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Nigeria Business

Business and Economics

According to countryaah, Nigeria has experienced strong economic growth throughout the 2000s. The country is, with its large population and rich natural resources, mainly in the form of oil and natural gas resources, together with the continent's largest economy in South Africa. In addition to commodity exports, the purchasing power of the growing middle class and the demand for goods and services have an increasing impact on economic growth, for example, the rapidly growing Internet and mobile phone market has been favorable for the country's economy.

Business and Economy of Nigeria

With a rapidly growing population, the country has great economic potential. In order to realize this, one must expand and improve the country's infrastructure. On the one hand, transport opportunities must be improved (roads, railways, ports and airports), and on the other hand, electricity generation and electricity distribution must also be greatly improved. Today, the country has the capacity to produce a maximum of 5,900 MW (megawatts) of electricity to 177 million residents, the corresponding figure for South Africa is 44,000 MW to 53 million residents and Brazil 119,000 MW to 195 million residents. The low and very uncertain supply of electricity is a major problem for the country's economic development. Furthermore, Nigeria also has to deal with the widespread corruption that exists in the country (see human rights).

In recent years, the industry has been affected by disruptions in oil production as a result of unrest in the Niger Delta.

Despite this, oil and petroleum products still account for more than 90 percent of the country's export earnings. However, the oil industry has few links to the country's other economy and creates few domestic jobs. The importance of the manufacturing industry has grown somewhat, but the sector accounts for just over 5 per cent of GDP.

While the country has a growing middle class and economic growth, about 85 percent of the population is still living in poverty (below US $ 2 per day). Primarily, it is the northern and eastern parts of the country that have not benefited from economic growth, which has become a breeding ground for a great dissatisfaction with the country's leadership. This discontent has manifested itself in riots and acts of violence by groups such as Boko Haram, which in some cases has led foreign investors to wait to invest in the country. Similarly, the growing problem of piracy off the coast of Nigeria has contributed to the uncertainty about the country's ability to maintain security in the country.

At Nigeria's independence in 1960, the economy was dominated by agriculture. The country was self-sufficient in food and had significant agricultural exports.

The extraction of crude oil began in the late 1950s, and the oil then increasingly impacted the country's economy. Following the sharp rise in world oil prices in 1973, major investments in industry and infrastructure began. By the mid-1970s, Nigeria was considered a leading economy in Africa and was the continent's largest oil exporter.

The fall in oil prices in the 1980s dramatically reduced export revenues and the inability to complete development projects. The industry suffered from a lack of spare parts and imported raw materials. The military regimes that ruled the country during most of the 1980s and 1990s sought to overcome the economic problems, including by expanding the export base, reducing imports and privatizing business. Foreign investors were discouraged due to widespread corruption and the government's inability to limit government spending. The economic sanctions directed at Nigeria because of the political situation in the country also hampered the development.

Since the return to civilian government in 1999, much of the country's external debt has been written off, inflation has fallen and economic growth has accelerated. At the same time, Nigeria's economy still has problems with a large informal sector, smuggling of petroleum products, repeated interruptions in electricity supply, deficiencies in infrastructure and national conflicts. The fact that the oil accounts for almost the entire export value also makes the country vulnerable to falling world market prices and to cyclical fluctuations especially in the US, which buys large parts of Nigerian oil and is thus the country's most important trading partner.

For information on GDP and other business statistics, see Landsfakta.

Agriculture

About 1/3 of Nigeria's area is estimated to be cultivable and the country as a whole has good conditions for agriculture.

At the time of independence in 1960, Nigeria had significant agricultural exports. However, with the rapid expansion of the oil industry in the 1970s, development in agriculture was neglected. Food production did not increase at the same rate as the population, and during a twenty-year period from the mid-1960s, Nigeria transitioned from being self-sufficient in food to becoming heavily dependent on imports.

Nigeria is still regarded as an agricultural country where about half of the population is employed in agriculture.

Traditional small farmers with primitive technology, as well as burning and extensive land under trees still dominate agriculture. The fact that all land is owned by the state and only leased to the farmers also slows down the development as tenants are less likely to make large investments than owners.

