With approximately 184 million inhabitants, Nigeria accounts for 47% of West Africa’s population, and has one of the largest populations of youth in the world. It is a political federation that consists of 36 autonomous states, and a multi-ethnic and culturally diverse society. With an abundance of natural resources, Nigeria—Africa’s biggest oil exporter—also has the largest natural gas reserves on the continent.
Nigeria’s economy grew by 2.7% in 2015, significantly below its growth of 6.3% in 2014. Since the fall in oil prices in mid-2014, growth has been on a downward spiral, and the economy is currently in recession. In 2016, it continued to deteriorate further after recording negative growth in the first two consecutive quarters (-0.4% and -2.1% year-on-year in real terms, respectively). In the third quarter, GDP contracted by 2.2%, driven by a significant decline in the country’s oil output, shortages of power, fuel, and foreign exchange. Inflation doubled to 18.8% (projected) at the end of 2016, from its level of 9.6% at the end of 2015, mainly as a result of fuel and electricity price increases and the depreciation of the Nigerian naira during the year. Average inflation will likely remain in the double digits over 2017/2018.
Nigeria’s economy is expected to grow by about 1% in 2017 and 2.5% in 2018, based on an expected increase in oil output, as well as the accelerated implementation of public and social investment projects by the Federal Government.
The recent lower growth rate of the Nigerian economy has resulted in a renewed focus on economic diversification, promoting growth in the private sector, and driving job growth.
The fifth consecutive national elections, held in March and April 2015 and won by an opposition party, marked the first peaceful transfer of power between two political parties in Nigeria’s history. The current administration took office amid a severely weakened economy, narrow fiscal space, large gaps in infrastructure, and poor service delivery. The 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 its main policy priorities.
Restoring macro-economic resilience and growth calls for stabilization and recovery measures while addressing the country’s medium and long-term development agenda, including efforts to improve security and combat corruption.
- Although the private sector is the main driver of the economy, its potential has not been fully exploited as it faces significant challenges, mainly power, a poor regulatory environment, and a lack of access to finance.
- With a teeming young population, there is a need to promote job creation and achieve inclusive growth. 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. Promoting diversified growth and accelerating the creation of productive jobs through private sector growth and improvements in education and skills remain the medium-term challenge. Providing physical and economic infrastructure; enacting social policies that would increase opportunities for the poor and vulnerable; and addressing climate change and other stressors remain the major medium- to long-term challenge.
- Other human development challenges include reducing the vast inequities in terms of access and quality of services in the health, education, and water, and improving the quality and efficiency of social service delivery at the state level to promote social inclusion.
Nigeria continues to face terrorist attacks in the northeast, a restive insurgency in the Delta region, and the perennial inter-communal violence across the middle belt. At the root of the security challenges are high levels of poverty, joblessness, growing numbers of frustrated youth, and the degradation of natural resources and climate stressors. The critical and immediate challenge is ensuring the welfare of the internally displaced people, host communities, and population in the North- East.
Last Updated: Apr 01, 2017