Economy of Nigeria
|Economy of Nigeria|
|Currency||Nigerian naira (₦) (NGN)|
|GDP||$522 billion (2013 est.) (Nominal; 23rd)|
|6.2% (Q1 2014) (driven by non-oil production activities)|
GDP per capita
|$2,800 (2012 est.)|
GDP by sector
|agriculture: 40%; services: 30%; manufacturing: 15%; oil: 14% (2012 est.)|
|11.9% (2011 est.)|
Population below poverty line
|33.1% (2013 est.)|
|48.57 million (2011 est.)|
Labour force by occupation
|services: 32%; agriculture: 30%; manufacturing: 11%|
|Unemployment||24% (2011 est.)|
|crude oil, coal, tin, columbite, uranium; palm oil, peanuts, cotton, rubber, wood; hides and skins, textiles, cement and other construction materials, food products, footwear, chemicals, fertilizer, printing, ceramics, steel, small commercial ship construction and repair, entertainment, machinery, car assembly|
|Exports||$97.46 billion (2012 est.)|
|petroleum and petroleum products 95%, cocoa, rubber, machinery, processed foods, entertainment|
Main export partners
| United States 16.8%
United Kingdom 5.1%
France 4.1% (2012 est.)
|Imports||$70.58 billion (2012 est.)|
|machinery, chemicals, transport equipment, manufactured goods, food and live animals|
Main import partners
| China 18.2%
United States 10.0%
India 5.5% (2012 est.)
|$71.59 billion (2009 est.)|
Gross external debt
|$10.1 billion (2012 est.)|
|18.8% of GDP (2012 est.)|
|Expenses||$31.61 billion (2012 est.)|
|Standard & Poor's:
B+ (T&C Assessment)
|$42.8 billion (2012 est.)|
Nigeria is a middle income, mixed economy and emerging market, with expanding financial, service, communications, technology and entertainment sectors. It is ranked 26th in the world in terms of GDP (nominal: 30th in 2013 before rebasing, 40th in 2005, 52nd in 2000), and is the largest economy in Africa (based on rebased figures announced in April 2014). It is also on track to become one of the 20 largest economies in the world by 2020. Its re-emergent, though currently underperforming, manufacturing sector is the third-largest on the continent, and produces a large proportion of goods and services for the West African region. Nigeria recently changed its economic analysis to account for rapidly growing contributors to its GDP, such as telecommunications, banking, and its film industry. As a result of this statistical revision, Nigeria has added 89% to its GDP, making it the largest African economy.
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 (PPP) has almost tripled from $170 billion in 2000 to $451 billion in 2012, although estimates of the size of the informal sector (which is not included in official figures) put the actual numbers closer to $630 billion. Correspondingly, the GDP per capita doubled from $1400 per person in 2000 to an estimated $2,800 per person in 2012 (again, with the inclusion of the informal sector, it is estimated that GDP per capita hovers around $3,900 per person). (Population increased from 120 million in 2000 to 160 million in 2010). These figures are to be revised upwards by as much as 80% when metrics are recalculated subsequent to the rebasing of its economy in April 2014.
Although much has been made of its status as a major exporter of oil, Nigeria produces only about 2.7% of the world's supply (Saudi Arabia: 12.9%, Russia: 12.7%, USA:8.6%). To put oil revenues in perspective: at an estimated export rate of 1.9 Mbbl/d (300,000 m3/d), with a projected sales price of $65 per barrel in 2011, Nigeria's anticipated revenue from petroleum is about $52.2 billion (2012 GDP: $451 billion). This accounts about 11% of official GDP figures (and drops to 8% 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 a large quantity of its food products, though there is a resurgence in manufacturing and exporting of 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).
According to a Citigroup report published in February 2011, Nigeria will get the highest average GDP growth in the world between 2010 and 2050. Nigeria is one of two countries from Africa among 11 Global Growth Generators countries.
- 1 Overview
- 2 Economic history
- 3 Economic sectors
- 4 Labour force
- 5 Government policy
- 6 Foreign economic relations
- 7 Data
- 8 References
- 9 Further reading
- 10 External links
Nigeria's economy is struggling to leverage the country's vast wealth in fossil fuels in order to displace the poverty that affects about 45% 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 curse". 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% of Nigeria's energy revenues flow to the government, 16% cover operational costs, and the remaining 4% go to investors. However, the World Bank has estimated that as a result of corruption 80% of energy revenues benefit only 1% 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 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 Index.