In the rainy and humid southern part of the country, jams and cassava (cassava) are the most important food crops, while millet and sorghum are most important in the north, where the climate is drier. In addition, rice, maize and vegetables are grown. Nigeria used to be an important cocoa exporter but deregulation in the late 1980s led to poorer quality control and export of substandard products, which damaged export markets. However, cocoa is still the only crop that contributes in any significant way to export earnings. Other forage crops are peanuts, palm oil, rubber and cotton. Livestock breeding is concentrated in the northern parts of the country, which are free from the tsetse fly. The country must import meat to meet demand.

Forestry

Almost 10 percent of Nigeria's land area is covered by forest, most of which consists of a rainforest belt that runs across the southern part of the country. Commercial logging is small in scope and timber exports are insignificant. Most of the felling (more than 90 per cent) is used for firewood, which is the most important source of energy for households. Growing need for grazing and cultivable land also contributes to forest deforestation, which is a serious problem in especially the northern parts of the country as well as in the Niger Delta mangrove forests. Nigeria is one of the countries where forest areas are declining at the fastest pace and by 2010 the forest stock had halved by 20 years.

Fishing

With its long stretch of coast, the great Niger Delta and several large rivers, including Niger and Benue, Nigeria has good fishing conditions, but fishing is still conducted mainly on a small scale.

During the 2000s, the importance of fish farming has grown sharply; In 2000–12 production increased tenfold. Of the approximately 857,000 tonnes landed in 2011, fish farms accounted for 25 percent. Continued expansion of the industry is made more difficult by the fact that the coastal waters are heavily polluted by oil spills and by the harvesting in the mangrove swamp. High investment costs in the form of boats and equipment are another inhibitory factor.

Mineral

The oil industry has a huge impact on Nigeria's economy. The country has been extracting oil in the Niger Delta since 1958, and there are also large oil deposits further out at sea. Nigeria is the largest oil exporter in Africa; oil, natural gas and petroleum products account for about 95 percent of export earnings. The country's oil is one of the cleanest in the world and thus also the most expensive.

Nigeria also has rich natural gas deposits and its economic significance has grown during the 21st century; In 2012, Nigeria was the world's fourth largest exporter of LNG (liquefied natural gas).

However, the lack of necessary infrastructure will allow large quantities of natural gas to burn above the oil wells.

Oil production varies greatly due to unrest in the Niger Delta. The oil industry is also associated with serious corruption, and the revenues from the oil recovery will not benefit the local population to any great extent. In addition, the extensive environmental degradation, including in the form of oil spills caused by poorly maintained and leaking pipelines, has caused protests. Sabotage against, for example, pipelines is common, and kidnapping of foreign oil workers has also occurred. In addition, large quantities of oil are stolen, mainly exported illegally abroad.

Despite the great importance of the oil industry, it has limited connection with the country's economic life in general and creates relatively few domestic jobs. All of the deposits are owned by the state and most of the extraction is carried out by foreign companies such as Shell, ExxonMobil Corporation and Chevron Corporation in joint venture projects with the state Nigerian company Nigerian National Petroleum Corporation (NNPC).

Although the country is one of the world's largest crude oil producers, Nigeria imports most of the refined petroleum products, such as gasoline, consumed in the country. The country's four refineries operate well below their full capacity. Fuel subsidies, which cost the state huge sums each year, attract many to smuggle fuel to neighboring countries where prices are higher, leading to shortages in the home country. The government has tried several times to abolish fuel subsidies, but violent protests have forced it to back down.

Nigeria also has other major mineral resources, but the mining industry is severely neglected and mining is still to a limited extent. In the country there are large deposits of coal, iron, bauxite, gold, limestone, phosphates, lead, zinc and uranium.

Energy

Although the country is one of the world's largest producers of oil and natural gas, and also has large coal deposits and good conditions for extracting water energy, Nigeria is one of the countries in the world that generates the least electricity per capita. The expansion of production capacity and distribution networks has neither followed the population growth nor the demand for other reasons. This has led to just over half the population still lacking access to electricity. Even for those connected to the outdated and unreliable electricity grid, access to electricity is uncertain.

