Nigeria is a middle-income, mixed economy with emerging market, notable with expanding manufacturing, agriculture, oil and gas, solid minerals sectors. Other vibrant sectors of its economy include financial, communications, information technology, entertainment, real estate and services. It is ranked as the 27th-largest economy in the world in terms of nominal GDP, and the 24th-largest in terms of purchasing power parity. With a GDP of $ 440 billion Nigeria has the largest economy in Africa. The country’s re-emergent manufacturing sector became the largest on the continent in 2013; it produces a large proportion of goods and services for the region of West Africa. In addition, the debt-to-GDP ratio was 16.075% as of 2019.
Nigerian GDP at purchasing power parity (PPP) almost tripled from $170 billion in 2000 to $451 billion in 2012, though estimates of the size of the informal sector (which is not included in official figures) put the actual number closer to $630 billion. Its 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. The country’s population increased from 120 million in 2000 to 160 million in 2010, and believed to have reached 206 million in 2020 according to the World Bank. The GDP figures were revised upwards by as much as 80% (percent) following the rebasing of its economy in April 2014.
Although oil revenues contribute 2/3 of state revenues, it contribution amounts to about 9% to the GDP. Although the petroleum sector is important, as government revenues still heavily rely on this sector, it remains a small part of the country’s overall economy. The largely subsistence agricultural sector has not kept up with the country’s rapid population growth. Nigeria was once a large net exporter of food, but currently imports some of its food products. Mechanization has led to resurgence in the manufacturing and exporting of food products, and there was consequently a move towards food sufficiency at some point. In 2006, Nigeria came to an agreement with the Paris Club to buy back the bulk of its owed debts from them, in exchange for a cash payment of roughly US$12 billion. According to a Citigroup report published in February 2011, Nigeria would have the highest average GDP growth in the world between 2010 and 2050; and Nigeria is one of two countries from Africa among the 11 Global Growth Generators countries.
In 2014, Nigeria changed its economic analysis to account for fast growing contributors to its GDP, such as telecommunications, banking, and its film industry. In 2005, Nigeria reached an agreement with the Paris Club of lending nations to eliminate all of its bilateral external debt. Under the agreement, the lenders forgave most of the debts, and Nigeria paid off the remainder with a portion of its energy revenues.
With its extensive oil and gas reserves, high potential in the agriculture and manufacturing, as well as services sectors, and a rapidly growing population, Nigeria is arguably equipped to emerge as a global economic powerhouse. With a large influence in the ECOWAS region and with enabling domestic environment with a large market, Nigeria is certainly the right entry point for investment in Africa.
Nigeria’s economy entered a recession in 2020, and was noted to have shrunk by 1.8%, this is described as its deepest decline since 1983. The COVID-19 crisis drove the economic retardation; the external context was marked by capital outflows, intensified risk loathing, declined oil prices, and dwindling foreign remittances from the Diaspora. However, the reforms executed by the government were not just critical but also timely to alleviate the impact of the recession on the economy and to craft added fiscal space. Reform slippages would along the line threaten the speed of recovery and limit the government’s capacity to address gaps in human and physical capital.
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