Fund with figures in millions of Nigerian NairaNigerian naira
The naira is the currency of Nigeria. It is subdivided into 100 kobo.The Central Bank of Nigeria is the sole issuer of legal tender money throughout the Federation. It controls the volume of money supply in the economy in order to ensure monetary and price stability...
.
| Year | Gross Domestic Product | US Dollar Exchange | Inflation Index (2000=100) |
Per Capita Income (as % of USA) |
|---|---|---|---|---|
| 1980 | 50,849 | 0.78 Naira | 1.30 | 7.22 |
| 1985 | 98,619 | 2.83 Naira | 3.20 | 1.87 |
| 1990 | 286,374 | 8.94 Naira | 8.10 | 1.49 |
| 1995 | 1,928,642 | 54.36 Naira | 56 | 1.28 |
| 2000 | 4,676,394 | 102.24 Naira | 100 | 1.11 |
| 2005 | 14,894,454 | 131.01 Naira | 207 | 1.96 |
For purchasing power parity comparisons, the US Dollar is exchanged at 75.75 Nigerian Naira only.
Current GDP per capita] of Nigeria expanded 132% in the Sixties reaching a peak growth of 283% in the Seventies. But this proved unsustainable and it consequently shrank by 66% in the Eighties. In the Nineties, diversification initiatives finally took effect and decadal growth was restored to 10%.
Due to inflation, per capita GDP today remains lower than in 1960 when Nigeria declared independence. About 57 percent of the population lives on less than US$1 per day. In 2005 the GDP was composed of the following sectors: agriculture, 26.8 percent; industry, 48.8 percent; and services, 24.4 percent.
In 2005 Nigeria’s inflation rate was an estimated 15.6 percent. Nigeria’s goal under the National Economic Empowerment Development Strategy (NEEDS) program is to reduce inflation to the single digits.
In 2005 Nigeria’s central government had expenditures of US$13.54 billion but revenues of only US$12.86 billion, resulting in a budget deficit of 5 percent. Nigerian tax authorities face the challenge of widespread tax evasion, which is motivated by complaints about corruption and the poor quality of services.
Mean wages were $1.11 per manhour in 2009.
Agriculture
Nigeria ranks twenty fifth worldwide and first in Africa in farm output.Agriculture has suffered from years of mismanagement, inconsistent and poorly conceived government policies, and the lack of basic infrastructure. Still, the sector accounts for over 26.8% of GDP and two-thirds of employment. Nigeria is no longer a major exporter of cocoa, groundnuts (peanuts), rubber, and palm oil. Cocoa production, mostly from obsolete varieties and overage trees, is stagnant at around 180,000 tons annually; 25 years ago it was 300,000 tons. An even more dramatic decline in groundnut and palm oil production also has taken place. Once the biggest poultry producer in Africa, corporate poultry
Poultry
Poultry are domesticated birds kept by humans for the purpose of producing eggs, meat, and/or feathers. These most typically are members of the superorder Galloanserae , especially the order Galliformes and the family Anatidae , commonly known as "waterfowl"...
output has been slashed from 40 million birds annually to about 18 million. Import constraints limit the availability of many agricultural and food processing inputs for poultry and other sectors. Fisheries are poorly managed. Most critical for the country's future, Nigeria's land tenure system does not encourage long-term investment in technology or modern production methods and does not inspire the availability of rural credit.
Agricultural products include cassava (tapioca), corn, cocoa, millet, palm oil, peanuts, rice, rubber, sorghum, and yams. In 2003 livestock production, in order of metric tonnage, featured eggs, milk, beef and veal, poultry, and pork, respectively. In the same year, the total fishing catch was 505.8 metric tons. Roundwood removals totaled slightly less than 70 million cubic meters, and sawnwood production was estimated at 2 million cubic meters. The agricultural sector suffers from extremely low productivity, reflecting reliance on antiquated methods. Although overall agricultural production rose by 28 percent during the 1990s, per capita output rose by only 8.5 percent during the same decade. Agriculture has failed to keep pace with Nigeria’s rapid population growth, so that the country, which once exported food, now relies on imports to sustain itself.
Industry
Nigeria ranks 44th worldwide and third in Africa in factory output.The oil boom of the 1970s led Nigeria to neglect its strong agricultural and light manufacturing bases in favor of an unhealthy dependence on crude oil. In 2000, oil and gas exports accounted for more than 98% of export earnings and about 83% of federal government revenue. New oil wealth, the concurrent decline of other economic sectors, and a lurch toward a statist economic model fueled massive migration to the cities and led to increasingly widespread poverty, especially in rural areas. A collapse of basic infrastructure and social services since the early 1980s accompanied this trend. By 2000, Nigeria's per capita income had plunged to about one-quarter of its mid-1970s high, below the level at independence. Along with the endemic malaise of Nigeria's non-oil sectors, the economy continues to witness massive growth of "informal sector" economic activities, estimated by some to be as high as 75% of the total economy.
