Nigeria, a vibrant democracy, is the largest economy in Africa with a nominal GDP of 561.6 billion USD (N89.0 trillion) in 2014. She is among the most richly endowed countries of the world in terms of natural, mineral and human resources. The country has over 34 discovered solid minerals including uranium, abundant arable land and over 44 exportable commodities.
Nigeria enjoys strong demographics with a population of about 180 million people. The country has a labour force of about 76 million people and about 32 million Micro Small Medium Enterprises. In 2014, household consumption expenditure was over 63 trillion. Current inflation rate is about 15% while average age in the country is about 18.6 years. The country maintains a decent level of fiscal discipline. Nigeria’s market opens up to an ECOWAS market of about 300 million. She contributes over 70% of the West African sub-regions’ Gross Domestic Product.
The country ranks as the 8th largest producer of petroleum, with oil reserves estimated at about 36 billion barrels. Since its discovery in 1956, oil has contributed substantially to Nigeria’s revenue (accounts for two-thirds of government revenue) though it contributes only about 14% of the country’s GDP. Nigeria has the 6th largest deposit of gas, with reserves estimated at a minimum of 100 trillion cubic feet.
Earlier reforms in the country has positively impacted on the economy, reducing its debt profile considerably while steadily growing its GDP at over 7% per annum between 2005 and 2015. Sectors such as financial services, telecommunications, and entertainment recorded impressive performances during the period. For instance, in the telecommunications sector and following the deregulation exercise, the country recorded an increase in the number of telephone lines available in the country from about four hundred thousand (400,000) lines in 2001 to over one hundred and forty million (140,000,000) lines currently. The success recorded in the sector, especially mobile telephony has rubbed off on other sectors such as e-commerce, entertainment, etc.
The country’s financial sector grew with the liberalization programme which commenced in 1990 under the supervision of the Central Bank of Nigeria. The banks are now bigger, with better corporate governance and some of them have started operating within Africa and financing large transactions. The growth was sequel to market-led mergers and acquisitions which reduced the number of banks from eighty-nine (89) to twenty-four (24). It further helped in accelerating the growth of the stock exchange.
During the period, foreign direct investment inflows remained strong while sectors such as oil and gas, power, banking and capital markets benefitted from several reforms. Driving growth is trade, manufacturing and agriculture. It is pertinent to note that through the rebasing of the country’s economy in 2014, it became clear that there are significant activities out of the control (fiscal) of government and that the structure of the economy changed significantly since the last exercise in the 1990s. It has been observed that informal sectors such as agriculture, trade, real estate contributed significantly to the country’s GDP, thus revealing that the Nigerian economy is largely informal.
As the Statistician General of the Federation recently observed – despite the fact that government revenue is dependent on oil and gas, however, the economic structure of Nigeria is not solely dependent on oil and gas. He pointed out that in the revised national accounts, oil value added has been negative for years and it is actually the non-oil economy that had sustained the economy.
Global economic slow-down and its attendant impact as well as significant drop in crude oil price leading to exchange rate depreciation have recently impacted negatively on the Nigerian economy resulting in economic growth slowing to about 3% in 2015. Foreign direct and portfolio investments have also declined while inflation has been rising to double digits. The government is working very hard to restore confidence in the economy and financial markets.
The on-going reforms by President Muhammadu Buhari are designed to strengthen fiscal and monetary policies to ensure stability in the economy, most recent of these steps being the introduction of a flexible exchange rate system. The Federal Government intends to maintain a sustainable debt management strategy, establish incentives to improve collection of taxes, sustain the fight against corruption by increasing transparency, accountability and compliance with law and order and intensify public procurement reforms in projects to obtain value for money and cut costs. For instance, the Treasury Single Account (TSA) is one of the measures established to block leakages and wastages of public resources. The government has made appreciable gains in its effort to track and recover stolen wealth of the country.
Efforts are already being deployed towards redressing infrastructural gaps, raising production to create more jobs, building capital and stimulating further growth and prosperity in the country. The Federal Government also offers support to domestic and foreign entrepreneurs in its bid to promote the central role of the private sector in the government’s economic agenda.
