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The Nigerian economy is one of the largest in Africa. Since the late 1960s it has been based primarily on the petroleum industry. A series of world oil price increases from 1973 produced rapid economic growth in transportation, construction, manufacturing, and government services. (www.britannica.com)

Sectors of Nigerian economy are divided into 3 types: - Primary (agriculture, oil/gas, mining, forestry); - Secondary (light and heavy industry); - Tertiary (services). (www.legit.ng)

According to a World Bank survey, the agriculture sector is the largest employer of labor and income-generating activity in Nigeria.(www.futurelearn.com)

The country is of growing economic importance as well. In mid-2016, it overtook South Africa as the largest economy on the African continent, and was, until recently, viewed as having the potential to emerge as a major global economy. (www.wenr.wes.org)  

Nigeria is a middle income, mixed economy and emerging market, with expanding financial, service, communications, technology and entertainment sectors. It is ranked as the 21st largest economy in the world in terms of nominal GDP, and the 20th largest in terms of Purchasing Power Parity. It is the largest economy in Africa; 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 subregion. Nigeria recently changed its economic analysis to account for rapidly growing contributors to its GDP, such as telecommunications, banking, and its film industry.

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).

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). 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).

 

SECTORS

Agriculture

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 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.

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.

Oil

In 2000, oil and gas exports accounted for more than 98% of export earnings and about 83% of federal government revenue.

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). The types of crude oil exported by Nigeria are Bonny light oil, Forcados crude oil, Qua Ibo crude oil and Brass River crude oil.

Services

Nigeria ranks 63rd worldwide and fifth in Africa in services' output. Low power generation has crippled the growth of this sector.

Nigeria's banking sector has witnessed significant growth over the last few years as new banks enter the financial market.

Transport

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 (Onne), 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.

Overseas remittances

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.

(source:www.globaltenders.com)

 

 2020 INDEX OF ECONOMIC FREEDOM

Nigeria’s economic freedom score is 57.2, making its economy the 116th freest in the 2020 Index. Its overall score has decreased by 0.1 point, reflecting a decline in the fiscal health score. Nigeria is ranked 14th among 47 countries in the Sub-Saharan Africa region, and its overall score is slightly above the regional average and well below the world average.

The Nigerian economy has been mostly unfree since 2007, when it emerged from the repressed category. GDP growth over the past five years has been unimpressive for such a resource-rich developing country.

Economic freedom and economic development have been battered by Nigeria’s chronic and severe political instability, intervention in the economy by the central bank and government, and pervasive corruption. The government maintains an overvalued official rate for Nigeria’s currency so that gasoline subsidies can be maintained. Additionally, the economy is held back by power shortages, insecurity, high inflation, and tight credit conditions.

Rule of Law

Protection of property rights is weak. Bribery is a common practice when starting a business and registering property. The judiciary is hobbled by political interference, understaffing, underfunding, inefficiency, and corruption. Pervasive corruption is rarely investigated or prosecuted, and impunity remains widespread at all levels of government. Nigeria is a major drug transshipment point and a significant center for financial crime and cybercrimes.

Government size

The top individual income tax rate is 24 percent, and the top corporate tax rate is 30 percent. Other taxes include value-added and capital gains taxes. The overall tax burden equals 3.6 percent of total domestic income. Government spending has amounted to 11.2 percent of the country’s output (GDP) over the past three years, and budget deficits have averaged 4.6 percent of GDP. Public debt is equivalent to 28.4 percent of GDP.

Regulatory efficiency

Incremental improvements in starting a business, getting electricity, and enforcing contracts outweigh the added opaqueness that has been added to the property registration system. More than 60 percent of Nigeria’s people live in extreme poverty. A vibrant labor market has yet to develop. The cost of funding government electricity and fuel subsidies soared in 2019 as the country grappled with fiscal deficits and rising debt levels.

Open Market 

The total value of exports and imports of goods and services equals 26.3 percent of GDP. The average applied tariff rate is 11.3 percent, and onerous nontariff barriers further deter growth in trade. Most sectors are open to private investment, and regulations formally treat foreign and domestic investment equally, but the investment regime lacks efficiency and transparency. The state continues to influence the allocation of credit. ( source:www.heritage.org)