Nigeria has a lower-middle-income, mixed economy and emerging market, with expanding manufacturing, financial, service, communications, technology, and entertainment sectors. It is ranked as the 52nd-largest economy in the world in terms of nominal GDP, the second largest in Africa in terms of purchasing power parity, and the 19th-largest in terms of purchasing power parity. The country's re-emergent manufacturing sector became the largest on the continent in 2013, and it produces a large proportion of goods and services for the region of West Africa. Nigeria's debt-to-GDP ratio was 36.63% in 2021 according to the IMF.
Although oil revenues contributed 2/3 of state revenues, oil only contributes about 9% to the GDP. Nigeria produces about 2.7% of the world's oil supply. The largely subsistence agricultural sector has not kept up with the country's rapid population growth. It was once a large net exporter of food, but currently imports some of its food products. Mechanization has led to a manufacturing resurgence and food export and there was consequently a move towards food sufficiency.
In 2006, Nigeria came to an agreement with the Paris Club to buy back the bulk of its owed debts from them, in exchange for a cash payment of roughly US$12 billion. According to a report by Citigroup, published in February 2011, Nigeria had the highest projected average GDP growth in the world between 2010 and 2050. Nigeria is one of two countries from Africa among the 11 Global Growth Generators countries.
Overview In 2014, Nigeria established a new base level GDP to account for fast-growing industries such as telecommunications, banking, and its film industry to its economy. Human capital is underdeveloped, as Nigeria ranked 161 out of 189 countries in the United Nations Development Index in 2019, and non-energy-related infrastructure is inadequate.
Nigeria has advanced efforts to provide universal primary education, and protect the environment.
Economic development has been hampered by government corruption. However, while broad-based progress has been slow, these efforts are becoming visible in international surveys of corruption. Nigeria's ranking has mostly improved since 2001, ranking 154 out of 180 countries in Transparency International's 2021 Corruption Perceptions Index.
The Nigerian economy suffers from an ongoing supply crisis in the power sector. Despite a rapidly growing economy, some of the world's largest deposits of oil, coal, and gas, and the country's status as Africa's largest oil producer, power supply difficulties are frequently experienced by residents.
Two-thirds of Nigerians expect living conditions to improve in the coming decades.The Economist, 28 March 2020, page 4. According to the National Bureau of Statistics (NBS) Nigeria's GDP grew by 3.19% in Q2 2024. The non-oil sector drove growth, expanding by 4.13%, while the oil sector contracted by -3.83%.
History
Pre-colonial times, the transatlantic slave trade Before 1800, the 14 Hausa states in northern Nigeria were civilisational leaders; at that time, there was already a body of Hausa literature, including historical works (the Kano Chronicle) and anthropological studies (on the Yoruba). For their part, the Yoruba, with the Oyo Empire, formed a second centre of power in pre-colonial Nigeria, combining superior economic strength with military dominance. Slavery had long existed in large parts of Nigeria, but this was increasingly exacerbated from 1700 onwards by the European (affluent) demand for slaves for plantations in North and South America.
Only where the savannah in West Africa reached the coast were there European trading posts: tiny settlements that changed hands repeatedly due to the constant illness of their light-skinned inhabitants (Africa was, for good reason, regarded as the 'white man's grave'). Along the much longer stretches where mosquito-infested lagoons lie between land and sea (and thus provide ideal conditions for the transmission of malaria), European trading ships – British, French, Dutch, Danish – anchored at a safe distance, whilst local traders approached in small boats to offer their wares for sale. In addition to ivory and gold, these goods also included slaves; accordingly, the West African coastal regions were named the Ivory Coast, the Gold Coast (Ghana) and the Slave Coast (Nigeria). According to historian Toyin Falola, European demand after 1700 transformed the previously mixed economy of southern Nigeria into a veritable slave economy. Other buyers of slaves were the Fulani rulers in northern Nigeria, who by 1805 had subjugated the 14 Hausa states and established an Islamic theocracy, thereby heralding a civilisational, technological and economic decline in northern Nigeria.
As a result of Napoleon's Continental Blockade, the transatlantic slave trade shifted to Portuguese, Cuban and Brazilian galleons and brigs. By 1800, England, Denmark and Scotland had already abolished slavery; in 1807, Great Britain also enacted the Slave Trade Act and began hunting down slave ships in the Atlantic (a large portion of the Royal Navy's budget was allocated to this effort, with the freed slaves being disembarked and the ship's crew tried in Freetown, Sierra Leone). The Royal Navy also exerted pressure in negotiations with local rulers to put a stop to the slave trade. They met with resistance, as many local kings financed themselves by selling their subjects into slavery (such as the kings of Benin or King Pebble of Bonny; in Lagos, the slave trade was in the hands of the king's sister, Efunroye Tinubu). The local nobility therefore had little interest in following the somewhat sudden British shift from slave traders to opponents of slavery. – At the same time, British and German missionaries began establishing outposts in Badagry, Abeokuta and Calabar. Here they built churches, hospitals and mission schools, but also trading houses to finance them (the firm that would later become Nigeria's largest cocoa trader was consequently named the 'Basel Mission'). The missionaries' activities also aroused the displeasure of the local rulers, whereupon the Europeans sought protection from their home countries. Thanks to the widespread use of quinine as a prophylactic against malaria, it had been possible since 1855 to station European troops permanently on the African mainland. In London, Paris, Brussels, Lisbon and elsewhere, it was therefore deemed necessary and feasible to establish pointlike bases of influence along the West African coast; the chapter on the transatlantic slave trade was thus brought to a close by opening a new chapter: that of colonial rule.