Nigeria's proven oil reserves
Oil reserves
The total estimated amount of oil in an oil reservoir, including both producible and non-producible oil, is called oil in place. However, because of reservoir characteristics and limitations in petroleum extraction technologies, only a fraction of this oil can be brought to the surface, and it is...
are estimated to be 35 Goilbbl; natural gas reserves are well over 100 Tcuft. Nigeria is a member of the Organization of Petroleum Exporting Countries (OPEC), and in mid-2001, its crude oil production was averaging around The types of crude oil exported by Nigeria are Bonny light oil
Bonny Light oil
Bonny Light oil is a high grade of Nigerian crude oil with high API gravity , produced in the Niger Delta basin and named after the prolific region around the city of Bonny....
, Forcados crude oil, Qua Ibo crude oil and Brass River crude oil. Poor corporate relations with indigenous communities, vandalism of oil infrastructure, severe ecological damage, and personal security problems throughout the Niger Delta
Niger Delta
The Niger Delta, the delta of the Niger River in Nigeria, is a densely populated region sometimes called the Oil Rivers because it was once a major producer of palm oil...
oil-producing region continue to plague Nigeria's oil sector. Efforts are underway to reverse these troubles. In the absence of government programs, the major multinational oil companies have launched their own community development programs. A new entity, the Niger Delta Development Commission
Niger Delta Development Commission
The Niger Delta Development Commission is a Federal Government agency established by Nigerian president, Olusegun Obasanjo in the year 2000 with the sole mandate of developing the oil-rich Niger Delta region of southern Nigeria....
(NDDC), has been created to help catalyze economic and social development in the region. Although it has yet to launch its programs, hopes are high that the NDDC can reverse the impoverishment of local communities. The U.S. remains Nigeria's largest customer for crude oil, accounting for 40% of the country's total oil exports; Nigeria provides about 10% of overall U.S. oil imports and ranks as the fifth-largest source for U.S. imported oil.
The United Kingdom is Nigeria's largest trading partner followed by the United States. Although the trade balance overwhelmingly favors Nigeria, thanks to oil exports, a large portion of U.S. exports to Nigeria is believed to enter the country outside of the Nigerian government's official statistics, due to importers seeking to avoid Nigeria's excessive tariffs. To counter smuggling and under-invoicing by importers, in May 2001, the Nigerian government instituted a full inspection program for all imports, and enforcement has been sustained. On the whole, Nigerian high tariffs and non-tariff barriers are gradually being reduced, but much progress remains to be made. The government also has been encouraging the expansion of foreign investment, although the country's investment climate remains daunting to all but the most determined. The stock of U.S. investment is nearly $7 billion, mostly in the energy sector. Exxon Mobil and Chevron
Chevron Corporation
Chevron Corporation is an American multinational energy corporation headquartered in San Ramon, California, United States and active in more than 180 countries. It is engaged in every aspect of the oil, gas, and geothermal energy industries, including exploration and production; refining,...
are the two largest U.S. corporations in offshore oil and gas production. Significant exports of liquefied natural gas started in late 1999 and are slated to expand as Nigeria seeks to eliminate gas flaring by 2008.
Oil dependency, and the allure it generated of great wealth through government contracts, spawned other economic distortions. The country's high propensity to import means roughly 80% of government expenditures is recycled into foreign exchange. Cheap consumer imports, resulting from a chronically overvalued Naira, coupled with excessively high domestic production costs due in part to erratic electricity and fuel supply, pushed down utilization of industrial capacity to less than 30%. Many more Nigerian factories would have closed except for relatively low labor costs (10%–15%). Domestic manufacturers, especially pharmaceuticals and textiles, have lost their ability to compete in traditional regional markets. However, there are signs that some manufacturers have begun to improve competitiveness.
In April 2006, Nigeria became the first African country to fully pay off its debt owed to the Paris Club
Paris Club
The Paris Club is an informal group of financial officials from 19 of some of the world's biggest economies, which provides financial services such as war funding, debt restructuring, debt relief, and debt cancellation to indebted countries and their creditors...
. However, this was structured as a debt writeoff of approximately $18 billion and a cash payment of approximately $12 billion.
In the light of highly expansionary public sector fiscal policies in 2001, the government sought ways to head off higher inflation, leading to the implementation of stronger monetary policies by the Central Bank of Nigeria
Central Bank of Nigeria
The Central Bank of Nigeria was established by the CBN Act of 1958 and commenced operations on July 1, 1959.The major regulatory objectives of the bank as stated in the CBN act of 1958 is to: issue legal tender, maintain the external reserves of the country, promote monetary stability and a sound...
(CBN) and underspending of budgeted amounts. As a result of the CBN's efforts, the official exchange rate for the Naira has stabilized at about 112 Naira to the dollar. The combination of CBN's efforts to prop up the value of the Naira and excess liquidity resulting from government spending led the currency to be discounted by around 20% on the parallel (non-official) market. A key condition of the Stand-by Arrangement has been closure of the gap between the official and parallel market exchange rates. The Inter Bank Foreign Exchange Market (IFEM) is closely tied to the official rate. Under IFEM, banks, oil companies, and the CBN can buy or sell their foreign exchange at government influenced rates. Much of the informal economy, however, can only access foreign exchange through the parallel market. Companies can hold domiciliary accounts in private banks, and account holders have unfettered use of the funds.