Long power outages, both planned and unplanned, are very common, something that also affects the industry. The use of private generators for house needs is therefore common. However, for the majority of the population, especially in the countryside, firewood is still the most important source of energy for heating and cooking; over 80 percent of all energy consumed in the country comes from so-called traditional biomass such as wood, charcoal and dried animal waste.

Gas and oil-fired power plants account for almost 80 percent of the electricity produced, while the rest comes from water energy. However, the government plans to build several new hydropower plants, including in cooperation with China. The companies in the state energy group Power Holding Company of Nigeria (PHCN) were sold to private players in 2013.

Industry

The industrial sector, outside the oil and natural gas industry, has a fairly wide production, mainly focused on the domestic market. The manufacturing industry is mostly focused on textiles, beverages, cigarettes, shoes, detergents and cement. In addition, there are tire and artificial manure production as well as car assembly and pharmaceutical industry.

A large part of the industrial activity takes place in the informal sector, which means that it is neither visible in statistics nor taxed.

The industry is still heavily import-dependent and is hampered by, among other things, the backlog of infrastructure and the lack of electricity. As in many other African countries, the textile industry is subject to fierce competition from China, for example.

With the increase in income after the oil crisis in 1973, an extensive industrialization program was started, but the fall in prices in the 1980s greatly reduced industrial production. The large investments in large-scale industries, such as steel industry and petrochemical industry facilities, made since the 1970s have not produced the desired results and production is well below actual capacity. The manufacturing industry is largely located in Lagos and its environs, but Kano, Kaduna and Ibadan are also important industrial cities. Port Harcourt and Warri are central locations for the oil industry.

Foreign trade

Foreign trade is largely determined by the world oil market. Oil exports account for almost the entire export value and thanks to this Nigeria has a positive trade balance. The second largest export product is LNG (liquefied natural gas), which has grown in importance during the 2000s; In 2012, Nigeria was the world's fourth largest exporter of LNG. Nigeria also exports cocoa beans and rubber, but its economic importance is small. Exports are mainly to India, the United States and Spain. Extensive smuggling to neighboring countries means that the actual value of exports cannot be determined. No official trade exchange with other countries in the region is to any great extent.

Most of the imports consist of machinery, chemical products, transport equipment, industrial goods and food. In addition, the country's manufacturing industry is heavily dependent on imports of raw materials and components. Imports come mainly from China, Belgium and the Netherlands.

Tourism and gastronomy

Nigeria is not a real tourist country but most visitors are usually businessmen or academics. Hotels of international standard are found mainly in major cities such as Lagos and Abuja. Several of the largest resorts have museums, including Benin bronzes and masks, ruled palaces and a marketplace with a selection of local products. The National Museum in Lagos is particularly interesting, but also the museums in Ife, Benin City and Ibadan are worth a visit. The palace and architecture of the older Kano district attracts some visitors.

In the highlands Jos is situated in a beautiful landscape with a national park. In northeastern Nigeria, Sukur's cultural landscape is listed on UNESCO's World Heritage List. It consists of terraced farms and very old settlements. Smaller national parks are also near Lagos and Benin City. Most large animals, except elephants and hippos, are missing in Nigeria, however monkeys and birds can be seen.

The unusually diverse population has given Nigeria a kitchen that is multi-faceted and rich in recipes. As always in Africa, vegetable food dominates. The base porridge is cooked on cassava, corn or cooking bananas and is often served to a bean pan (for example with tomatoes, wake ewa) or to pepper sauce with corn (egbo). Risotto with seafood is common, as is a soup that includes both fresh and dried and smoked fish (asaro). Akara is ground black-eyed beans that are seasoned with chili pepper and onion and then formed into buns and deep fried, sometimes shrimp is added. Goat meat is included in many dishes. When there is no fun for a party, it occurs in egusi, a spicy soup that also holds shrimp. This mixture of meat and fish or seafood in the same dish is not uncommon in the country.

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