Nigeria Development Study

Nigeria is located at the extreme inner corner of the Gulf of Guinea on the west coast of Africa and has a tropical climate with variable rainy and dry seasons, depending on location.

Nigeria, commonly known as the giant of Africa with more than 180 million people is the most populous country in Africa. With a democratic presidential system of government, it has an economy which is based on its rich natural resources, traditional agriculture and the trade sector. The country has a rich land of diverse cultural heritage, with more than 250 ethnic groups, including a wide array of religions and sophisticated visual arts.

It not only shows high potential in human resources but also is endowed with rich natural resources such as oil, gas and minerals. The country aims to develop other productive sectors, boosted by the size of its population and economy, it is a regional powerhouse.

Nigeria is one of the largest economies in Africa, with a GDP of USD 481,1 billion and a steady growth which however slowed sharply from 6,3% in 2014 to 2,7% in 2015. Growth in 2016 is expected to decline further to 2,3%, with non-oil sector growth projected to slow from 3,6% in 2015 to 3,1% in 2016 before recovering to 3,5% in 2017. Moreover, one of the bigger events of Nigeria’s foreign exchange policy happened in June 2016, when Nigeria’s central bank allowed the Naira exchange rate to be market-driven, switching from a fixed exchange rate policy.

Exports in Nigeria reached 50,74 billion USD in 2015, earning it a ranking of 52 in a global scale. However, exports fell significantly in 2015 in comparison to 2014, when they reached 82,59 billion USD. Imports of Nigeria stood at 48,41 billion USD in 2015 (51st in the world), down from the recorded 61,59 billion USD in 2014. Inflation in Nigeria jumped by 17,1 percent year-on-year in July of 2016.

Nigeria’s unemployment rate was recorded at 13,3% in second quarter of 2016, up from 12,1 percent in the three months to March, reaching the highest since 2009. Meanwhile, youth unemployment increased to 24% from 21,5%.

Nigeria is the largest oil producer in Africa, holds the largest natural gas reserves on the continent, and was the world’s fourth-largest exporter of liquefied natural gas (LNG) in 2015. Nigeria became a member of the Organization of the Petroleum Exporting Countries (OPEC) in 1971, more than a decade after oil production began in the oil-rich Bayelsa State in the 1950s. Although Nigeria is the leading oil producer in Africa, production is affected by sporadic supply disruptions, which have resulted in unplanned outages of up to 500,000 barrels per day (b/d).

The Civil Society Organizations (CSOs) in Nigeria have been characterized with civic activism, vibrancy, mobilization, contestation, criticism and opposition in the civic engagements in the public realm. The CSOs made huge progress as vanguards in the struggle for democratization, revisions of certain economic policies, government concessions of some subsidies and cost reductions of some social services. However, the CSO suffered from banning, repressions, arrests and detentions. As at 2009, it was estimated that there were about 46.000 registered non state actors, particularly Non-governmental organization (NGOs) in Nigeria. The relevance and in fact vibrancy of the sector necessitated the appointment of a Special Adviser to the President on Civil Society during the Obasanjo presidency.

As far as Information and Communications Technology (ICT) is concerned, Nigeria in 2011 created the Ministry of Communication Technology to ensure better coordination of ICT activities and development in Nigeria. The Nigerian telecommunications market is fully liberalized, highly competitive, and evolving with time. Since 1992, a wide range of regulatory initiatives have been undertaken to open up the market to private operators to provide products and services across the entire spectrum of ICT market segments. These initiatives, particularly in relation to market entry, have resulted in an impressive 53% compound annual growth rate (CAGR) in overall fixed and mobile subscriptions since 2001. Although the future and prospects for the Nigerian ICT sector appear rich, achieving the necessary scale and pace of growth is predicated on finding the correct mix of regulatory initiatives and interventions needed to encourage greater competition among market players and deeper penetration and usage of the entire range of ICT services.

In recent years the construction market in Nigeria has been among the world’s fastest growing, forecast to have expanded by 13% in 2014 on the back of a diverse array of demand drivers, including substantial state investment in infrastructure, rising levels of foreign direct investment and rapidly increasing urbanization rates. According to the National Bureau of Statistics (NBS), the sector made up 3,12% of the country’s GDP in 2013, up from 3,01% in 2012 and 2,88% in 2011.

Many years of underinvestment and poor maintenance have left Nigeria with a significant infrastructure deficit which is holding back the country’s development and economic growth. Nigeria needs to make massive investments, beyond the means available to government, in order to close its yawning infrastructure gap. The Federal Government believes that the private sector can play an important role in providing some of this new investment through Public Private Partnerships (PPPs). The scope of the Federal Government’s programme for PPP is the creation of new infrastructure, and the expansion and refurbishment of existing assets such as roads and bridges, ports, airports, railways, etc.

As Nigeria receives little in the way of mainstream leisure travelers, the tourism sector is represented mainly by the domestic, visiting friends and family (VFF), and corporate travel segments. The country is ranked 178th globally in terms of the sector’s size relative to its GDP, with the direct and indirect contributions measured at 1,5% and 3%, respectively, according to the World Travel & Tourism Council (WTTC). The sector is anchored by a steady corporate base with deep pockets, and as the economy continues to grow and industrialize, the supply of hotel rooms is expected to lag demand for some time to come.

Growth in the consumer sector has been a bright spot in Nigeria’s economy, with many of the fastest-growing industries focused on the country’s rapidly growing private consumer demand, thanks to a very large population and a rising retail sales growth. According to BMI Research, Nigeria’s food and drink industry will contract over 2016 due to an acute decline in per capita food spending. Over our forecast period, economically priced products will perform well as consumers trade down price points to mitigate rising food costs. From 2017, growth will return to positive territory and inflation will abate, relieving pressure on consumer purchasing power.

Last but not least, the Business Environment in Nigeria can be characterized as unsupportive, with the World Bank ranking it (ease of doing business) 170 out of the 189 countries surveyed in its 2016 “Doing Business” report.