After Lagos became a 'consulate' in 1851, a naval base in 1855 and a British colony (and the nucleus of the future colony of Nigeria) in 1861, the transatlantic slave trade from the Nigerian coast to America was a thing of the past. Instead, in 1861 the lagoon city began a rapid rise to become the dominant regional trading centre. The local trading magnates and moneylenders (predominantly 'Saro', i.e. slaves who had returned from Sierra Leone, and 'Aguda', former slaves who had remigrated from Brazil and Cuba) transformed the marshy islet of Lagos into the 'Venice of West Africa' during a 30-year economic boom, laying the foundations for today's financial, commercial, technological and media metropolis.
The years following the Panic of 1873 were marked by a prolonged global economic crisis (1873 to 1888), whilst in Brazil the local rubber and cocoa barons flaunted their wealth (they even had opera houses and theatres built in the jungle using imported building materials). In 1879, Captain James Davies broke the Brazilian cocoa monopoly in an adventurous manner and made the area around Lagos, inhabited mainly by the Yoruba, quite prosperous through the production of the raw material for chocolate (until it was overtaken by the Ivory Coast around 1930). These events triggered the “Scramble for Africa” in Europe – the expansion of previously pointlike colonies into planar areas in order to cultivate the cold-sensitive but profitable cocoa and rubber plants there. Shortly afterwards, from 1893 to 1903, Great Britain expanded its colonial holdings in what is now Nigeria, first into Yoruba territory, and ultimately at the expense of the Fulani Empire in the north. In doing so, a new type of weapon was deployed: the machine gun, the 'Maxim'. In January 1914, the colonial power consolidated the conquered territory under the artificial name 'Nigeria' to act as a counterweight to the German colony of Cameroon, which had almost doubled in size by 1911 (see Second Moroccan Crisis).
Unlike their ancestors, however, the British of that era were no longer driven by missionary zeal or the liberation of slaves, but by imperialist ambitions. They allowed slavery to continue in their new territory for another 33 years, did not build hospitals or schools as they had previously done in the south, and accepted Islam – not out of religious tolerance, but out of indifference to the question of which god His Majesty's new subjects worshipped. Thus, the backwardness imposed by the Fulani Caliphate exacerbated in northern Nigeria even under the British flag. The once-great culture and literature of the Hausa fell increasingly into oblivion.
Colonial economy During the colonial era under British rule, the Nigerian economy was primarily dependent on the export of cocoa, palm oil and groundnuts, and thus on fluctuations in the respective world market prices and structural shifts. Imports consisted primarily of spirits (rum, schnapps, gin/genever), as well as, to a much lesser extent, English cloth, building materials and, in fourth place, machinery/tools. Nigeria's trade balance was largely in equilibrium during the colonial era. Over 95% of the Governor's state budget was financed by import and export duties; thanks to its seaports such as Lagos, Badagry, Warri, Port Harcourt, Bonny and Calabar, the southern half of the colony was among the few 'profitable' colonial administrations in Africa, whereas the impoverished and feudal north had to be financed by the British Crown.
As a British colony, Nigeria benefited from 'Imperial Preference' – a tariff reduction granted by the United Kingdom to its colonies and dominions, setting the rate at a quarter of that levied on imports from other countries. (The aim – particularly following the Empire's Economic Conference in Ottawa in 1932 – was to bring the British-ruled territories together into a single economic zone. At that time, Great Britain ruled over a quarter of the world's land mass, so the 'Imperial Preference' effectively constituted a very large economic union.) Transactions were settled in West African pounds, which were pegged at a 1:1 ratio to the British pound. Whilst this brought Nigeria fiscal stability, it also paralysed the economy – both in the mother country and in colonies such as Nigeria – particularly from 1925 onwards, following Britain's return to the gold standard. Even as a colony, Nigeria thus suffered from an overvalued national currency and the resulting economic consequences. Among these was the fact that the Ivory Coast, as a French colony, overtook Nigeria as the world's leading cocoa producer, and the cocoa trees in Agege were felled in 1930.
Nigeria's colonial economy differed in several respects from other African colonies of the time. In terms of population, Nigeria was the British Empire's second-largest colony after India (Canada, Australia, New Zealand and South Africa were dominions, whilst Egypt was formally an independent kingdom), and the colonial power sought to govern the country with as little personnel as possible. Against this backdrop, extensive use was made of the local human potential, in return for which civil and economic freedoms were granted that were unknown in other African colonies.