Expanded government spending also has led to upward pressure on consumer prices. Inflation which had almost disappeared in April 2000 reached 14.5% by the end of the year and 18.7% in August 2001. In 2000, high oil prices resulted in government revenue of over $16 billion, about double the 1999 level. State and local governments demanded access to this "windfall" revenue, creating a tug-of-war between the federal government, which sought to control spending, and state governments desiring augmented budgets, preventing the government from making provision for periods of lower oil prices.
Services
Nigeria ranks 63rd worldwide and fifth in Africa in services' output. Low power and telecom density has crippled the growth of this sector.Since undergoing severe distress in the mid-1990s, Nigeria's banking sector has witnessed significant growth over the last few years as new banks enter the financial market. Harsh monetary policies implemented by the Central Bank of Nigeria to absorb excess Naira liquidity in the economy has made life more difficult for banks, some of whom engage in currency arbitrage (round-tripping) activities that generally fall outside legal banking mechanisms. Private sector-led economic growth remains stymied by the high cost of doing business in Nigeria, including the need to duplicate essential infrastructure, the threat of crime and associated need for security counter measures, the lack of effective due process, and nontransparent economic decisionmaking, especially in government contracting. As of 2007, 29% of Nigerians in urban areas did not own bank accounts.
While corrupt practices are endemic, they are generally less flagrant than during military rule, and there are signs of improvement. Meanwhile, since 1999 the Nigerian Stock Exchange has enjoyed strong performance, although equity as a means to foster corporate growth remains underutilized by Nigeria's private sector.
Transport
Nigeria's publicly owned transportation infrastructure is a major constraint to economic development. Principal ports are at LagosLagos
Lagos is a port and the most populous conurbation in Nigeria. With a population of 7,937,932, it is currently the third most populous city in Africa after Cairo and Kinshasa, and currently estimated to be the second fastest growing city in Africa...
(Apapa
Apapa
Apapa is the major port of the city of Lagos, Nigeria, and is located to the west of Lagos Island, across Lagos Harbour. It is also one of Nigeria's 774 Local Government Areas.- Overview :...
and Tin Can Island), Port Harcourt, and Calabar
Calabar
Calabar is a city in Cross River State, southeastern Nigeria. The original name for Calabar was Atakpa, from the Jukun language....
. Docking fees for freighters are among the highest in the world. Of the 80,500 kilometers (50,000 mi.) of roads, more than 15,000 kilometers (10,000 mi.) are officially paved, but many remain in poor shape. Extensive road repairs and new construction activities are gradually being implemented as state governments, in particular, spend their portions of enhanced government revenue allocations. The government implementation of 100% destination inspection of all goods entering Nigeria has resulted in long delays in clearing goods for importers and created new sources of corruption, since the ports lack adequate facilities to carry out the inspection. Four of Nigeria's airports—Lagos, Kano
Kano
Kano is a city in Nigeria and the capital of Kano State in Northern Nigeria. Its metropolitan population is the second largest in Nigeria after Lagos. The Kano Urban area covers 137 sq.km and comprises six Local Government Area - Kano Municipal, Fagge, Dala, Gwale, Tarauni and Nassarawa - with a...
, Port Harcourt and Abuja
Abuja
Abuja is the capital city of Nigeria. It is located in the centre of Nigeria, within the Federal Capital Territory . Abuja is a planned city, and was built mainly in the 1980s. It officially became Nigeria's capital on 12 December 1991, replacing Lagos...
--currently receive international flights. Government-owned Nigeria Airways
Nigeria Airways
Nigeria Airways Ltd., more commonly known as Nigeria Airways, is a defunct Nigerian airline. The company was founded in 1958 after the dissolution of West African Airways Corporation. It was wholly owned by the Government of Nigeria, and served as the country's flag carrier. The airline was...
ceased operations in December 2002. Virgin Nigeria Airways
Virgin Nigeria Airways
Air Nigeria , is the national flag carrier of Nigeria. The airline operates scheduled regional and domestic passenger services. Its base is Murtala Mohammed International Airport, Lagos. The airline is a replacement for defunct Nigeria Airways...
started operations in 2005 as a replacement and serves domestic and international routes. There are several domestic private Nigerian carriers, and air service among Nigeria's cities is generally dependable. The maintenance culture of Nigeria's domestic airlines is not up to internationally accepted standards.
