In this series, we take a look at Africa, country-by-country, and offer a (very) brief glance at the historical events, key industries, and current political situation shaping individual states.
Photo: Aerial view of Civic Towers and surrounding areas, Victoria Island, Lagos, 2021 (Nupo Deyon Daniel/ Wiki Commons)
Quick facts
Head of state: President Bola Tinubu (2023–present)
Capital: Abuja
Largest city: Lagos
Population: 213.4 million (2021)
GDP: USD 440.8 billion (2021)
A (very) brief history
Located in West Africa, Nigeria is a rapidly growing nation with a complex political, economic, and social history. The country was under British colonial rule for nearly 60 years, from 1901 to independence in 1960. The early post-independence era was characterized by political instability, with several military coups and counter-coups leading to a series of military dictatorships.
The discovery of oil in the late 1950s brought economic growth and development, but also corruption and inequality. Nigeria has faced several economic challenges, including periods of inflation, foreign debt, and a lack of investment in non-oil sectors. In 2021, the estimated inflation rate was 17%.
The country transitioned to democracy in 1999, and in the past two decades has returned to civilian rule and experienced a period of stability and economic growth. Telecommunications, agriculture, and manufacturing have seen particularly acute growth in recent years, in addition to the significant revenue that the oil industry continues to generate.
In early 2023, the country held national elections and though the results were not immediately clear, international observers noted that overall, “Nigeria’s democratic, peaceful election was a breath of fresh air in a region crippled by coups and persistent democratic backsliding.” In early March, the election commission declared Bola Tinubu the winner, and he will be the country’s eighth president.
Key industries
Oil
Though production has been on the decline for the last decade, oil continues to be the mainstay of the Nigerian economy, accounting for over 80% of the country's export earnings. The sector has been the source of much of the country's economic growth, but has also been plagued by corruption, mismanagement, and volatility in the commodities market. The government has been working to reform the sector and promote investment in the industry.
Agriculture
Like many African nations, agriculture is an important sector in Nigeria, accounting for over 20% of the country’s GDP and employing over 70% of the population. The sector is dominated by small-scale farmers and includes crops such as cassava, maize, and yams. In recent years, the government has been working to modernize the sector (one example: improving, and expanding dryland crops value chains in the continent), promote investment, and increase productivity.
Services
Services, including finance, telecommunications, and transportation, are also important to the Nigerian economy, contributing to over 50% of the country’s GDP. The sector has been growing in recent years, driven by increased investment and the growth of the middle class. The country has produced several homegrown firms like Jumia (we previously explored Jumia's story in our article "Silicon Savannah") that have experienced stratospheric success but have also served as cautionary tales to the nation’s rapid growth.
Manufacturing
Manufacturing is a growing industry in Nigeria, with the government promoting investment in the sector and implementing policies to support its growth, including the launch of a National Development Plan in 2021. The country has a large and growing population, which offers a large market for consumer goods, and since independence, there has been a focus on using this sector to provide employment opportunities, produce goods domestically, and increase consumption.
Photo: Bello Abu Bakkar, maize farmer and president of the Nigerian Maize Association, amidst fellow farmers (C. de Bode/ CGIAR)
How politics affect the business environment
The government has been promoting foreign investment in the country and has implemented policies to make it easier for foreign companies to do business in Nigeria. This includes tax incentives and streamlined investment procedures, making it easy to move money into the country. However, repatriation of funds can be problematic, with the problem becoming so widespread in late 2022 that foreign airlines had a total of USD 500 million effectively trapped in the country.
Less related to politics but particularly salient to understand is that Nigeria is home to over 250 ethnic groups, numerous religions, and even more local languages and dialects. This has meant that ethnic tensions have sometimes been exacerbated by inequality and poverty, which is widespread throughout the country. (For context, the monthly minimum wage in 2020 was approximately 30,000 naira, or roughly USD 65.) In short, while Nigeria has a large consumer market, it does not have the same buying power as other regions.
Current political and economic environment
In recent years, the government has been working to address some of the challenges facing the country, including poverty, unemployment, and a lack of access to basic services such as electricity and clean water. It has implemented initiatives to address these challenges, such as the Universal Basic Education program (first introduced in 1999) and the National Health Insurance Scheme (established in 2005).
In recent years, though, a more serious threat has emerged: that of security challenges, including terrorism and kidnapping primarily fueled by groups like Boko Haram and ISIS-West Africa, as well as conflicts between farmers and herders. The government has implemented measures to address these challenges, including the establishment of a joint task force and the launch of the National Livestock Transformation Plan.
In spite of these efforts, Nigeria was gray listed in 2023 by global anti-money laundering and terrorism financing watchdog, Financial Action Task Force (FATF), meaning it will be under increased scrutiny in combating money laundering and terrorism financing. The timing is particularly difficult for the country as its currency, the naira, has been losing value for a number of years, falling to a record low against the dollar in late 2022.
Final note
Nigeria has a diverse economy driven by oil, agriculture, services, and manufacturing. While the country has experienced a period of stability and economic growth since the transition to democracy, recent years have proved particularly tumultuous economically.
While the government has been promoting foreign investment and has implemented policies to address the challenges facing the country, the current economic and security situation should be monitored closely. Poverty, unemployment, and a lack of access to basic services remain challenges for the country, but the relative success of its recent national election gives reasons for measured optimism in this West African country.
The coming months and years will be particularly critical for the future of the country. Will it become a significant regional economic and political hub for the continent, or will it continue to be troubled by its many long-running issues?
Are you interested in knowing more about Nigeria or another African market or sector? Get in touch with us today, and let us help you create a strategy tailored for your business or organization.
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