Nigeria: Economic and Political Overview
In this page: Economic Indicators | Foreign Trade in Figures | Sources of General Economic Information | Political Outline | COVID-19 Country Response
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Africa’s leading economy, Nigeria - in close competition with South Africa - has a population of more than 219 million people (CIA). Worldwide, it is the 25th-largest economy by GDP volume. However, Nigeria's economy is highly dependent on oil and is therefore very vulnerable to fluctuations in crude oil prices and production. If over the past decade economic growth reached 2.5% on average, the Covid-19 pandemic and the fall in oil prices caused the economy to contract in 2020. Nevertheless, economic growth rebounded in 2021 (+3.6%) and 2022 (+3.2%) supported by a buoyant services sector and increased revenues from oil and gas exports. Crude oil production averaged 1.3 mbpd in 2022 and is expected to increase slightly to 1.4 mbpd in 2023, although the sector will continue to be affected by the combination of oil theft, pipeline vandalism, and ageing infrastructure. For 2023 and 2024, the IMF forecasts growth at 3% and 2.9%, respectively. Among the downside risks are high inflation and security issues.
Higher oil prices have brought an improvement in oil export receipts, resulting in a small surplus of the current account in 2022, from a deficit of 0.4% in 2021 (Fitch Ratings). Falling reserve levels (estimated at USD 36.3 billion in 2022, down from USD 40.2 billion one year earlier) have contributed to tight foreign-currency liquidity. The 2022 general government fiscal deficit was estimated at 6.1% of GDP by Fitch Ratings, as the subsidy on petrol cost the government approximately NGN 5 trillion (2.4% of GDP) in foregone revenue from the Nigerian National Petroleum Corporation (NNPC). Lower subsidy costs and a marginal improvement in oil production should contribute to a narrowing fiscal deficit in 2023 (still above 5%). Public debt increased from an estimated 36.6% GDP in 2021 to 37.4% GDP last year and is forecast to further rise to 38.6% GDP in 2023 and 39.8% GDP in 2024 (IMF). Even if the public debt remains low, debt accumulation has increased sharply, and interest payments absorb around 40% of the country’s scarce resources (Coface). According to Fitch Ratings, the government is expected to have to repay USD 2.4 billion in external debt in 2023 and USD 2.7 billion in 2024. To meet these payments, the government will likely rely on a mix of drawing down reserves and obtaining new external borrowing, most likely through syndicated loans. Fuelled by elevated food prices, high domestic energy prices, accommodative monetary policy and import restrictions, the inflation rate has constantly exceeded the Central Bank’s inflation target range of 6% over the past few years and reached a 17-year high in 2022, at 18.9%. Over the course of the year, the monetary policy rate was increased three times by a total of 450 basis points by the CBN, and the cash reserve ratio was utilized to periodically eliminate liquidity from the domestic banking sector. Nevertheless, inflation is expected to remain high over the forecast horizon, at 17.3% this year and 12.6% in 2024, according to the IMF.
Fiscal consolidation, economic diversification, inclusive growth and security issues are the main priorities. The main obstacles to development in Nigeria are the inappropriate energy supply, deficient transport infrastructures, inefficient judiciary system, widespread corruption, together with high inflation. The gap between the official value of the naira and its value on the black market is substantial and the banking system is fragilized by the deteriorating quality of assets.
Despite the country's dynamism, the real challenge for Nigeria is the risk of a demographic explosion: according to the United Nations, the population of Nigeria could reach 730 million inhabitants in 2100. Concerns regarding this potential boom are exacerbated by the fact that half of the inhabitants live below the poverty line; pandemics are rampant (HIV, tuberculosis), infant mortality is high and the country struggles with significant levels of inequalities. According to the Nigerian Bureau of Statistics, unemployment stood at 33.3% in 2022 (42.5% for youth), and 22.8% of the active workforce is under-employed. In 2021, Nigeria returned to positive real GDP per capita growth after five years of negative per capita growth. The overall GDP per capita was estimated at USD 5,884 in 2022 by the IMF.
| Main Indicators | 2020 | 2021 | 2022 (E) | 2023 (E) | 2024 (E) |
|---|---|---|---|---|---|
| GDP (billions USD) | 429.42 | 441.42 | 477.38 | 506.60 | 553.67 |
| GDP (Constant Prices, Annual % Change) | -1.8 | 3.6 | 3.3 | 3.2 | 3.0 |
| GDP per Capita (USD) | 2,083 | 2,088 | 2,202 | 2,280 | 2,431 |
| General Government Gross Debt (in % of GDP) | 34.5 | 36.5 | 38.0 | 38.8 | 39.0 |
| Inflation Rate (%) | 13.2 | 17.0 | 18.8 | 20.1 | 15.8 |
| Unemployment Rate (% of the Labour Force) | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Current Account (billions USD) | -15.99 | -1.85 | -3.46 | -2.96 | -2.57 |
| Current Account (in % of GDP) | -3.7 | -0.4 | -0.7 | -0.6 | -0.5 |
Source: IMF – World Economic Outlook Database , Latest available data
Note: (e) Estimated Data
The Nigerian economy is dominated by crude oil, which accounts for half of the government revenue and more than 75% of the country's total export earnings (Coface). Nigeria is among the first ten oil exporters, and its oil reserves are estimated at 37 billion barrels (OPEC). The country also has become one of the lead exporters of liquefied natural gas, which accounts for an additional 13% of exports (ITC). The country also extracts tin ore and coal for domestic use. Nigeria’s other natural resources include iron ore, limestone, niobium, lead, zinc and arable land.
