Nigeria consists of 36 states all packed in six geopolitical zones including, the southwest, the southeast, the south-south, the northeast, the northwest and the north-central regions. The country is the world’s sixth most populated country and Africa’s most populated with over 250 tribes residing in it alone.
Nigeria is the continent’s largest economy and has held that position since 2013 when the country re-based its GDP from an over two-decade break. The Nigerian economy stands at over 400 billion dollars, is the 31st largest economy in the world and is one of the world’s fastest-growing economies in the world.
This article presents the major advances and falls of the Nigerian economy.
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The Growth of the Nigerian economy
During the military regime in Nigeria, the country was plagued with a series of economic falls that affected the general growth and industrial prospects of the nation. Businesses feared investing in Nigeria, which was at the time, termed dictatorially; coupled with corruption, mismanagement and truancy as the norm of the day. The Abacha’s loot and other monies stolen during the various military regimes still impact the nation’s economy to this day.
Following the handover of power in 1999, Nigeria has quickly moved to a diversified economy with agriculture, manufacturing, services and real estate adding to over 85% of its GDP. Nonetheless, petroleum remains a vital part of the government’s revenue source. In manufacturing, Nigeria leads on the African continent for the exports of pharmaceuticals, yams, cassava, plastic products, cement, fertilizers, personal and baby care products, consumable products and beverages.
The country is also one of Africa’s top five leaders in the continent’s financial market, tech market, banking and legal industry. Nigeria is also home to the second-largest stock exchange in Africa. The country also makes significant revenue from entertainment.
In real terms, the Nigerian economy expanded by 3.4% in 2021, reaching an estimated value of N72.39 trillion, up from N70.01 trillion the year before.
In the review year, Nigeria’s real GDP experienced its fastest growth since 2014, recovering from the COVID-19-induced lockdown recession that occurred in 2020. In the meantime, the largest contributing sector in the largest African economy is still the agricultural sector.
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Nigerian economy by sector
It is essential to regularly evaluate the contributions of the Nigerian sectors and their sub-sectors in light of the economic structure of the Nigerian economy and the concerted efforts being made to drive growth in some areas of the economy, such as the agriculture and trade sectors.
As a result, the following is a ranking of the Nigerian economy’s largest sectors for 2021, with an emphasis on those contributing more than 5% of the country’s GDP.
1. Petroleum
GDP contribution: 9%
Nigeria produced 780.69 million barrels of crude oil in 2015, the most of any year from 2015 to 2017. In 2016, it decreased its production to 668.58 million, but in 2017, it significantly increased to 686.67 million.
This measurement shows the Brent raw petroleum cost from 1986 to 2017. Brent crude oil averaged 54.25 dollars per barrel in 2017 on the market. At the end of 2017, the price of a barrel of crude oil was 54.25 US dollars, up from 43.29 US dollars in 2016 but down from 93.17 US dollars in 2014.
Between 2011 and 2014, the price of crude oil was $157 and 158 dollars, respectively, and the exchange rate remained somewhat stable.
2. Agriculture
GDP contribution: 25.9%
With an estimated value of N18.74 trillion in 2021, Nigeria’s agricultural sector will continue to be the largest sector of the economy, contributing 25.9% of the country’s real GDP. From N18.35 trillion the year before, the industry increased by 2.1% year over year.
Despite numerous interventions by the CBN to develop the sector, the agricultural sector remains significantly below desired levels because agricultural imports continue to consume a significant portion of our foreign exchange reserves and there has been no significant inflow of export earnings.
Additionally, the sector’s year-over-year growth in 2021 was 2.13%, down from 2.17% the previous year.
Crop production, livestock, forestry, and fishing are the four components of the agricultural sector, with respective values of N16.92 trillion, N1.24 trillion, N193.22 billion, and N384.45 billion.
Nigeria’s agricultural sector contributed 25.9% of the country’s real GDP, down from 26.21% the year before. Despite the decrease, it was sufficient to make the largest contribution to Nigeria’s economy.
In 2009, agriculture employed approximately 70% of Nigeria’s workforce and contributed 41.84 % of the country’s GDP. In Nigeria, it is viewed as a means of encouraging youth employment to invest in profitable, sustainable, and high-growth agribusiness.
Nigeria has a favourable climate for agriculture, over 960 kilometres of coastline and marine resources, 120,000 square kilometres of rivers and lakes, and a significant consumer market.
Around 23% of West Africa’s arable land is accounted for by this. According to Kola Masha, managing director of Doreo Partners, “West Africa has the lowest levels of irrigation in the world, so the potential for the region to leap ahead in terms of production is immense.”
He also mentioned that the region benefits from having yields that are among the world’s fastest-growing. Nigeria’s soya bean yield grows multiple times more quickly than the world normal. Additionally, this results in a significant increase in production. Kola adds that empowering smallholder farmers who have access to millions of hectares is the key to unlocking the growth potential of agriculture in Africa. This would ensure that they have access to the right inputs, sufficient financing, and other resources that will significantly increase productivity.
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3. Data and correspondence
GDP contribution: 15.5%
The data and correspondence sector of the Nigerian economy contributed 15.5% to the total genuine Gross domestic product with a worth of N11.23 trillion in 2021, which addresses a 6.55% extension contrasted with N10.54 trillion kept in the earlier year.
The telecommunications industry, which is estimated to be worth N9.15 trillion, or 81.5% of the information and communication sector’s total value, is the primary driver of the sector. The sub-sector, on the other hand, experienced its slowest growth in 14 quarters.
To be expected, the area houses significant net-esteemed organizations in the country, with any semblance of MTN, Airtel, Glo, and 9mobile among others revealing trillions of naira in yearly income.
4. Manufacturing
GDP contribution: 9%
The manufacturing sector contributed N6.5 trillion to the country’s real GDP, or 9%, up 3.35% from N6.29 trillion the year before. The economy’s double-digit contraction in the oil refining subsector has significantly impacted the sector.
Oil refining, cement manufacturing, food production, textile production, and other subsectors make up the 12 subsectors that make up the manufacturing sector in Nigeria. The food, beverages, and tobacco subsector’s N3.18 trillion valuation and the N1.32 trillion cement industry accounted for the majority of the sector’s contribution.
Other industries that contribute more than 5% of real GDP include Real estate, mining and quarrying (7.4%), and Real Estate (5.6%).
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Conclusion
Nigeria’s economic freedom score is 54.4, making its economy the 124th freest in the 2022 Index. Nigeria is ranked 23rd among 47 countries in the Sub-Saharan Africa region, and its overall score is above the regional average but below the world average.
The Nigerian economy grew from 2017 through 2019, turned negative in 2020, and rebounded in 2021. The country’s five-year trend of mediocre economic freedom has continued to this day.
The Nigerian economy has been known to be heavily reliant on oil since it was discovered. However, Agriculture dominates the contribution to GDP. ICT, manufacturing sector and also making big contributions.