This is a chart of trend of gross domestic product of Nigeria at market prices estimated by the International Monetary Fund with figures in $USD Billions. Figures before 2000 are backwards projections from the 2000 - 2012 numbers, based on historical growth rates, and should be replaced when data becomes available. The figure for 2014 is derived from a rebasing of economical activity earlier in the year.
|Year||Gross Domestic Product,
(PPP, in Billions)
|US Dollar Exchange||Inflation Index
|Per Capita Income
(as % of USA)
|2014||972||180 Naira||(no data)||11%|
This is a chart of trend of the global ranking of the Nigerian economy, in comparison with other countries of the world, derived from the historical List of countries by GDP (PPP).
For purchasing power parity comparisons, the US Dollar is exchanged at 75.75 Nigerian Naira only. (may no longer be accurate as of 2013 - needs new data)
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 45% of the population lives on less than US$2 per day. [Editor's note: This number is highly questionable, as the cost of meals alone exceed $1 a day, per person. See NOI-polls (http://www.noi-polls.com/index.php?s_id=3&p_id=242&p_pt=1&parent=11#.VINNxnNDsal) for a more qualified assessment.
In 2012, the GDP was composed of the following sectors: agriculture: 40%; services: 30%; manufacturing: 15%; oil: 14% (2012 est.)
In 2005 Nigeria's inflation rate was an estimated 15.6%. 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%. 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.
Nigeria ranks sixth worldwide and first in Africa in farm output.
Agriculture has suffered from years of mismanagement, inconsistent and poorly conceived government policies, neglect and the lack of basic infrastructure. Still, the sector accounts for over 26.8% of GDP and two-thirds of employment. Nigeria has 19 million head of cattle, the largest in Africa. Nigeria is no longer a major exporter of cocoa, groundnuts (peanuts), rubber, and palm oil. Cocoa production, mostly from obsolete varieties and overage trees, has nevertheless increased from around 180,000 tons annually to 350,000 tons.
A 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% during the 1990s, per capita output rose by only 8.5% 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 billion barrels (5.6×109 m3); natural gas reserves are well over 100 trillion cubic feet (2,800 km3). 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.
The pump price of P.M.S. in Nigeria currently stands at 97 naira, but some fueling stations in Nigeria, especially in towns far from the state capitals, tend to sell the product at a much higher price, ranging from 110 naira to 140 naira. An initial increase in the price of petroleum on New Year day from 65 naira to 138 naira triggered off a total strike and massive protests across the country. President Goodluck Ebele Jonathan later reached an agreement with the Nigerian Labour Congress and reduced the pump price to 97 naira.
Nigeria ranks 63rd worldwide and fifth in Africa in services' output. Low power generation 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. 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 is being more utilized by Nigeria's private sector.
Nigeria's publicly owned transportation infrastructure is a major constraint to economic development. Principal ports are at Lagos (Apapa and Tin Can Island), Port Harcourt, and Calabar. 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.
Five of Nigeria's airports—Lagos, Kano, Port Harcourt, Enugu 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. Also, The Nigerian Airforce began a new airline called United Nigeria, with a Boeing 737-500 in 2013. 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.
Next to petrodollars, the second biggest source of foreign exchange earnings for Nigeria are remittances sent home by Nigerians living abroad. In 2014, 17.5 million Nigerians lived in foreign countries, with the UK and the USA having more than 2 million Nigerians each.
According to the International Organization for Migration, Nigeria witnessed a dramatic increase in remittances sent home from overseas Nigerians, going from USD 2.3 billion in 2004 to 17.9 billion in 2007, representing 6.7% 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, Libya and South Africa are important source countries of remittance flows to Nigeria, while China is the biggest remittance-sending country in Asia.
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 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.
In 2005, Nigeria had a labour force of 57.2 million. In 2003, the unemployment rate was 10.8% overall; urban unemployment of 12.3% exceeded rural unemployment of 7.4%. According to the latest available information from 1999, labor force employment by sector was as follows: 70% in agriculture, 20% in services, and 10% 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, 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%) are from neighbouring Economic Community of West African States (ECOWAS), and that this number has increased considerably over the last decade, from 63% in 2001 to 97% 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.