Labour force
In 2005, Nigeria had a labour force of 57.2 million. In 2003, the unemployment rate was 10.8 percent overall; urban unemployment of 12.3 percent exceeded rural unemployment of 7.4 percent. According to the latest available information from 1999, labor force employment by sector was as follows: 70 percent in agriculture, 20 percent in services, and 10 percent in industry. Labor unions, which have undergone periods of militancy and quiescence, reemerged as a force in 1998 when they regained independence from the government. Since 1999, the Nigerian Labor Congress (NLC), a union umbrella organization, has called six general strikes to protest domestic fuel price increases. However, in March 2005 the government introduced legislation ending the NLC’s monopoly over union organizing. In December 2005, the NLC was lobbying for an increase in the minimum wage for federal workers. The existing minimum wage, which was introduced six years earlier but has not been adjusted since, has been whittled away by inflation to only US$42.80 per month.According to the International Organization for Migration
International Organization for Migration
The International Organization for Migration is an intergovernmental organization. It was initially established in 1951 as the Intergovernmental Committee for European Migration to help resettle people displaced by World War II....
, the number of immigrants residing in Nigeria has more than doubled in recent decades – from 477,135 in 1991 to 971,450 in 2005. The majority of immigrants in Nigeria (74 per cent) are from neighbouring Economic Community of West African States (ECOWAS), and that this number has increased considerably over the last decade, from 63 per cent in 2001 to 97 per cent in 2005. In spite of Nigeria's importance as a destination for migrants in the region, more people are emigrating from, than immigrating to, Nigeria with the negative net migration rate (per 1,000 people) steadily increasing in recent years, from -0.2 in 2000 to -0.3 in 2005, and this trend is expected to continue. According to recent estimates, the net migration rate could reach -0.4 in 2010.
Gradual reform
The Obasanjo government supports "private-sector" led, "market oriented" economic growthEconomic growth
In economics, economic growth is defined as the increasing capacity of the economy to satisfy the wants of goods and services of the members of society. Economic growth is enabled by increases in productivity, which lowers the inputs for a given amount of output. Lowered costs increase demand...
and has begun extensive economic reform efforts. Although the government's anti-corruption campaign has so far been disappointing, progress in injecting transparency and accountability into economic decisionmaking is notable. The dual exchange rate mechanism formally abolished in the 1999 budget remains in place in actuality. During 2000 the government's privatization program showed signs of life and real promise with successful turnover to the private sector of state-owned banks, fuel distribution companies, and cement plants. However, the privatization process has slowed somewhat as the government confronts key parastatals such as the state telephone company NITEL
NITEL
Nigerian Telecommunications Limited, or NITEL, is the principal telecommunications company in Nigeria, and was owned by the government of Nigeria until it was sold to Mtel by the Bureau of Public Enterprises...
and Nigerian Airways. The successful auction of GSM telecommunications licenses in January 2001 has encouraged investment in this vital sector.
Although the government has been stymied so far in its desire to deregulate downstream petroleum prices, state refineries, almost paralyzed in 2000, are producing at much higher capacities. By August 2001, gasoline lines disappeared throughout much of the country. The government still intends to pursue deregulation despite significant internal opposition, particularly from the Nigeria Labour Congress
Nigeria Labour Congress
Nigeria Labour Congress is an umbrella organisation for trade unions in Nigeria. It was founded in 1978 following a merger of four different organisations: Nigeria Trade Union Congress , Labour Unity Front , United Labour Congress and Nigeria Workers Council . The numerous affiliated unions were...
. To meet market demand the government incurs large losses importing gasoline to sell at subsidized prices.
Investment
Although Nigeria must grapple with its decaying infrastructure and a poor regulatory environment, the country possesses many positive attributes for carefully targeted investment and will expand as both a regional and international market player. Profitable niche markets outside the energy sector, like specialized telecommunication providers, have developed under the government's reform program. There is a growing Nigerian consensus that foreign investment is essential to realizing Nigeria's vast but squandered potential. European investments are increasing, especially since Belgian consultancy companies such as Genco are exploring the Nigerian market.Companies interested in long-term investment and joint ventures, especially those that use locally available raw materials, will find opportunities in the large national market. However, to improve prospects for success, potential investors must educate themselves extensively on local conditions and business practices, establish a local presence, and choose their partners carefully. The Nigerian Government is keenly aware that sustaining democratic principles, enhancing security for life and property, and rebuilding and maintaining infrastructure are necessary for the country to attract foreign investment.
The stock market capitalisation of listed companies in Nigeria was valued at $97.75 billion on February 15, 2008 by the Nigerian Stock Exchange.
Foreign economic relations
Nigeria’s foreign economic relations revolve around its role in supplying the world economy with oil and natural gas, even as the country seeks to diversify its exports, harmonize tariffs in line with a potential customs unionCustoms union
A customs union is a type of trade bloc which is composed of a free trade area with a common external tariff. The participant countries set up common external trade policy, but in some cases they use different import quotas...
sought by the Economic Community of West African States
Economic Community of West African States
The Economic Community of West African States is a regional group of fifteen West African countries. Founded on 28 May 1975, with the signing of the Treaty of Lagos, its mission is to promote economic integration across the region....
(ECOWAS), and encourage inflows of foreign portfolio and direct investment. In October 2005, Nigeria implemented the ECOWAS common external tariff
Common external tariff
When a group of countries form a customs union they must introduce a common external tariff. The same customs duties, import quotas, preferences or other non-tariff barriers to trade apply to all goods entering the area, regardless of which country within the area they are entering...
