General overview of the Nigerian economy and its economic potentials

General overview of the Nigerian economy and its economic potentials

Let’s take a look at the general overview of the Nigerian economy and its economic potentials. Are you interested in Nigeria economy data for the last year! Read about the budget-forming sectors of the economy and industries that need to develop.

Nigerian big city

Nigeria has long suffered from political inconstancy, corruption, poor infrastructure and weak economic management. The former military leaders of Nigeria could not diversify the economy to rid the country of its total dependence on the oil sector, which gives 95% of foreign exchange earnings and provides 80% of the revenue of the budget.

General overview of the Nigerian economy

In the past few years, the government has started to introduce reforms, in particular - the privatization of the country's largest oil refineries, and canceled the regulation of the prices of petroleum products by the authorities. The government also encourages the development of the country's infrastructure in the private sector.

Sectors of Nigerian economy

Nigeria's GDP went down in 2016, and an economic decline of the most populous country in Africa was recorded for the first time since 1991. According to the Bloomberg agency, the decrease in the Nigerian economy was facilitated by a fall in oil prices and a shortening in the oil extraction because of illegal armed groups' attacks on oil infrastructure facilities.

In turn, the exchange rate of the local currency Naira, and inflation accelerated to its highest in more than a decade. At the same time, the Central Bank of Nigeria had to raise the key rate to a record 14%.

Economy

Let's see the economic indicators for 2016 according to http://www.focus-economics.com

• GDP (USD bn) - 363

• Economic Growth (GDP, annual variation in %) (-1,6)

• Industrial Production (annual variation in %) (-5.7)

• Inflation Rate (CPI, annual variation in %) - 15.7

• External Debt (% of GDP) - 3.1

Nigerian oil industry

Nigerian oil sector

The main sectors the of Nigerian economy

Oil industry and mining

The basis of the Nigerian economy is the oil industry. At present, the oil industry is the foundation of the economy. Nigeria is the 1st in Africa and the world's 8th exporter of oil. Oil provides more than 90% of the country's export earnings. Today the daily oil production is 1.59 - 1.65 million barrels a day. Now the quota of Nigeria in OPEC is 1.8 million b/d. 65% of the produced oil is light grades with low sulfur content.

Nigeria is one of the leading suppliers of oil to Western Europe and is the fifth largest supplier of crude oil in the United States.

Armed groups harm pipelines

Since the beginning of the 21st century, the activities of foreign companies are hampered by non-state armed groups carrying out explosions and seizing foreign workers hostage.

Besides, there are some other important sectors as the mining industry, and agriculture, although, before the civil war of 1967-70, agricultural goods predominated in Nigeria's exports.

Nigerian miners

In Nigeria, coal, tin, cassiterite, and columbite are also mined. Extraction of cassiterite and concomitant columbite mineral (niobium ore) is produced by an open method. After the tin-smelting plant commissioning in 1962, most of the tin is exported as ingots. Following 1960, because of the railroad turning to diesel fuel and the appearance of cheaper and more environmentally friendly oil products, coal mining began to curtail.

Agriculture

Nigerian agriculture

Agriculture

In agriculture, Nigeria employs 65% of the population. The main food crops are yams, sweet potatoes, and corn. Many lands are irrigated. Cacao beans (340 million tons), natural rubber (112 million tons), and cotton (0.4 million tons) are also grown. 31.29% of the land is cultivated.

Since the mid-1980s there has been a decline in agricultural production. The agrarian sector is not capable of providing the entire country's population with food products. The agriculture stagnation contributed to a considerable extent to drought, migration to the city and the community’s reorientation to imported food products as a result of increased revenues from the sale of oil. The primary export crops are cocoa beans, peanuts, soybeans, as well as rubber crops, oil palm, sugar cane, and cotton.

Cocoa producing in Nigeria

Cocoa producing

The country's high taste for quality explains the continuous demand for cocoa (Nigeria occupies the fourth world place for its manufacturing). Most farms deal with cultivating cocoa beans. The falling world prices for cocoa led to a severe decrease in revenue and depletion of the people in agricultural areas. A vast number of various fruits and vegetables are also grown.

Livestock breeding

Livestock

Livestock and fisheries are also developed in Nigeria. Livestock breeding (camels, goats, cattle, horses, sheep, and pigs) is developing basically in the northern part of the country. Poultry farming is also used. Fisheries take place in the waters of the Gulf of Guinea, rivers, and Chad. The annual catch of fish and seafood is approx. 250 thousand tons.