Human capital is an important factor for the wealth of a nation due to its influence on the overall production of the country. Technological progress can provide more efficient production-methods like machines and computers, but skilled labor is necessary to manage and develop them as well as to improve the quality and productivity of the existing labor. The formation of Nigeria's human capital is therefore of great importance in the coming years if Nigeria wants to be competitive in the future. However, Nigeria is having a problem with its human capital.
The Human Development Index (HDI) provides a measure of human capital development in three dimensions: income, health, and education. The latest values of HDI shows that Nigeria is ranked 156 with the value of 0.459 among 187 countries. The value places Nigeria in the bottom, meaning that Nigeria is considered to have low level of human development. The comparative value for Sub-Saharan Africa is 0.475, 0.910 for the US, and 0.694 for the world average. The HDI of Sub-Saharan Africa as a region increased from 0.365 in 1980 to 0.475 today, which places Nigeria a little below the regional average with an HDI of 0.471.
The value for the education index is 0.457, compared to the average in the US of 0.939. The expected years of schooling in Nigeria is 9.0 (16.00 in the US), while the mean years of schooling for adults over 25 years is 5.2 years (12.4 years in the US). Additionally, Nigeria is also facing a relatively high inequality, worsening the problem regarding the formation of human capital. The income distribution for the poorest (bottom 10%) is 1.6% while it is 40.8% for the richest (top 10%). Among 114 countries the income distribution places Nigeria respectively in 94th position for the poorest and 17th for the richest.
Even though human capital is only one factor of many that drives development and associated economic growth, it is very important factor for the development process for a developing country like Nigeria. The productive capacity of a country is related to the level of human capital, explaining why human capital formation must be considered of great importance in the future. 
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.
The Obasanjo government supports "private-sector" led, "market oriented" economic growth 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.
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 union 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%), the United States (8.4%), the United Kingdom (7.8%), the Netherlands (5.9%), France (5.4%), Germany (4.8%), and Italy (4%). 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%), Brazil (10.7%), and Spain (7.1%). In 2004 oil accounted for 95% of merchandise exports, and cocoa and rubber accounted for almost 60% of the remainder.
In 2005, Nigeria posted a US$26 billion trade surplus, corresponding to almost 20% 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 400,000 barrels per day (64,000 m3/d) to India valued at US$10 billion annually.
India is the largest purchaser of Nigeria's oil which fulfills 20% to 25% 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.
In 2012, Nigeria's external debt was an estimated $5.9 billion and N5.6 trillion domestic - putting total debt at $44 billion.
In April 2006, Nigeria became the first African country to fully pay off its debt owed to the Paris Club. This was structured as a debt writeoff of approximately $18 billion and a cash payment of approximately $12 billion.
In 2012, Nigeria received a net inflow of US$85.73 billion of foreign direct investment (FDI), much of which came from Nigerians in the diaspora. Most FDI is directed toward the energy and banking sectors. Any public designed to encourage inflow of foreign capital is capable of generating employment opportunities within the domestic economy. The Nigerian Enterprises Promotion (NEP) Decree of 1972 (revised in 1977) was intended to reduce foreign investment in the Nigerian economy. This type of policy is not relevant in an economy with a rapidly growing force like Nigeria.
Although one may accept the rationale for the promulgation of that decree at that time i.e. to promote indigenous entrepreneurship. But the decree or any exchange control policy that has the potential to discourage foreign investment will not be relevant under the present economic dispensations. The abrogation of the NEP decree was therefore a step in the right direction.
Furthermore, another reason for the low level of foreign investment in Nigeria is political instability. The various coups and counter coups since 1966, the discontentment and politically motivated riots following the long-drawn and inconclusive political engineering of the Babaginda Military Administration, all combined to create an environment not conducive to foreign investment.
Foreign direct investment (FDI) is arguably an important source of employment opportunities for developing countries like Nigeria. As a consequence, it is imperative that the federal government promotes a healthy private sector that can earn a reasonable rate of return.
