NIGERIA'S ECONOMY

Lagos Central Business District.

Nigeria is classified as a mixed economy emerging market, and has already reached middle income status according to the Worldbank[1], with its abundant supply of natural resources, well-developed financial, legal, communications, transport sectors and stock exchange (the Nigerian Stock Exchange), which is the second largest in Africa. Nigeria is ranked 37th in the world in terms of GDP (PPP) as of 2007. Nigeria is the United States' largest trading partner in sub-Saharan Africa and supplies a fifth of its oil (11% of oil imports). It has the seventh-largest trade surplus with the U.S. of any country worldwide. Nigeria is currently the 50th-largest export market for U.S. goods and the 14th-largest exporter of goods to the U.S. The United States is the country's largest foreign investor.^[55]

Previously, economic development had been hindered by years of military rule, corruption, and mismanagement, the restoration of democracy and subsequent economic reforms have successfully put Nigeria back on track towards achieving its full economic potential. It is now one of the largest economies in Africa, and the largest economy in the West Africa Region ^[56].

According to the Economist Intelligence Unit and the World Bank, Nigerian GDP at purchasing power parity has nearly doubled from $170.7 billion in 2005 to 292.6 billion in 2007. The GDP per head has jumped from $692 per person in 2006 to $1,754 per person in 2007.^[57]

During the oil boom of the 1970s, Nigeria accumulated a significant foreign debt to finance major infrastructural investments. With the fall of oil prices during the 1980s oil glutNigeria struggled to keep up with its loan payments and eventually defaulted on its principal debt repayments, limiting repayment to the interest portion of the loans. Arrears and penalty interest accumulated on the unpaid principal which increased the size of the debt.

However, after negotiations by the Nigeria authorities, in October 2005 Nigeria and its Paris Club creditors reached an agreement in which Nigeria repurchased its debt at a discount of approximately 60%. Nigeria used part of its oil profits to pay the residual 40%, freeing up at least $1.15 billion annually for poverty reduction programmes. Nigeria made history in April 2006 by becoming the first African Country to completely pay off its debt (estimated $30 billion) owed to the Paris Club.

Key sectors

Nigeria has one of the fastest growing telecommunications markets in the world, major emerging market operators (like MTN, Etisalat, Zain and Globacom) basing their largest and most profitable centres in the country.^[59] The government has recently begun expanding this infrastructure to space based communications. Nigeria has a space satellite which is monitored at the Nigerian National Space Research and Development Agency Headquarters in Abuja.Nigeria is the 12th largest producer of petroleum in the world and the 8th largest exporter, and has the 10th largest proven reserves. (The country joined OPEC in 1971). Petroleum plays a large role in the Nigerian economy, accounting for 40% of GDP and 80% of Government earnings. However, agitation for better resource control in the Niger Delta, its main oil producing region, has led to disruptions in oil production and currently prevents the country from exporting at 100% capacity.^[58]

The country has a highly developed financial services sector, with a mix of local and international banks, asset management companies, brokerage houses, insurance companies and brokers, private equity funds and investment banks.^[60]

Nigeria also has a wide array of underexploited mineral resources which include natural gas, coal, bauxite, tantalite, gold, tin, iron ore,limestone, niobium, lead and zinc.^[61] Despite huge deposits of these natural resources, the mining industry in Nigeria is still in it infancy.

Agriculture used to be the principal foreign exchange earner of Nigeria.^[62] At one time, Nigeria was the world's largest exporter ofgroundnuts, cocoa, and palm oil and a significant producer of coconuts, citrus fruits, maize, pearl millet, cassava, yams and sugar cane. About 60% of Nigerians work in the agricultural sector, and Nigeria has vast areas of underutilized arable land.^[63]

It also has a manufacturing industry which includes leather and textiles (centred Kano, Abeokuta, Onitsha, and Lagos), car manufacturing (for the French car manufacturerPeugeot as well as for the English truck manufacturer Bedford, now a subsidiary of General Motors), t-shirts, plastics and processed food.

The country has recently made considerable amount of revenue from home made Nigerian Movies which are sold locally and Internationally. These movies are popular in other African countries and among African immigrants in Europe.