, which reduced the number of tariff bands. Prior to this revision, tariffs constituted Nigeria’s second largest source of revenue after oil exports. In 2005 Nigeria achieved a major breakthrough when it reached an agreement with the Paris Club to eliminate its bilateral debt through a combination of write-downs and buybacks. Nigeria joined the Organization of the Petroleum Exporting Countries in July 1971 and the World Trade Organization
World Trade Organization
The World Trade Organization is an organization that intends to supervise and liberalize international trade. The organization officially commenced on January 1, 1995 under the Marrakech Agreement, replacing the General Agreement on Tariffs and Trade , which commenced in 1948...
in January 1995.
External trade
In 2005, Nigeria exported about US$52 billion of goods. In 2004, the leading destinations for exports were the United States (47.4 percent), Brazil (10.7 percent), and Spain (7.1 percent). In 2004 oil accounted for 95 percent of merchandise exports, and cocoa and rubber accounted for almost 60 percent of the remainder.
In 2005, Nigeria posted a US$26 billion trade surplus, corresponding to almost 20 percent of gross domestic product. In 2005, Nigeria achieved a positive current account balance of US$9.6 billion. The Nigerian currency is the naira (NGN). As of mid-June 2006, the exchange rate
Exchange rate
In finance, an exchange rate between two currencies is the rate at which one currency will be exchanged for another. It is also regarded as the value of one country’s currency in terms of another currency...
was about US$1=NGN128.4.
In recent years, Nigeria has expanded its trade relations with other developing countries such as India. Nigeria is the largest African crude oil supplier to India — it annually exports 400000 oilbbl/d to India valued at US$10 billion annually.
India seeks expansion of oil trade with Nigeria, as it is the second largest purchaser of Nigeria's oil which fulfills 20 to 25 percent of India's domestic oil demand. Indian oil companies are also involved in oil drilling operations in Nigeria and have plans to set up refineries there.
Remittances
According to the International Organization for MigrationInternational Organization for Migration
The International Organization for Migration is an intergovernmental organization. It was initially established in 1951 as the Intergovernmental Committee for European Migration to help resettle people displaced by World War II....
, Nigeria witnessed a dramatic increase from USD 2.3 billion in 2004 to 17.9 billion in 2007, representing 6.7 per cent of GDP.The United States accounts for the largest portion of official remittances, followed by the United Kingdom, Italy, Canada, Spain and France. On the African continent, Egypt, Equatorial Guinea, Chad, the Libyan Arab Jamahiriya and South Africa are important source countries of remittance flows to Nigeria, while China is the biggest remittance-sending country in Asia.
Foreign investment
In 2007, Nigeria received a net inflow of US$5.2 billion of foreign direct investmentForeign direct investment
Foreign direct investment or foreign investment refers to the net inflows of investment to acquire a lasting management interest in an enterprise operating in an economy other than that of the investor.. It is the sum of equity capital,other long-term capital, and short-term capital as shown in...
(FDI), much of which came from Nigerians in the diaspora. Most FDI is directed toward the energy and banking sectors.
Swiss Banks to return Abacha Funds
The Swiss foreign ministry says it has done all it can to ensure that funds stolen by the late Nigerian dictator Sani AbachaSani Abacha
General Sani Abacha was a Nigerian military leader and politician. A Kanuri from Borno by tribe, he was born and brought up in Kano, Nigeria. He was the de facto President of Nigeria from 1993 to 1998....
were used properly in his homeland. The authorities were responding to allegations that $200 million (SFr240 million) of $700 million handed back by the Swiss Banks to Nigeria had been misappropriated.
Economic assistance
As of October 2005, World Bank assistance to Nigeria involved 19 active projects with a total commitment value of about US$1.87 billion. Since Nigeria joined the World Bank in 1961, the World Bank has assisted it on 120 projects. In October 2005, the International Monetary Fund approved a two-year “policy support instrument” designed to promote the growth of the non-oil sector and to reduce poverty.The United States assisted with Nigeria's economic development
Economic development
Economic development generally refers to the sustained, concerted actions of policymakers and communities that promote the standard of living and economic health of a specific area...
from 1954 through June 1974, when concessional assistance was phased out because of a substantial increase in Nigeria's per capita income resulting from rising oil revenue. By 1974, the United States had provided Nigeria with approximately $360 million in assistance, which included grants for technical assistance, development assistance
Development aid
Development aid or development cooperation is aid given by governments and other agencies to support the economic, environmental, social and political development of developing countries.It is distinguished...
, relief and rehabilitation, and food aid. Disbursements continued into the late 1970s, bringing total bilateral economic assistance to roughly $445 million.
The sharp decline in oil prices, economic mismanagement, and continued military rule characterized Nigeria in the 1980s. In 1983, USAID began providing assistance to the Nigerian Federal and State Ministries of Health to develop and implement programs in family planning and child survival. In 1992, an HIV
HIV
Human immunodeficiency virus is a lentivirus that causes acquired immunodeficiency syndrome , a condition in humans in which progressive failure of the immune system allows life-threatening opportunistic infections and cancers to thrive...