Developing countries that wish to attract FDI flows should consider measures such as establishing a transparent legal framework that does not discriminate between local and foreign investors; adopting liberal foreign exchange regime (e.g., a regime without large gaps between official and market rates); creating simple,investor-friendly regulations and institutions and effectively administering them.
Therefore, the convertibility of naira, the relaxation of the control on remittance of profits and technical fees and the abrogation of the Exchange Control Act of 1962 and the Nigerian Enterprises Promotion Decree of 1989 as spelt out in 1995 Budget are the kind of reforms that can promote the inflow of foreign direct investment a politically stable environment is also of immense importance.
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.
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 Abacha 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.
GDP: nominal – $509.9 billion (2013 est.)
GDP – real growth rate: 7% (July 2012 est.)
GDP – per capita: purchasing power parity – $5,600 (2013 est.)
GDP – composition by sector:
services: 26% (2012 est.)
Population below poverty line: 33.1%(2013 est.)
Household income or consumption by percentage share:r
lowest 10%: 2.6%
highest 10%: 35.8% (1996–97)
Inflation rate (consumer prices): 12.3% (2011 est.)
Labor force: 57.21 million
Labor force – by occupation: agriculture 70%, industry 10%, services 20% (1999 est.)
Unemployment rate: 24% NA (2010 est.)
revenues: $17 billion
expenditures: $13.54 billion including capital expenditures of $NA (2005 est.)
Industries: crude oil, coal, tin, columbite, palm oil, peanuts, cotton, rubber, wood, hides and skins, textiles, cement and other construction materials, food products, footwear, chemicals, fertilizer, printing, ceramics, steel, small commercial ship construction and repair
Industrial production growth rate: 4.7% (2010 est.)
Electricity – production: 18.89 billion kWh (2009)
Electricity – production by source:
fossil fuel: 61.69%
other: <.1% (1998)
Electricity - consumption: 17.66 billion kWh (2009)
Electricity - exports: 40 million kWh (2003)
Electricity - imports: 0 kWh (1998)
Oil - production: 2.35 million barrels per day (374×103 m3/d) (July 2006 est.)
Oil - consumption: 310,000 bbl/d (49,000 m3/d) (2003 est.)
Exports: $72.16 billion f.o.b. (2005 est.)
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 – 157.3 (2012) 149.5 (2009), 120 (2006), 128 (2005), 132.89 (2004), 129.22 (2003), 120.58 (2002), 111.23 (2001)
External Reserves: $50 billion ( 2012)
Fiscal year: calendar year 2009
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- Rogers, Simon; Sedghi, Ami (15 April 2011). "How Fitch, Moody's and S&P rate each country's credit rating". The Guardian (London). Retrieved 31 May 2011.
- Nigeria Rebase Economy
- - World Petroleum Production
- Center for Global Development : Publications: Resolving Nigeria's Debt Through a Discounted Buyback
- "FORGET THE BRICs: Citi's Willem Buiter Presents The 11 "3G" Countries That Will Win The Future". businessinsider.com. 22 February 2011. Retrieved 31 May 2011.
- Olomola Ade S. (2007) “Strategies for Managing the Opportunities and Challenges of the Current Agricultural Commodity Booms in SSA” in Seminar Papers on Managing Commodity Booms in Sub-Saharan Africa: A Publication of the AERC Senior Policy Seminar IX. African Economic Research Consortium (AERC), Nairobi, Kenya
- "Remittances from diaspora Nigerians as lubricant for the economy", Nigerian Tribune, 8 September 2014.
- "India now Nigeria's biggest crude oil buyer". The Hindu (Chennai, India). 15 July 2013.
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- This article incorporates public domain material from websites or documents of the Library of Congress Country Studies. 16. http://www.thisdaylive.com/articles/fitch-affirms-nigeria-s-bb-rating-stable-outlook/175980/
- Economy of Nigeria at DMOZ
- World Bank Summary Trade Statistics Nigeria
- 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.
- Nigerian Economy: Essays on Economic Development by Mete Feridun and S.T. Akindele (ISBN 9781411665071) from Amazon's Book Store.
- Tariffs applied by Nigeria as provided by ITC's Market Access Map, an online database of customs tariffs and market requirements and are officially directed to the European Trade.