Further diversification of the Nigerian economy
In its bid to develop and expand the country’s productive base and boost export, the current administration is steadily implementing the Nigeria Industrial Revolution Plan (NIRP) while also improving the ease of doing business and building critical infrastructure. The NIRP launched in 2012 is a strategic and integrated road map for industrialization in the country. It provides actionable plan across three sectors: agro-allied, solid minerals and oil and gas related industries. Efforts to increase manufacturing capacity will be reinforced by the operationalisation of industrial parks and free export processing zones and the launch of “made in Nigeria” campaign.
The Federal Government is determined to improve the operating environment for small, medium and large businesses to thrive while removing the obstacles to investment in Nigeria. In this connection, trade and investment laws, policies and incentives are being reviewed to ensure they are in consonance with global best practices. The Federal Ministry of Industry, Trade and Investment will deploy modern technology to improve speed, ensure transparency as well as efficiency of business procedures.
President Buhari’s administration is working assiduously in implementing measures to achieve self-sufficiency and become a net exporter of food items such as rice, tomato paste and wheat. The Federal Government intends to increase local production of maize, soya, poultry and livestock in its bid to achieve self-sufficiency. This will be complemented by measures to revitalize and expand agro-allied processing to enable local production and processing of cassava, cocoa, cashew, fruits and sesame seed through the utilization of 5,000 hectares of irrigable land in the 12 River Basin Development Authorities and utilize 22 dams for commercial farming activities by prospective investors.
Critical in the task of diversifying the economy is modern and efficient infrastructure. In this regard, a national infrastructure master plan has been developed which aims to catalyze economic activity. The Federal Government is creating a national infrastructure fund to complement the existing Sovereign Wealth Fund. It is envisaged that the infrastructure fund will support projects to enable steady supply of electricity, robust, efficient and cost-effective transport networks, among others.
A roadmap for boosting electricity generation through incremental power has been developed. It is envisaged to address current challenges such as damaged, unmaintained or unserviced turbines in the hydro-power plants in addition to the non-availability of gas coupled with lack of maintenance. The government is also committed to addressing the problem of vandalization of oil production platforms and pipelines and gas supply lines. Presently, the country has 26 power plants and 140 turbines with installed capacity of 12,341 megawatts. There are plans to stimulate the use of solar and other energy resources that are available in the six geo-political zones in the country.
The Federal Government is investing in the rehabilitation and construction of roads to restore damaged federal highways network and to establish connectivity through public works projects, maintenance works, PPP and other interventions. It will also complete and construct new rail projects while rehabilitating existing airports in the country.
Furthermore, there are steps to develop roadmaps on gas development, stimulate investment into the solid minerals sector and to implement social intervention programmes. A Comprehensive National Oil and Gas Master Plan, a roadmap for the petroleum industry’s development, diversification, privatization and governance will be developed. The government envisages eliminating gas flaring, dealing with funding gaps in the upstream sector, setting a deadline for self-sufficiency in refined petroleum products while also ensuring that Nigeria becomes a net exporter of petroleum products. It will work in concert with the National Assembly on the passage of a revised Petroleum Industry Bill (PIB).
The social intervention programmes include the training and deployment of unemployed graduates as well as volunteer teachers who would be paid on the job while they seek jobs in their chosen careers. The government recently launched the “Homegrown School Feeding” for primary school pupils across the country. It will implement a micro-credit scheme to provide soft loans for market women, artisans, traders, create innovation and technology hubs and parks on a large scale and provide skills acquisition and vocational training for several non-graduate youths.
There is a programme to provide a “Conditional Cash Transfer” involving a million poor and vulnerable Nigerians who will receive 5,000 naira monthly and bursary awards for tertiary education students of science, technology, engineering and mathematics and STEM.
Nigeria – a top investment destination in Africa
With abundant land, rich in agricultural and mineral resources, a robust and competitive private sector, investment policies and legislation to guarantee predictability and consistency with global best practices, Nigeria is poised to consolidate its position as an important investment destination in Africa. She is equally committed to achieving its vision of becoming one of the 20 largest economies in the world by the year 2020.