/AIDS
AIDS
Acquired immune deficiency syndrome or acquired immunodeficiency syndrome is a disease of the human immune system caused by the human immunodeficiency virus...
prevention and control program was added to existing health activities. USAID committed $135 million to bilateral assistance programs for the period of 1986 to 1996 as Nigeria undertook an initially successful Structural Adjustment Program, but later abandoned it. Plans to commit $150 million in assistance from 1993 to 2000 were interrupted by strains in U.S.-Nigerian relations over human rights abuses, the failed transition to democracy, and a lack of cooperation from the Nigerian Government on anti-narcotics trafficking issues. By the mid-1990s, these problems resulted in the curtailment of USAID activities that might benefit the military Government. Existing health programs were re-designed to focus on working through grassroots Nigerian non-governmental organizations and community groups. As a response to the Nigerian military government's plans for delayed transition to civilian rule, the Peace Corps
Peace Corps
The Peace Corps is an American volunteer program run by the United States Government, as well as a government agency of the same name. The mission of the Peace Corps includes three goals: providing technical assistance, helping people outside the United States to understand US culture, and helping...
closed its program in Nigeria in 1994.
In response to the increasingly repressive political situation, USAID established a Democracy and Governance (DG) program in 1996. This program integrates themes focusing on basic participatory democracy
Participatory democracy
Participatory Democracy, also known as Deliberative Democracy, Direct Democracy and Real Democracy , is a process where political decisions are made directly by regular people...
, human rights
Human rights
Human rights are "commonly understood as inalienable fundamental rights to which a person is inherently entitled simply because she or he is a human being." Human rights are thus conceived as universal and egalitarian . These rights may exist as natural rights or as legal rights, in both national...
and civil rights
Civil rights
Civil and political rights are a class of rights that protect individuals' freedom from unwarranted infringement by governments and private organizations, and ensure one's ability to participate in the civil and political life of the state without discrimination or repression.Civil rights include...
, women's empowerment, accountability, and transparency with other health activities to reach Nigerians at the grassroots level in 14 of Nigeria's 36 states.
The sudden death of General Sani Abacha
Sani Abacha
General Sani Abacha was a Nigerian military leader and politician. A Kanuri from Borno by tribe, he was born and brought up in Kano, Nigeria. He was the de facto President of Nigeria from 1993 to 1998....
and the assumption of power by General Abdulsalami Abubakar
Abdulsalami Abubakar
General Abdulsalami Alhaji Abubakar is a Nigerian general who was President of Nigeria from June 9, 1998 until May 29, 1999. He succeeded Sani Abacha upon Abacha's death. It was during Abubakar's leadership that Nigeria adopted its new constitution on May 5, 1999, which provided for multiparty...
in June 1998, marked a turning point in U.S.-Nigerian relations. USAID provided significant support to the electoral process by providing some $4 million in funding for international election observation, the training of Nigerian election observers and political party polling agents, as well as voter education activities. A Vital National Interest Certification was submitted to Congress in February 1999 by President Clinton
Bill Clinton
William Jefferson "Bill" Clinton is an American politician who served as the 42nd President of the United States from 1993 to 2001. Inaugurated at age 46, he was the third-youngest president. He took office at the end of the Cold War, and was the first president of the baby boomer generation...
to lift restrictions on U.S. Government interaction with and support to the Government of Nigeria.
Since that time, USAID has supported Nigeria to sustain democracy and to improve governance by providing training on the roles and responsibilities of elected officials in a representative democracy for newly elected officials at the federal, state, and local levels prior to their installation in May 1999 and assisting with conflict prevention and resolution in the Niger Delta, civil military relations, civil society, and political party development. In the economic area USAID supports programs in strengthening economic management and coordination, encouraging private sector development and economic reform, helping Nigeria reap the benefits of AGOA, improved agricultural technology and marketing and smallscale and microenterprise development. In addition, health assistance, focusing on HIV/AIDS, nutrition, and immunization, education, transportation and energy infrastructure, are priorities for bilateral assistance.
Data
GDP:
purchasing power parity – $459.4 billion (2009 est.)
GDP – real growth rate:
7% (July 2006 est.)
GDP – per capita:
purchasing power parity – $3460 (2009 est.)
GDP – composition by sector:
agriculture:
26.8%
industry:
48.8%
services:
24.4% (2005 est.)
Population below poverty line:
78.98%(2000 est.)
Household income or consumption by percentage share:r
lowest 10%:
2.6%
highest 10%:
35.8% (1996–97)
Inflation rate (consumer prices):
7% (2006 est.)
Labor force:
57.21 million
Labor force – by occupation:
agriculture 70%, industry 10%, services 20% (1999 est.)
Unemployment rate:
2.9% NA (2005 est.)
Budget:
revenues:
$17 billion
expenditures:
$13.54 billion including capital expenditures of $NA (2005 est.)
