Nigeria Economics and Business

According to cheeroutdoor, Nigeria is the most populous country in Africa, with an estimated population of over 200 million people and a GDP per capita of US$ 2,400. The economy of Nigeria is highly diversified and includes agriculture, manufacturing, services and oil production.

Agriculture accounts for around one-third of total GDP and employs more than half of the population. The main crops grown in Nigeria are cassava, yam, maize, rice and soybeans. Livestock rearing is also important with cattle being the most commonly raised animals.

Manufacturing accounts for around one-fifth of total GDP and includes food processing, textiles and light engineering. Oil production is a major contributor to the economy with exports accounting for around two-thirds of total government revenue. Services account for around half of total GDP and include banking, insurance, telecommunications and tourism which has grown in importance in recent years due to the country’s beautiful landscapes and wildlife.

In recent years, there has been an increasing focus on renewable energy sources such as solar power which now account for over one-fifth of electricity generation capacity in Nigeria. The government has also implemented several economic reforms to improve the business climate including reducing red tape and taxes to encourage foreign investment.

Despite these positive developments, Nigeria remains one of the poorest countries in Africa due to high levels of poverty, poor infrastructure, political instability and weak government institutions which hinder economic growth. The country is heavily reliant on international aid to support its development efforts; it received nearly US$ 2 billion from foreign donors in 2018 alone. In order to reduce poverty levels, the government needs to continue investing in education and healthcare as well as improving infrastructure such as roads, ports and telecommunications networks.

Abbreviated as NG by, Nigeria is Africa’s most populous state, and the continent’s largest economy. The country’s economy was previously based largely on agriculture, but since the 1970s it has been heavily dominated by oil. As Africa’s largest oil producer, with a production of approximately two million barrels per day, Nigeria is an important country in the global economy.

Finance, service, communication and entertainment are growing sectors. Film production in Nigeria, the so-called “Nollywood”, is the world’s second largest film industry (after Bollywood, but before Hollywood). Nigeria is characterized by strong urbanization, and today more than half of the population lives in cities.

Due to the large population and a growing middle class with increased purchasing power, Nigeria is considered an interesting country for both investment and trade. In 2013, Nigeria, along with Malaysia, Indonesia and Turkey, were identified as one of the most important emerging markets in the world. These so-called MINT countries were predicted to gradually take over after BRICS (Brazil, Russia, India, China and South Africa). Nigeria saw average growth in gross domestic product (GDP) of 8.6 percent in the period 2000–2011, and was among the world’s 10 fastest growing economies. Growth has since been somewhat lower, not least after the fall in oil prices from 2014.

The security situation, corruption and uncertainty surrounding legislation have hindered investment. A proposal for a comprehensive petroleum law (Petroleum Industry Bill, PIB) was submitted to Parliament in 2008. President Muhammadu Buhari divided the law, and Petroleum Industry Governance (PIGB) was finally adopted in January 2018. The law deals with a restructuring of the institutional framework for oil management., and will contribute to more openness and less corruption. Oil companies have awaited the conclusion of the PIB, and together with the decline in oil prices this has led to a lack of investment in the oil industry. Nigerian authorities are now hoping for renewed investor interest.

Although Nigeria has moved from a low-income to a lower-middle-income country, and has experienced steady growth since the turn of the millennium, both poverty and differences in the country are increasing. Today, 70 percent of the population still lives below the poverty line.

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Historical development

During the colonial rule, and not least from World War II, the Nigerian economy was geared towards the production of raw materials for British needs. Therefore, by the independence of 1960, the Nigerian economy was far on its way to the needs of Europe, and not Nigeria’s own social and economic development. Independent Nigeria has been characterized by a lack of political stability with great internal contradictions. Several military coups and the Biafra War (1967-1970) are factors that have undermined stable economic development.

The major changes in the Nigerian economy occurred in the early 1970s, with a sharp increase in oil recovery and revenues. This provided the opportunity for large public investments, including transport and industry, but also had several negative consequences. The increased cash flow led, among other things, to widespread corruption and waste, and to an investment level that falling oil prices were unable to maintain. This resulted in large borrowings and high government debt in the 1980s. Modernization optimism based on the large petroleum deposits also led to the neglect of agriculture and the countryside – and to Nigeria becoming dependent on food imports; from being a net exporter of agricultural products by independence in 1960.