READ ALSO: Nigeria’s economy to reach $1.4trn in 2030 - Pricewaterhouse

Forestry

Forestry

About 90% of the wood harvested in Nigeria is used as fuel for cooking, although there are forestry enterprises that specialize in the production of sawn timber, pulpwood, and poles for power lines. In arid zones: Kanu, Sokoto and Borno states have planted belts to provide favorable conditions for grazing. The harvesting of timber for export and domestic consumption is carried out in the tropical forests. Their area is 133.7 thousand square km. Among them, 21 thousand square km is a part of the country reserves.

Nigerian industrial production

Industrial production of natural gas

Industrial production of natural gas is being carried out (according to its reserves, Nigeria ranks the 10th place in the world). Coal, bauxite, iron ore, gold, tin, gypsum is also mined. In 2005, in the state of Oyo (southwest of the country), the development of semi precious stones deposits (aquamarines, etc.) began.

Textile production

Textile and leather production

Processing enterprises in the skin and textiles industries are concentrated in the cities of Kano, Abeokuta, Onitsha, and Lagos. Large industrial production is concentrated around Lagos. Other industrial centers are Port Harcourt, Aba, Enugu, Kano, and Kaduna.

Nigerian Economic Summit

Telecommunications market

In Nigeria, the telecommunications market is developing rapidly. Recently, the government began to expand its infrastructure. Nigeria has a space satellite. Its job is controlled by the National Space Agency for Research and Development, headquartered in Abuja. Also, Nigeria has a car manufacturing facility for the French automaker Peugeot, for the English manufacturer of Bedford trucks, which is now a subsidiary of General Motors.

Nigerian power engineering

Power engineering

Power engineering

The power system in the country is not developed enough. The demand for electricity is noticeably ahead of supply. Electricity is generated at TPPs. They work on oil, natural gas or coal. Besides, Nigeria has hydro power plants.

About 60% of the energy consumed in Nigeria is derived from wood and charcoal, 30% from oil and 11% from natural gas. The part of coal and hydroelectric power is negligible. There is a tendency to increase the consumption of natural gas and wood.

Periodic malfunctions in the power system are noted. It leads to a power outage or failure to supply it to consumers. For this reason, almost every enterprise and many apartment houses have their generators.

Automotive transport

Transport infrastructure

Bad infrastructure is one of the problems that the government of Nigeria strives to resolve with the help of National Economic Empowerment Development Strategy (NEEDS).

The primary transport is automotive. It provides approx. 95% of freight and passenger traffic. Nigeria has two main railway lines.

To improve the railway network, the government plans to privatize the Nigerian Railway Corporation. Within the privatization program, there is a plan to provide three separate concessions for 25-30 years for private companies to manage the maintenance of trains in the western, central, and eastern regions. Also, Nigeria makes efforts to establish rail links with other countries, in particular with Niger and Cameroon.

Sea and river transport

The system of sea and river transport is well developed in the country. Air transport is used intensively too.

Logistics

In Nigerian domestic markets, there is an active trade in food products, handicrafts, industrial goods of foreign and local production. Delivery of goods is carried out by roads, by railway, and by river transport. The largest center of wholesale and retail trade in food and consumer products (imported and local productions) is a huge modern market in Onitsha (restored after the civil war). Other important trading centers are Aba, Kano, and Ibadan.

Nigerian stock exchange

Regarding foreign trade turnover, Nigeria occupies one of the leading places on the African continent. International trade is one of the main sources of foreign exchange earnings in the country's economy.

Oil, oil products, natural gas, cocoa, and rubber are exported. The main imports are petroleum products, machinery, chemical goods, vehicles, consumer goods, food, and livestock.

Export/import data for 2016:

• Exports is 34.7 USD billion

• Imports is 35.2 USD billion

The official data of foreign trade turnover are not complete because there is a problem of contraband trade with neighboring states.

Economic growth model

Economic growth in Nigeria

As for the economic development in Nigeria, recently the government has been able to stabilize the situation in the oil extraction area and increase production of oil and petroleum products. In turn, the efforts led to a gradual improvement of the situation in the country’s financial sector. And soon it will help to attract additional investments in the Nigerian economy from abroad.

Economy and counting

The path of pumping and selling natural resources leads nowhere. Revenues from the sale of raw materials should be used to modernize industry and agriculture so that fossil raw materials can be processed on-site in Nigeria. We should produce goods from inside the country and sell to other countries, rather than import them from abroad.

Nigerian money

Due to overpopulation, it is obligatory to develop agriculture and to produce enough food here, in Nigeria. Also, it is necessary to pay attention to the energy sector. The country has sufficient resources to provide the required amount of electricity. And, of course, there is a need for big-scale investments in a social sector: medical care and education of Nigerian citizens. They are the most valuable resource of our country.

READ ALSO: Nigeria’s economy to witness blossom in 2017

Source: Naij.com

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