Another key sector of the Nigerian economy is agriculture, which employs 35% of the workforce and contributes to about 23.4% of the GDP (World Bank). Crop production in Nigeria is dominated by food crops such as cassava, yams, maize, rice, sorghum, and millet, which are mainly grown by small-scale farmers. Other important crops grown in the country include cocoa, palm oil, rubber, groundnut, and cotton. Nigeria is the world's largest producer of cassava and the third-largest producer of tomatoes and groundnuts. The livestock sub-sector in Nigeria includes the production of cattle, sheep, goats, pigs, and poultry. The sector is also characterized by small-scale farmers, and the production is mainly for subsistence and commercial purposes. Nigerian agriculture is mainly centred on subsistence farming. According to the National Bureau of Statistics (NBS), the agricultural sector grew by 3.16% (year-on-year) in real terms in the first quarter of 2022, 13.8% in the second quarter, and 1.3% in the third quarter.
The industrial sector makes up 31.4% of the GDP and employs 12% of the workforce. The largest subsector in the country is the petroleum industry, which currently suffers from oil theft that is believed to cost the country potential revenues valued as much as USD 10.9 billion. Significant oil losses are also recorded due to oil spills. The total annual contribution of oil to aggregate GDP in 2022 was 5.67% (data NBS). The manufacturing sub-sector is the largest component of Nigeria's industrial sector and includes the production of textiles, food and beverages, chemicals, cement, paper, and automobiles. However, the sector has been facing challenges such as inadequate infrastructure, high production costs, and limited access to finance and raw materials. Overall, the manufacturing sector is estimated to account for 15% of GDP (World Bank). The construction industry in Nigeria is also a significant contributor to the industrial sector, driven by the demand for new infrastructure, housing, and commercial buildings. The sector has been growing rapidly in recent years, and the government has been investing in infrastructure projects such as roads, airports, and railways to support its development.
Services represent 43.8% of the GDP and employ 53% of the population. Financial sectors, telecommunications and retail especially, are very dynamic. The finance sub-sector is a significant component of Nigeria's services sector, driven by the growth of the banking industry, insurance, and capital markets. Nigeria's banking industry is one of the largest and most sophisticated in Africa, with local and international banks operating in the country. Tourism is also a significant sector, but it struggles due to the country's poor power supply, insufficient road infrastructure, and poor water quality. The Covid-19 pandemic had a huge impact on tourism as well as the entertainment industry, but vaccination programmes enabled activity to rebound in 2022. To address the challenges facing the services sector, the Nigerian government has implemented various policies and initiatives such as the National Digital Economy Policy and Strategy, the Nigerian Tourism Development Master Plan, and the Nigerian Postal Service Reform. These initiatives aim to promote digitalization, improve infrastructure, increase productivity, and create employment opportunities.
| Breakdown of Economic Activity By Sector | Agriculture | Industry | Services |
|---|---|---|---|
| Employment By Sector (in % of Total Employment) | 35.0 | 12.0 | 53.0 |
| Value Added (in % of GDP) | 23.4 | 31.4 | 43.8 |
| Value Added (Annual % Change) | 2.1 | -0.5 | 5.6 |
Source: World Bank - Latest available data.
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| Monetary Indicators | 2016 | 2017 | 2018 | 2019 | 2020 |
|---|---|---|---|---|---|
| Nigerian Naira (NGN) - Average Annual Exchange Rate For 1 MUR | 7.13 | 8.85 | 9.02 | 9.15 | 9.07 |
Source: World Bank - Latest available data.
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The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.
Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation
The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.
Source: The Economist Intelligence Unit - Business Environment Rankings 2020-2024
See the country risk analysis provided by Coface.
Nigeria is relatively open to trade, which accounts for 23% of its GDP (World Bank, latest data available). The objective of Nigeria's trade policy is to promote and diversify its exports by reinforcing national competitiveness and encouraging liberalization through the reduction of subsidies. The country mainly exports petroleum oils and petroleum gas (mineral products account for 90% of total exports), and boats (3.4%); while imports are lead by mineral products (40%), machinery (16.9%), chemical products (8.6%), and vehicles (6.5% - data National Bureau of Statistics 2022).