Although the economic importance of agriculture has diminished as a result of oil recovery, urbanization and industrial travel, Nigeria is still a significant agricultural country. Several measures dating back to the 1970s have been aimed at an increase in food production, but without the goal of becoming self-sufficient.

As a result of strong compensation, a structural adjustment program was launched in 1986; two years later, a comprehensive privatization program for state-owned enterprises started. Several companies are privatized, including electricity supply. A major challenge for the authorities is to create jobs.

International sanctions against Nigeria were introduced in the second half of the 1990s. These were wound up with the introduction of the civilian government from 1999, when President Olusegun Obasanjo, among other things, implemented measures to remove corruption, though with limited success. In 2002, Nigeria presented its strategy to reduce poverty by 2015, as part of reaching the UN Millennium Development Goals.

Nigeria has not been a priority recipient of international aid other than through development banks and UN organizations.

Economic sectors


Agriculture is traditionally Nigeria’s main industry, and is still of major importance for society by employ about half of the working population (2005) and account for between 1/3 and 1/ 4 of GNI.

As in most African countries, the relative importance of agriculture has declined as a result of urbanization and modernization, and this trend has been more pronounced in Nigeria than in many other countries, not least because of the large growth in the petroleum sector. The efforts in this led to the neglect of agriculture in the 1960s and 1970s, and in a few years, Nigeria went from being a net exporter of agricultural products to becoming dependent on imports. At independence in 1960, agriculture is the main economic sector, accounting for approximately 3 / 4 of its export revenues. By the end of the 1980s, agriculture’s share of export earnings had fallen below one percent.

Agricultural production has been significantly reduced due to both lack of investment and inefficiency. The agricultural sector is dominated by small farmers and traditional methods that provide low returns and low profits for the market. Lack of infrastructure (including storage facilities to reduce post-harvest losses) and lack of capital also impede increased production. The sector is also weakened as a result of youth moving from the countryside.

The considerable dependence on food imports is due to the fact that production has been lower than population growth and that the consumption pattern has changed. In addition, the northernmost areas have been hit several times by drought, and large land areas are threatened by desertification despite measures being taken to stop this development. Only a small part of the land area is cultivated annually, while large parts of the remaining land are broken and waiting to be cleared again after 3-7 years of rest.

Main agricultural products are cotton, cocoa, peanuts, palm oil and rubber. From food products, yams, cassava, sweet potato, corn and rice are grown in the south; millet and sorghum in the north. Around the city of Zaria in the north there is large cotton cultivation, and in the south plantations for the production of natural rubber. As a result of the civil war in Liberia, in 1990 Nigeria took over the position of Africa’s largest rubber producer; production goes to domestic consumption.

The operation is essentially limited to northern areas and is of great importance both to nomadic people and to the economy of that part of Nigeria.

In essence, agricultural production goes to domestic consumption; only cocoa is exported to a greater extent. Previously, palm oil products were of great importance, but from being the world’s largest exporter of palm oil before 1970, Nigeria is now an importer.


Forestry is significant in western Nigeria (Benin, Ijebu) but not of great national economic value, and timber exports (substantially obeche, abura and mahogany) are relatively small, while plantation production has increased to meet domestic needs, and for to protect water supply and limit soil erosion. More than 20 percent of Nigeria’s land area is forested. The harvest is estimated at approximately 100 million cubic meters annually. Most are used for fuel in the villages.


Fishing is of little economic importance, beyond the communities that feed on the sector; about 1.5 million people. Fishing is mostly done on a small scale, only a small part of the catch is taken with trawlers. The catch covers about half of the consumption.

Mining and energy

Nigeria has major mineral deposits, primarily oil and gas, but also a number of other minerals, several of which are mined; others represent a financial potential for the future. However, the sector, as well as Nigeria’s formal economy, is dominated by petroleum.

Oil and natural gas

Extraction of oil, and eventually exploitation of the large gas deposits, is almost exclusively in Nigerian exports and normally accounts for around 90 percent of export revenue; about 80 percent of the state’s revenue and about 15 percent of the national value creation. Nigeria is a member of OPEC, but has exceeded its allotted production quotas several times.

The first discoveries of commercially exploitable deposits were made in 1956, in Oloibiri in the state of Bayelsa in the Niger Delta. Exports began in 1958, after which production grew rapidly. The Niger Delta is the center of the oil economy, and most of the oil finds have been in the five states of Akwa-Ibom, Rivers, Bayelsa, Cross Rivers and Delta. Historically, onshore extraction has dominated, but there is increasing investment offshore. The large international oil companies tend to shift their interest offshore as a response to the security situation on land, better technology and increased local ownership.

