A key regional player in West Africa, with approximately 184 million inhabitants, Nigeria accounts for 47% of West Africa’s population, and has one of the largest population of youth in the world. A federation that consists of 36 autonomous states, Nigeria is a multi-ethnic and culturally diverse society. With an abundance of resources, it is Africa’s biggest oil exporter, and also has the largest natural gas reserves on the continent.
The fifth consecutive national elections held in 2015 marked the first time in Nigeria’s history that it saw a peaceful transfer of power between two political parties. The current administration, led by President Muhammadu Buhari, identifies fighting corruption, increasing security, tackling unemployment, diversifying the economy, enhancing climate resilience, and boosting the living standards of Nigerians as main policy priorities. Nigeria’s federated structure gives significant autonomy to states.
Between 2006 and 2016, Nigeria’s gross domestic product (GDP) grew at an average rate of 5.7% per year, as volatile oil prices drove growth to a high of 8% in 2006 and to a low of -1.5% in 2016. While Nigeria’s economy has performed much better in recent years than it did during previous boom-bust oil-price cycles, such as in the late 1970s or mid-1980s, oil prices continue to dominate the country’s growth pattern.
Moreover, the volatility of Nigeria’s growth continues to impose substantial welfare costs on Nigerian households. The onset of the oil price shock in mid-2014 confronted the government with the pivotal challenge of building an institutional and policy framework capable of managing the volatility of the oil sector and supporting the sustained growth of the non-oil economy.
After contracting for five consecutive quarters, the economy has returned to growth in the second quarter of 2017. With a renewed focus on economic diversification, promoting growth in the private sector and driving job growth, GDP grew by 0.6% (year-on-year) in the second quarter of 2017, driven by recovering oil production and some recovery in non-oil industries, too, and modest growth in agriculture.
Economic growth is expected to have remained positive in the second half of 2017, averaging about 1.0% for 2017; driven by the continued recovery of oil production, sustained growth in agriculture, and the positive impact on investment and other private sector activities from the improved availability of foreign exchange to support imports.
As the government begins to implement the structural reforms outlined in its Economic Recovery and Growth Plan 2017–2020, growth can be expected to strengthen further in the medium term, reaching about 2.8% by 2019.
Nigeria has made significant progress in socio-economic terms over the last 15 years. Between 2005 and 2015, Nigeria’s Human Development Index value increased by 13.1%. However, the country continues to face massive developmental challenges, which include reducing the dependency on oil and diversifying the economy, addressing insufficient infrastructure, and building strong and effective institutions, as well as governance issues, public financial management systems, human development indicators, and the living conditions of the population.
Inequality in terms of income and opportunities has been growing rapidly, and has adversely affected poverty reduction. The North-South divide has widened in recent years due to the Boko Haram insurgency and a lack of economic development in the northern part of the country. Large pockets of Nigeria’s population still live in poverty, without adequate access to basic services, and could benefit from more inclusive development policies. The lack of job opportunities is at the core of the high poverty levels, of regional inequality, and of social and political unrest in the country.
last updated: Nov 01, 2018 (Culled from the World Bank).