Economy of Nigeria

The economy of Nigeria is a complex, mixed economy and an emerging market. It is classified as a lower-middle-income nation. Nigeria holds a significant position in global and regional markets. It is the 52nd-largest economy in the world by nominal Gross Domestic Product (GDP). In Africa, it ranks as the second-largest economy in terms of purchasing power parity (PPP). It is also the 19th-largest economy in the world when measured by PPP.

Nigeria's economy functions through several distinct sectors. The petroleum sector is a vital driver of government revenue. Although oil accounts for only about 9% of the total GDP, it contributes two-thirds of all state revenues. Nigeria produces approximately 2.7% of the global oil supply. The country also possesses large deposits of coal and natural gas. However, the economy faces an ongoing supply crisis in the power sector. This means residents often experience difficulties with electricity despite these vast energy resources.

The agricultural sector is another major pillar of the nation. This sector accounts for about 18% of the GDP and provides employment for nearly one-third of the population. There is a clear distinction between regional farming methods. In the south, a "roots economy" focuses on tubers. This group produced 118 million tonnes of food in 2020, including yam, cassava, and potatoes.

In the north, the savannah zone supports a cereal economy. This includes sorghum, pearl millet, and sugar cane. Nigeria ranks first in Africa for farm output.

Manufacturing and services have become increasingly important. In 2013, Nigeria's re-emergent manufacturing sector became the largest on the African continent. The country produces many goods and services for the West African region.

In 2014, the government rebased its GDP. This rebasement helped account for fast-growing sectors like telecommunications, banking, and the film industry. By 2015, the services sector had grown to represent 55% of the GDP. This shows a shift away from the 40% agriculture share seen in 2012.

Nigeria's economic history is marked by periods of intense volatility. During the 1960s, GDP per capita expanded by 132%. This growth peaked at 283% in the 1970s. However, this expansion proved unsustainable, and the economy shrank by 66% in the 1980s. Diversification initiatives in the 1990s helped restore decadal growth to 10%.

A major financial milestone occurred in 2006. Nigeria reached an agreement with the Paris Club to buy back most of its owed debts. This required a cash payment of approximately US$12 billion.

Despite this progress, several structural challenges remain. Human capital is currently underdeveloped. In 2019, Nigeria ranked 161 out of 189 countries on the United Nations Development Index. Non-energy-related infrastructure is also considered inadequate. Additionally, the country must manage endemic corruption to improve its business environment. While progress has been slow, international surveys show improvements. Nigeria ranked 154 out of 180 countries in the 2021 Corruption Perceptions Index.

Looking toward the future, the economic outlook remains a subject of intense study. A 2011 Citigroup report projected that Nigeria would have the highest average GDP growth in the world between 2010 and 2050. Nigeria is one of only two African countries named among the 11 Global Growth Generators. Recent data shows continued movement in the economy. In the second quarter of 2024, the GDP grew by 3.19%. This growth was driven by the non-oil sector, which expanded by 4.13%.

Most Nigerians remain optimistic about their future. Two-thirds of the population expect their living conditions to improve in the coming decades.