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 gross domestic product (GDP). Based on the rebased figures, Nigeria’s economy is the largest economy in Africa.
Recently, Nigeria changed its economic analysis to account for rapidly growing contributors to its GDP, such as telecommunications, banking, and its film industry. This was achieved through economic reforms from past administration which have paved way for Nigeria to attain its full economic potential.
Nigeria’s GDP at purchasing power parity (PPP) has almost tripled from $170 billion in 2000 to $451 billion in 2012. The economy has been growing at an average rate of around 7% a year over the past decade. This was largely fueled by the growth of the non-oil sector despite the fall in crude oil price.
The non-oil sector has been the main driver of growth, with services contributing about 57%, while manufacturing and agriculture, respectively contributed about 9% and 21%. To sustain this annual growth rate, the Nigerian Government is privatizing important sectors of the economy, promoting public-private partnerships, and encouraging strategic alliances with foreign firms, especially for infrastructure development and technology acquisition in critical sectors such as security, power generation, agriculture, transportation, and healthcare.
Labour market and unemployment
Nigeria is famous for her huge population of over 170 million people - the largest national population on the African continent. The youth make up about half of the population. Unfortunately, as the youth population grows, so does the unemployment rate making unemployment one of the countries pressing problems that is being addressed by the current administration.
Agriculture, forestry & fishing
Nigeria is endowed with significant agricultural, mineral, marine and forest resources. Its multiple vegetation zones, plentiful rain, surface water and underground water resources and moderate climatic extremes, allow for production of diverse food and cash crops. The agricultural sector accounts for over 26.8% of GDP and two-thirds of employment both formal and informal for a large majority of the population. Over 60 percent of the population is involved in the production of the food crops such as cassava, maize, rice, yams, various beans and legumes, soya, sorghum, ginger, onions, tomatoes, melons and vegetable. The main export crops are cocoa, cotton, groundnuts, oil palm and rubber. Extractions from these for export and local industrial use include cocoa flour and butter, rubber crumb, vegetable oil, cotton fibre and yarn. The rain forest has been well exploited for timber and wood products of exotic and popular species.
Agriculture has been revolutionized in Nigeria and is now treated as a business, and no longer as a mundane development program. The Agricultural reform focused on generating foreign trade, reducing dependence on imports, creating millions of jobs, diversifying the economy, and assuring food security and sufficiency. These reforms have attracted partnership from reputed global agencies like World Bank, African Development Bank, and USAID.
Industry and manufacturing
Since the 1970s, Nigeria has neglected its manufacturing base, choosing instead to depend on the revenues from its oil and gas reserves to drive its economy. Nigeria’s manufacturing industry is now attracting more foreign investment than ever before, and as the government pushes to increase the sector’s share of GDP, there are many positive indicators for the future of manufacturing in Nigeria.
With the recent rebasing of the Nigeria’s GDP the sector has been witnessing significant development currently growing faster than the telecommunications, oil and gas and agricultural sectors. The sector has recorded 22 percent growth in 2013, as against the 14 percent it recorded in 2012, with growth largely driven by the textile, cement and food sub-sectors, among others.
Mining and semi-processing
Nigeria used to be one of the largest producers of tin in the world, with production based around the highland district of the North central Jos city. Production collapsed from an average of 10,000 tonnes per year in the 1970s to 300 tonnes in 1995. Tin reserves are estimated at 16,000 tonnes. Independent estimates place iron ore reserves at 800 million tonnes, averaging 37% metal content. Iron ore mining began in 1984 and 1989 reported a stockpile of over 500,000 tonnes. By 1997, it was unlikely that iron output was more than 50,000 tonnes per year. Iron ore deposits are being exploited with the long-term aim of supplying the requirements of the national steel industry. Deposits of uranium, lead, zinc, tungsten and gold are not yet exploited. There are 65 sites in Nigeria where gold has been located.
The petroleum sector is the mainstay of the economy, which accounts for about 35% of its gross domestic product, and petroleum exports revenue represents over 90% of total exports revenue before diversification and reform programme of the government. Nigeria is the largest oil producer in Africa, holds the largest natural gas reserves on the continent, and is among the world’s top five exporters of liquefied natural gas (LNG).
Also, Nigeria is one of the most promising export markets for ethanol. Nigeria has a policy of blending 10 percent ethanol with gasoline; it is not however a mandate. The organization for Economic and Cooperation Development estimates that consumption of ethanol in Nigeria will increase about 25 percent from 2013 to 2015. As Africa’s largest oil producer, Nigeria is in good position logistically to export blended gasoline or even pure ethanol to other countries in Africa, many of whom have ethanol blending mandates.
The Nigerian Government, conscious of the over-dependence on Oil which highly constitutes its generated revenue, has embarked on many measures
to give the Nigerian a new lease on life. To generate and stronger and stable growth rate, the Government is promoting the increased
production in the non-oil sector of the economy by creating a level-playing field for private-sector led activity. Essentially, the pivots
around which the framework for economic growth and development will revolve include the following:
- agriculture and agro-business,
- solid minerals development,
- other manufacturing, including information and communications technology (ICT),
- crude oil,
- natural gas, and
Other expected areas of concentration that will equally engender accelerated economic growth and poverty reduction are:
- diversification of the productive base of the economy
- emphasis on agriculture and rural development to consolidate existing initiatives in ensuring food security and export possibilities, particularly in cassava, rice production, textiles, cash crops, livestock, and vegetable oil,
- continued privatization of government owned companies and public utilities
- maximum use of the opportunity available to the textile and garment industry through the African Growth Opportunity Act (AGOA)
- Promotion of environmental protection and management
- Making Nigeria the hub or economic activity in West Africa
- Sensitization of the Nigerian public about the concept of the New Partnership for Africa’s Development (NEPAD), which is the political and socio-economic program of the African Union (AU), and which is recognized as the expression of Africa’s collective determination as willingness to develop and integrate into the global economy.
Government will provide Nigerian businesses with an enabling environment that will enhance their ability to take advantage of opportunities arising from NEPAD and the African Union.
Conclusively, the main focus of the Nigerian Government for embarking on vigorous economic reforms is to build a more humane, productive, and courteous society where every citizen is valued, and the plight of the disadvantaged is adequately addressed.
Government finance and fiscal policy
In 1995 the government made a move towards deregulation of the economy. More recently it has followed up with earlier promises of privatization and exchange-rate reform. The two-tier exchange rate system was abolished by the government in January 1999 and the price of petrol was reduced by 20%; in May 1999 a bill was passed to pave the way for the privatization of major utilities. The country is now undergoing substantial economic reform under the new civilian administration, but is at a crossroads in its economic policies, facing a choice between further liberalization and greater reliance on the private sector, or remaining dependent on the public sector. By 2001 Nigeria's wide-ranging privatization scheme was behind schedule, it had failed to reach agreed policy targets set with the IMF, and the IMF had expressed concerns over the expansionary 2001 budget. Opposition due to the loss of sources of patronage is considered to be an important factor in the slow pace of privatization.
In January 2001, the government announced a new poverty reduction programme the Poverty Eradication Scheme to which US$231m was allocated. The existing Poverty Alleviation Programme introduced in 2000 had fallen far short of its aim to create a total of 200,000 new jobs.