Nigeria's main export partners are India (12.6% of total exports), Spain (12%), the Netherlands (9.6%), the U.S. (6.8%), and France (5.8%). Its main suppliers are China (22.7% of total imports), the Netherlands (10.4%), India (7.9%), the United States (5.6%), and France (2.6% - data NBS 2022). Nigeria is a member of the World Trade Organization (WTO) and has signed several regional and bilateral trade agreements. The country is a member of the Economic Community of West African States (ECOWAS) and has signed the African Continental Free Trade Area (AfCFTA) agreement, which aims to create a single market for goods and services among African countries. The Nigerian government has implemented various measures to promote exports, such as the Export Expansion Grant (EEG) and the Nigerian Export Supervision Scheme (NESS). These measures aim to encourage non-oil exports, promote value addition, and increase competitiveness. Lingering barriers to trade and investment persist in the country, mainly due to long bureaucratic delays.
Nigeria’s trade balance is structurally positive, but it occasionally turns negative when oil prices and production drop. According to World Bank data, in 2021 the trade balance was negative by 1.1% of GDP. In the same year, exports of goods amounted to USD 46.9 billion, whereas imports reached USD 51.9 billion (+32.7% and -6.7% y-o-y, respectively - WTO). Exports of services stood at USD 4 billion, while imports totalled USD 15.1 billion (WTO).
Economic recovery and higher oil revenues resulted in a trade surplus in 2022: according to figures from CBS, exports increased by 41.7% vis-à-vis 2021 to NGN 26.8 trillion while imports reached NGN 25.6 trillion (+22.8%).
| Foreign Trade Indicators | 2017 | 2018 | 2019 | 2020 | 2021 |
|---|---|---|---|---|---|
| Imports of Goods (million USD) | 31,273 | 43,007 | 55,257 | 55,390 | 51,941 |
| Exports of Goods (million USD) | 44,468 | 60,547 | 62,531 | 35,634 | 46,932 |
| Imports of Services (million USD) | 17,973 | 30,625 | 38,452 | 19,598 | 15,165 |
| Exports of Services (million USD) | 4,541 | 4,351 | 4,486 | 3,533 | 4,082 |
| Imports of Goods and Services (Annual % Change) | 4.8 | 49.2 | 27.3 | -61.9 | 44.4 |
| Exports of Goods and Services (Annual % Change) | 8.7 | -1.4 | 15.0 | -33.4 | -32.1 |
| Imports of Goods and Services (in % of GDP) | 13.2 | 17.5 | 19.8 | 8.2 | 11.8 |
| Exports of Goods and Services (in % of GDP) | 13.2 | 15.5 | 14.2 | 8.1 | 10.7 |
| Trade Balance (million USD) | 13,148 | 20,467 | 2,868 | -16,402 | -3,246 |
| Trade Balance (Including Service) (million USD) | -86 | -5,599 | -30,893 | -32,241 | -15,251 |
| Foreign Trade (in % of GDP) | 26.3 | 33.0 | 34.0 | 16.4 | 22.6 |
Source: WTO – World Trade Organisation ; World Bank , Latest Available Data
| Main Customers (% of Exports) |
2021 |
|---|---|
| India | 16.4% |
| Spain | 11.8% |
| France | 6.3% |
| Netherlands | 6.0% |
| Canada | 4.5% |
| See More Countries | 55.0% |
| Main Suppliers (% of Imports) |
2021 |
|---|---|
| China | 24.7% |
| Netherlands | 10.3% |
| India | 8.8% |
| Belgium | 7.3% |
| United States | 6.1% |
| See More Countries | 42.8% |
Source: Comtrade, Latest Available Data
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| 5.0 bn USD of services exported in 2019 | |
|---|---|
| 39.77% | |
| 29.28% | |
| Personal travelPersonal travel | 29.28% |
| 13.84% | |
| 9.35% | |
| 4.28% | |
| 2.47% | |
| 1.00% | |
| 38.7 bn USD of services imported in 2019 | |
|---|---|
| 41.30% | |
| 34.95% | |
| Personal travelPersonal travel | 30.87% |
| Business travelBusiness travel | 4.08% |
| 17.72% | |
| 2.55% | |
| 1.11% | |
| 0.75% | |
| 0.67% | |
| 0.65% | |
| 0.23% | |
| 0.05% | |
Source: United Nations Statistics Division, Latest Available Data
- All Progressives Congress (APC): socialist; in the 2023 general election, its candidate Bola Tinubu won the presidential election
- People's Democratic Party (PDP): centre-right, typically attracts national support holding more than half of parliamentary seats
- Young Progressive Party (YPP): social democracy
- Labour Party (LP) : centre-left
- All Progressives Grand Alliance (APGA): progressive
- Social Democratic Party (SDP): centre-left, moderate
- African Democratic Congress (ADC): centre-left.
The world rankings, published annually, measures violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire incorporating the main criteria (44 in total) to assess the situation of press freedom in a given country. This questionnaire was sent to partner organisations,150 RWB correspondents, journalists, researchers, jurists and human rights activists. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).
The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.
Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House
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Latest Update: September 2023