Industries:
crude oil, coal
Coal
Coal is a combustible black or brownish-black sedimentary rock usually occurring in rock strata in layers or veins called coal beds or coal seams. The harder forms, such as anthracite coal, can be regarded as metamorphic rock because of later exposure to elevated temperature and pressure...
, tin
Tin
Tin is a chemical element with the symbol Sn and atomic number 50. It is a main group metal in group 14 of the periodic table. Tin shows chemical similarity to both neighboring group 14 elements, germanium and lead and has two possible oxidation states, +2 and the slightly more stable +4...
, columbite
Columbite
Columbite, also called niobite, niobite-tantalite and columbate [2O6], is a black mineral group that is an ore of niobium and tantalum. It has a submetallic luster and a high density and is a niobate of iron and manganese, containing tantalate of iron. This mineral group was first found in Haddam,...
, palm oil
Palm oil
Palm oil, coconut oil and palm kernel oil are edible plant oils derived from the fruits of palm trees. Palm oil is extracted from the pulp of the fruit of the oil palm Elaeis guineensis; palm kernel oil is derived from the kernel of the oil palm and coconut oil is derived from the kernel of the...
, peanut
Peanut
The peanut, or groundnut , is a species in the legume or "bean" family , so it is not a nut. The peanut was probably first cultivated in the valleys of Peru. It is an annual herbaceous plant growing tall...
s, cotton
Cotton
Cotton is a soft, fluffy staple fiber that grows in a boll, or protective capsule, around the seeds of cotton plants of the genus Gossypium. The fiber is almost pure cellulose. The botanical purpose of cotton fiber is to aid in seed dispersal....
, rubber
Rubber
Natural rubber, also called India rubber or caoutchouc, is an elastomer that was originally derived from latex, a milky colloid produced by some plants. The plants would be ‘tapped’, that is, an incision made into the bark of the tree and the sticky, milk colored latex sap collected and refined...
, wood, hides and skins, textiles, cement
Cement
In the most general sense of the word, a cement is a binder, a substance that sets and hardens independently, and can bind other materials together. The word "cement" traces to the Romans, who used the term opus caementicium to describe masonry resembling modern concrete that was made from crushed...
and other construction materials, food products, footwear, chemicals, fertilizer, printing, ceramic
Ceramic
A ceramic is an inorganic, nonmetallic solid prepared by the action of heat and subsequent cooling. Ceramic materials may have a crystalline or partly crystalline structure, or may be amorphous...
s, steel
Steel
Steel is an alloy that consists mostly of iron and has a carbon content between 0.2% and 2.1% by weight, depending on the grade. Carbon is the most common alloying material for iron, but various other alloying elements are used, such as manganese, chromium, vanadium, and tungsten...
, small commercial ship
Ship
Since the end of the age of sail a ship has been any large buoyant marine vessel. Ships are generally distinguished from boats based on size and cargo or passenger capacity. Ships are used on lakes, seas, and rivers for a variety of activities, such as the transport of people or goods, fishing,...
construction
Construction
In the fields of architecture and civil engineering, construction is a process that consists of the building or assembling of infrastructure. Far from being a single activity, large scale construction is a feat of human multitasking...
and repair
Industrial production growth rate:
2.4% (2005 est.)
Electricity – production:
15.59 billion kWh (2003)
Electricity – production by source:
fossil fuel:
61.69%
hydro:
38.31%
nuclear:
0%
other:
<.1% (1998)
Electricity - consumption:
14.46 billion kWh (2003)
Electricity - exports:
40 million kWh (2003)
Electricity - imports:
0 kWh (1998)
Oil - production:
2.35 Moilbbl/d (July 2006 est.)
Oil - consumption:
310000 oilbbl/d (2003 est.)
Agriculture – products:
cocoa, peanut
Peanut
The peanut, or groundnut , is a species in the legume or "bean" family , so it is not a nut. The peanut was probably first cultivated in the valleys of Peru. It is an annual herbaceous plant growing tall...
s, palm oil
Palm oil
Palm oil, coconut oil and palm kernel oil are edible plant oils derived from the fruits of palm trees. Palm oil is extracted from the pulp of the fruit of the oil palm Elaeis guineensis; palm kernel oil is derived from the kernel of the oil palm and coconut oil is derived from the kernel of the...
, maize
Maize
Maize known in many English-speaking countries as corn or mielie/mealie, is a grain domesticated by indigenous peoples in Mesoamerica in prehistoric times. The leafy stalk produces ears which contain seeds called kernels. Though technically a grain, maize kernels are used in cooking as a vegetable...
, rice
Rice
Rice is the seed of the monocot plants Oryza sativa or Oryza glaberrima . As a cereal grain, it is the most important staple food for a large part of the world's human population, especially in East Asia, Southeast Asia, South Asia, the Middle East, and the West Indies...
, sorghum
Sorghum
Sorghum is a genus of numerous species of grasses, one of which is raised for grain and many of which are used as fodder plants either cultivated or as part of pasture. The plants are cultivated in warmer climates worldwide. Species are native to tropical and subtropical regions of all continents...