According to the state oil company, NNPC (Nigerian National Petroleum Corporation), there are 606 oil fields in the Niger Delta, of which 355 are onshore and 251 are offshore. The economic significance increased especially in the early 1970s, with rising oil prices allowing room for investment in both the petroleum industry and other industrial activities.

Nigeria is currently Africa’s largest and the world’s 14th largest oil producer with an average production of around two million barrels per day (2017), according to the US Energy Information Administration (EIA). Nigeria’s “Bonny Light” oil is easy to refine, and is therefore sought after and offers high prices.

Nigeria’s proven oil reserves in 2016 were 37.5 billion barrels; the majority of the coast in the Niger Delta, spread around 250 small fields. It is believed the deposits are significantly larger. In 2005, five blocks were allocated in the second round in an area managed jointly between Nigeria and São Tomé and Príncipe (Joint Development Zone), where the deposits are estimated at approximately eleven billion barrels.

The oil sector in Nigeria is dominated by major foreign companies such as Shell, ExxonMobil, Chevron, Agip, Elf and Texaco, in collaboration with the national oil company, Nigerian National Petroleum Company (NNPC), with Shell as the largest single operator.

Nigeria also has large deposits of natural gas (LNG). The country is the world’s fourth largest exporter of natural gas, and has Africa’s largest proven natural gas reserves. At the same time, Nigeria is one of the countries that burn up (” torches “) the largest proportion of gas associated with oil extraction: According to the World Bank, Nigeria is the world’s seventh largest “torch”, with eight million cubic meters torched annually. Flaring has enormous climatic consequences and leads to major health problems and environmental damage.

In the early 2000s, a gas pipeline was constructed from Nigeria, through Benin and Togo to Ghana: West African Gas Pipeline (WAGP), while other pipelines were designed, including Ajaokuta-Abuja-Kaduna to supply central and northern Nigeria with gas as a new energy source. Nigeria and Algeria are planning a gas pipeline from Nigeria, through the Sahara, to export terminals in Algeria: the Trans-Saharan Gas Pipeline (TSGP).

Nigeria has four oil refineries; two in Port Harcourt, one in Warri and one in Kaduna. Although they have the capacity to distill nearly 450,000 barrels per day – surpassing local consumption – Nigeria imports large quantities of refined products. The refineries are characterized by corruption, lack of maintenance and under-production. Most of the crude oil is exported over the Bonny oil port outside Port Harcourt.

Conflicts related to oil operations in the Niger Delta have disrupted oil production and safety. The oil industry has been the object of local resistance, from both peaceful human rights and environmental activists, and later militant groups. Oil spills in the Niger Delta are considered one of the world’s largest environmental disasters according to the United Nations Environment Program (UNEP), and have led to a devastated livelihood for local farmers and fishermen. The industry is also linked to human rights violations. Especially from the mid-1990s, this has led to international focus, especially following the execution of eight human rights and environmental activists, including author Ken Saro-Wiwa in 1995. Especially from the late 1990s, the conflict escalated into violent forms. The area is characterized by plant sabotage and extensive theft of crude oil.

Due to its historical dominance, Shell has been criticized for its role in a business that has major environmental consequences. Shell has lost litigation in The Hague and London for environmental damage in the Niger Delta. The Government Pension Fund Global (SPU) has shares in Shell Nigeria and in Eni. The GPFG’s review of these investments in 2013 concluded that the companies were responsible for environmental damage, but that there were plans for improvements in this area.


Nigeria also has other mineral deposits, including large deposits of coal, mainly at Enugu, and lignite (lignite) is found at Asaba (near Onitsha), bitumen at Akura and iron ore in several places in Kwara state. Extraction of iron ore at Itakpe started in 1984 to supply steel production at Ajaokuta- and Delta plants. Tin is recovered by Jos, and the tin ore is melted on the spot. As a by-product, columbite is extracted, of which Nigeria is the world’s largest exporter.

There are also known deposits of gold, phosphates, lead zinc, bentonite, barite, kaolin, manganese, copper, talc, uranium and plaster, as well as gemstones. Long transport distances and capital shortages have contributed to low utilization of several deposits.


