Nigeria has the largest market in Africa with..
a population of approximately 200 million people. In March 2016, PwC published a report, “Nigeria: Looking beyond Oil,” that raises the Nigerian economy to the top 10 in the world in 2050 with a projected GDP of $6.4 trillion.
Examples of such extrapolations are numerous and wide-ranging. A 2018 World Bank report on Business Reforms in Nigeria noted improvements in starting a business, dealing with construction permits, registering property, getting credit and paying taxes.
Consequently, Nigeria’s status on the Ease of Doing Business index has started to show signs of improvement.
Nigeria’s potential has remained largely untapped as the country’s previous growth was fueled by consumption and high oil prices.
Because Nigeria is heavily dependent on oil which accounts for about 90% of export earnings and over 70% of total government revenues, Nigeria’s commercial activities were adversely affected by declining oil prices with its economy contracting by 0.67% and 2.06% in the first and second quarters of 2016 respectively. Successive quarterly contractions in 2016 and an annual growth rate of -1.6%, the first full year contraction since 1991, meant Nigeria officially entered a recession in 2016 which lasted till Q2 of 2017.
The slowdown in economic activity was compounded by inadequate supply of foreign exchange, worsening inflation (peaking at 18.72% in January 2017 from 9.62% in January 2016) and inability to access foreign exchange at the official window for certain items which form inputs into the agriculture and manufacturing sectors.
By the third quarter (Q3) of 2017, Nigeria officially exited the recession and commenced implementation of the government’s Economic Recovery and Growth Plan (ERGP) which focuses on diversifying the country’s economy.
By the third quarter (Q3) of 2017, Nigeria officially exited the recession and commenced implementation of the government’s Economic Recovery and Growth Plan (ERGP) which focuses on diversifying the country’s economy.
The ERGP articulates the Government of Nigeria’s vision for the country and lays the foundation for long term growth with an underlying philosophy to optimize local content and empower local business using driving factors such as increase in agricultural output, increase in the country’s oil production, recent gains in manufacturing, telecommunications, and real estate, and the expansionary budget of the Nigerian government.
Currently, Headline Inflation is on the rise as the one-year figures for June 2018 (11.23%) to June 2019 (11.40%) indicates.
Analysts have predicted that the figure will rise to about 11.42% in July 2020. The country continues to experience some development challenges such as non-inclusive growth, poverty, poor maternal and infant mortality indices, an underachieving education sector, and poor distribution of wealth amongst its citizens.
Nigeria has an abundance of labor at rates well below high-income and some middle-income countries. Nigeria also has an abundance of natural resources including oil, other commercial minerals, and precious stones.
However, major impediments to development and trade include inadequate power supply, deficient transportation infrastructure, a slow and ineffective judicial system, and widespread corruption especially in the public sector.
The United States is the second largest foreign investor in Nigeria with total capital imported in 2017 at $1.3 billion.
In 2018, the U.S. was Nigeria’s fourth largest import partner with 11.5% of the entire volume of imports by the top fifteen import trade partners of Nigeria emanating from the U.S.
Furthermore, data collected from the National Bureau of Statistics shows that the U.S. supplied 8.8% of imports to Nigeria within the first quarter of 2019.
Nigerian imports from the U.S. include wheat, vehicles, spare parts and machinery, refined petroleum products, military hardware. Nigeria exports to the U.S. in 2018 consisted of oil, cocoa, rubber, antiques, and food wastes, and accounted for 8.02% of its top 15 export destination volume making the U.S. Nigeria’s 6th largest export destination.
Nigeria has an abundance of labor at rates well below high-income and some middle-income countries. Nigeria also has an abundance of natural resources including oil, other commercial minerals, and precious stones.
However, major impediments to development and trade include inadequate power supply, deficient transportation infrastructure, a slow and ineffective judicial system, and widespread corruption especially in the public sector.
The United States is the second largest foreign investor in Nigeria with total capital imported in 2017 at $1.3 billion.
In 2018, the U.S. was Nigeria’s fourth largest import partner with 11.5% of the entire volume of imports by the top fifteen import trade partners of Nigeria emanating from the U.S.
Furthermore, data collected from the National Bureau of Statistics shows that the U.S. supplied 8.8% of imports to Nigeria within the first quarter of 2019.
Nigerian imports from the U.S. include wheat, vehicles, spare parts and machinery, refined petroleum products, military hardware. Nigeria exports to the U.S. in 2018 consisted of oil, cocoa, rubber, antiques, and food wastes, and accounted for 8.02% of its top 15 export destination volume making the U.S. Nigeria’s 6th largest export destination.