, millet
Millet
The millets are a group of small-seeded species of cereal crops or grains, widely grown around the world for food and fodder. They do not form a taxonomic group, but rather a functional or agronomic one. Their essential similarities are that they are small-seeded grasses grown in difficult...
, cassava
Cassava
Cassava , also called yuca or manioc, a woody shrub of the Euphorbiaceae native to South America, is extensively cultivated as an annual crop in tropical and subtropical regions for its edible starchy tuberous root, a major source of carbohydrates...
(tapioca
Tapioca
Tapioca is a starch extracted Manihot esculenta. This species, native to the Amazon, Brazil, Colombia, Venezuela, Cuba, Puerto Rico, Haiti, the Dominican Republic, Honduras, and most of the West Indies, is now cultivated worldwide and has many names, including cassava, manioc, aipim,...
), yams
Yam (vegetable)
Yam is the common name for some species in the genus Dioscorea . These are perennial herbaceous vines cultivated for the consumption of their starchy tubers in Africa, Asia, Latin America and Oceania...
, rubber
Rubber
Natural rubber, also called India rubber or caoutchouc, is an elastomer that was originally derived from latex, a milky colloid produced by some plants. The plants would be ‘tapped’, that is, an incision made into the bark of the tree and the sticky, milk colored latex sap collected and refined...
; cattle
Cattle
Cattle are the most common type of large domesticated ungulates. They are a prominent modern member of the subfamily Bovinae, are the most widespread species of the genus Bos, and are most commonly classified collectively as Bos primigenius...
, sheep
Domestic sheep
Sheep are quadrupedal, ruminant mammals typically kept as livestock. Like all ruminants, sheep are members of the order Artiodactyla, the even-toed ungulates. Although the name "sheep" applies to many species in the genus Ovis, in everyday usage it almost always refers to Ovis aries...
, goat
Goat
The domestic goat is a subspecies of goat domesticated from the wild goat of southwest Asia and Eastern Europe. The goat is a member of the Bovidae family and is closely related to the sheep as both are in the goat-antelope subfamily Caprinae. There are over three hundred distinct breeds of...
s, pig
Domestic pig
The domestic pig is a domesticated animal that traces its ancestry to the wild boar, and is considered a subspecies of the wild boar or a distinct species in its own right. It is likely the wild boar was domesticated as early as 13,000 BC in the Tigris River basin...
s; timber
Timber
Timber may refer to:* Timber, a term common in the United Kingdom and Australia for wood materials * Timber, Oregon, an unincorporated community in the U.S...
; fish
Fish
Fish are a paraphyletic group of organisms that consist of all gill-bearing aquatic vertebrate animals that lack limbs with digits. Included in this definition are the living hagfish, lampreys, and cartilaginous and bony fish, as well as various extinct related groups...
Exports:
$72.16 billion f.o.b. (2005 est.)
Exports – commodities:
petroleum
Petroleum
Petroleum or crude oil is a naturally occurring, flammable liquid consisting of a complex mixture of hydrocarbons of various molecular weights and other liquid organic compounds, that are found in geologic formations beneath the Earth's surface. Petroleum is recovered mostly through oil drilling...
and petroleum products 95%, cocoa, rubber
Rubber
Natural rubber, also called India rubber or caoutchouc, is an elastomer that was originally derived from latex, a milky colloid produced by some plants. The plants would be ‘tapped’, that is, an incision made into the bark of the tree and the sticky, milk colored latex sap collected and refined...
Exports – partners:
United States 47.4%, Brazil 10.7%, Spain 7.1%(2004)
Imports:
$45.95 billion f.o.b. (2005 est.)
Imports – commodities:
machinery, chemicals, transport equipment, manufactured goods, food and live animals
Imports – partners:
the People's Republic of China 9.4%, United States 8.4%, United Kingdom 7.8%, Netherlands 5.9%, France 5.4%, Germany 4.8%, Italy 4% (2004)
Debt – external:
$3.3 billion with London Club(2006 est.)
Economic aid – recipient:
IMF $250 million (1998)
Currency:
1 Naira (NGN) = 100 kobo
Exchange rates:
Naira (NGN) per US$1 – 149.5 (2009), 120 (2006), 128 (2005), 132.89 (2004), 129.22 (2003), 120.58 (2002), 111.23 (2001)
External Reserves:
$59 billion ( 2008)
Fiscal year:
calendar year 2009
External links
- Nigeria latest trade data on ITC Trade Map
- West African Agricultural Market Observer/Observatoire du Marché Agricole (RESIMAO), a project of the West-African Market Information Network (WAMIS-NET), provides live market and commodity prices from fifty seven regional and local public agricultural markets across Benin, Burkina Faso, Côte d'Ivoire, Guinea, Niger, Mali, Senegal, Togo, and Nigeria. Sixty commodities are tracked weekly. The project is run by the Benin Ministry of Agriculture, and a number of European, African, and United Nations agencies.