Nigeria had an installed capacity for energy production of around 11,000 MW in 2015, but has issued licenses for more than double that. Production has normally been well below capacity, with the result that there is a significant deficit in power. Just over 40 percent of the population lacks access to electricity. Many households use large quantities of wood and charcoal, while others rely on generators. A significant part of the energy supply comes from the Kainji dam on the Niger River, and from a Chinese- built thermal power plant in Egbin. Most of the energy is produced from thermal power plants using petroleum or coal, with increasing use of natural gas, including the Egbin power plant in Lagos State. Inadequate power supply has contributed to reduced industrial production.


Nigeria has a significant industrial sector that mainly produces finished products for the domestic market. As a result of expansion in petroleum extraction, industrialization was started from the 1970s, not least the establishment of a national heavy industry, including the iron and steel industry, as well as facilities for mounting cars, among other things.

Due to the major financial difficulties in the 1980s, much of the production was reduced, but partly resumed and further developed from the 1990s. This applies not least to industry related to the extraction and utilization of petroleum, gradually natural gas, as a source of energy.

The industry is highly concentrated in Lagos, with secondary centers in Kano, Ibadan and Port Harcourt. The processing of agricultural products, as well as the production of cooking oil and other foodstuffs, as well as of paper, mineral fertilizers, textiles and other finished products are extensive. A limiting factor in industrial development has been the large dependence on imported raw materials.

The craftsmanship is very high in some places: woodwork from Benin, leatherwork from Kano, carpets from Iseyin and glass from Bida. The establishment of a number of new federal states, in need of public investment, has contributed to strong growth in construction. In Calabar, an export production zone (EPS) has been established to attract investors.

Transport and Communications

Nigeria’s road and rail network is well developed by African scale, but is weakened by inadequate investment in maintenance. In the past, the road network had a distinct north/south pattern that reflected the traditional trading structure established during the colonial era. The transport network has later become more complex in order to increase trade between the individual states. Nigeria has a relatively extensive railway network, which with the support of China is in the process of being upgraded and modernized.

The Niger River and other rivers are navigable. The inland waterways cover approximately 6400 kilometers in the coastal zone. Niger is navigable all year to Onitsha (320 kilometers) for vessels up to 500 tonnes. Abuja, Lagos, Kano and Port Harcourt have international airports as well as several airports for domestic traffic. Most of the petroleum exports go over the ports of Bonny and Burutu; Apapa and Tin Can Island (which serves Lagos), Port Harcourt, Warri, Sapele and Calabar are the major ports of trade.

Note: the capital city of Nigeria is Abuja with a population of 3.3 million (estimate 2020). Other major cities include Lagos with a population of 9 million, Kano with a population of 3.6 million, Ibadan with a population of 3.6 million, Kaduna with a population of 1.6 million, Port Harcourt with a population of 1.1 million (estimate 2020).

Foreign Trade

Nigeria GDP (Nominal, $USD) 2003-2017

Nigeria’s strong dependence on petroleum makes the country’s foreign trade very vulnerable to international price fluctuations. Some cocoa is exported from agriculture. Imports are composed of industrial goods, vehicles and foodstuffs.

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Main trading partner is the United States. Exports are also significant to India, Spain, France and Brazil.

Trade and business cooperation with Norway

In the 2010 figure, about 50 Norwegian companies have cooperated with Nigeria, and this figure is increasing. The bulk of the commitment is related to the petroleum sector, but there are also interests in shipping, fish farming, seafood and renewable energy. In 2016, the Norwegian-Nigerian Chamber of Commerce was established, with offices in Lagos and Oslo.

Nigeria was among the first four countries that Statoil (now Equinor) established in, after partnering with British Petroleum (BP) in 1990 to invest internationally. Equinor’s Nigeria office was opened in 1992. First in 2008, production started on the offshore field of Agbami, where Equinor owns just over 20 percent, Petrobras 12 percent and Chevron (formerly BP), which owns just over 67 percent. The Agbami field produces around 48,000 barrels of oil per day. In addition, Equinor has two exploration licenses where they are majority owners. Hydro gained interest in Nigeria in 2005 through its acquisition of the US company Spinnaker Exploration Company.

Nigeria is an important market for Norwegian seafood, and especially for dry fish. In 2017, the total value of dried fish to Nigeria was close to NOK 1 billion. The stockfish trade with Nigeria started in the late 1800s, but has its roots in the transatlantic slave trade. Stockfish was also used by Norwegian Church Aid as a relief during the Biafra war. Norway has some industry-related assistance to Nigeria related to agriculture, petroleum and fish.

Nigeria Economics and Business

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