Nigeria's Economy

Written by Adeoye Yusuf Category: Nigeria Last Updated: Saturday, 19 October 2019 10:30 Hits: 7463

Nigeria is a middle income, mixed economy and emerging market, with expanding financial, service, communications, technology and entertainment sectors. It is ranked 30th (40th in 2005, 52nd in 2000), in the world in terms of GDP as of 2013, and the 2nd largest economy in Africa (behind South Africa and on track to become the largest economy in Africa in 2014 when their new GDP rebasing result is out early 2014 and also becoming one of the 20 largest economies in the world by 2020. Its re-emergent, though currently under performing, manufacturing sector is the third-largest on the continent, and produces 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 (PPP) has almost trebled 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 might be revised upwards by as much as 40% when the country completes the rebasing of its economy later in 2013.

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%).[8] 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).[9]

According to a Citigroup report published in February 2011, Nigeria will get the highest average GDP growth in the world between 2010–2050. Nigeria is one of two countries from Africa among 11 Global Growth Generators countries.[10]

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.

Nigeria has been ranked as the 27th largest economy in the world in terms of nominal GDP and although much has been made of its status as a major exporter of oil and as important as the petroleum sector is, it remains, in fact, a small part of the country's overall vibrant and diversified economy.

Nigeria which was once a large net exporter of food now imports a large quantity of its food products, NEEDS addressed basic deficiencies with the hope to create over 7 million new jobs, boost energy exports and most importantly to improve agricultural productivity thereby reducing the country's dependence on the oil sector.

Citigroup report presumed that Nigeria will get the average GDP growth in the world between 2010-2050. Stating that Nigeria is one of two countries from Africa among 11 Global Growth Generators countries,

Sadly, a flourishing economy slipped into recession in 2015, the vital oil industry was hit by weaker global prices and aside from the fall in the price of oil, figures also showed a fall in the Nigeria currency. The slump in the global oil price hit Nigeria hard because crude oil accounts for 70% of government income since Nigeria is so reliant on oil, the stage of recession left Nigerian citizens lamenting. According to Kevin Daly from Aberdeen Asset Management "A lot of Nigeria's current predicament could have been avoided"

Fortunately, the Nigeria Economy at the second quarter of 2017 left the stage of recession as announced by the National Bureau Of Statistics, and hit the stage of Economic recovery and from the second stage of Economic recovery, the country is heading towards sustainable growth.

Nigeria needs to include Tourism to its Economic analysis to account as a rapidly growing contributor to its GDP, because Tourism contributes towards complete growth and development of a country by bringing numerous economic value, image and identity.

The Tourism Industry in Nigeria can go beyond attractive destinations to being an important economic growth contributor since tourism induces consumption and being a commercial activity it creates demand and growth for many more industries by generating revenue, new jobs.etc.

 The Nigeria Economy needs to be diversified, and promising sectors need to be developed especially the Tourism sector which plays significant roles in a nation's development to motivate for global standard.