The U.S. and Nigeria have a bilateral Trade and Investment Framework Agreement (TIFA) and Nigeria is eligible for preferential trade benefits under the African Growth and Opportunity Act (AGOA). By the first half of 2019, an estimated $400 million has been spent on development assistance from the U.S. through its Agency for International Development to Nigeria.
Nigeria plays an important leadership role in both West Africa and on the African continent. The headquarters of the Economic Community of West African States (ECOWAS) is in Abuja. Nigeria, which represents roughly 70% of the 15-country ECOWAS GDP and over half of the ECOWAS region’s population, plays an outsized role in ECOWAS.
It was Nigeria, for instance, that was largely responsible for the decades-long delays in developing the ECOWAS Common External Tariff (CET) and for the protections and flexibilities that remain a part of that tariff system. In 2017, U.S. exports to ECOWAS totaled $4.8 billion, up 15% from 2016, with Nigeria being the top U.S. export market as a total $2.2 billion worth of business was conducted. The top export categories are vehicles and spare parts, mineral fuels, machinery, cereals and plastics.
Imports to the U.S. from ECOWAS totaled $9.3 billion in 2017, up 58.6% from 2016. Nigeria remained top in this category, supplying about $7.1 billion worth of goods to the U.S.
Nigeria can be a lucrative market for companies that can learn to navigate a complex and evolving business environment. Established multinationals that have mastered operating in this chaotic regulatory environment make substantial profits despite the country’s low-income levels and logistical difficulties.
The Nigerian Government continues to promote Nigeria as a rewarding target for Foreign Direct Investment (FDI). Foreign capital flows into all major sectors of the economy with the United Kingdom, United States, Canada, France, and China being the main sources. China has re-emerged as a major development, trade, and investment partner of the Nigerian government especially considering Western skittishness in investing in Nigeria due to the recession and restrictive government controls in foreign exchange and international trade.
China is Nigeria’s largest contractor and partner in infrastructure projects with total volume of projects estimated at $77 billion. These projects cut across infrastructure sectors – road, rail, power, construction – and are largely implemented by Chinese state-owned enterprises and financed by the Export-Import Bank of China.
To pull Nigeria out of recession, the government released an Economic Recovery and Growth Plan (ERGP) in March 2017 which, amongst other objectives, prioritizes the diversification of the Nigerian economy.
Nigeria plays an important leadership role in both West Africa and on the African continent. The headquarters of the Economic Community of West African States (ECOWAS) is in Abuja. Nigeria, which represents roughly 70% of the 15-country ECOWAS GDP and over half of the ECOWAS region’s population, plays an outsized role in ECOWAS.
It was Nigeria, for instance, that was largely responsible for the decades-long delays in developing the ECOWAS Common External Tariff (CET) and for the protections and flexibilities that remain a part of that tariff system. In 2017, U.S. exports to ECOWAS totaled $4.8 billion, up 15% from 2016, with Nigeria being the top U.S. export market as a total $2.2 billion worth of business was conducted. The top export categories are vehicles and spare parts, mineral fuels, machinery, cereals and plastics.
Imports to the U.S. from ECOWAS totaled $9.3 billion in 2017, up 58.6% from 2016. Nigeria remained top in this category, supplying about $7.1 billion worth of goods to the U.S.
Nigeria can be a lucrative market for companies that can learn to navigate a complex and evolving business environment. Established multinationals that have mastered operating in this chaotic regulatory environment make substantial profits despite the country’s low-income levels and logistical difficulties.
The Nigerian Government continues to promote Nigeria as a rewarding target for Foreign Direct Investment (FDI). Foreign capital flows into all major sectors of the economy with the United Kingdom, United States, Canada, France, and China being the main sources. China has re-emerged as a major development, trade, and investment partner of the Nigerian government especially considering Western skittishness in investing in Nigeria due to the recession and restrictive government controls in foreign exchange and international trade.
China is Nigeria’s largest contractor and partner in infrastructure projects with total volume of projects estimated at $77 billion. These projects cut across infrastructure sectors – road, rail, power, construction – and are largely implemented by Chinese state-owned enterprises and financed by the Export-Import Bank of China.
To pull Nigeria out of recession, the government released an Economic Recovery and Growth Plan (ERGP) in March 2017 which, amongst other objectives, prioritizes the diversification of the Nigerian economy.
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