The largest Economy in Africa, Nigeria, experienced challenging economic trends from 1999 till date. Major occurrences that influenced the country’s financial situation over the years include shifts in global economic patterns, policy changes, and oil price volatility. Nigeria’s economy grew moderately between 1999 and 2004, with Gross Domestic Product (GDP) growth averaging between 4 to 5% yearly. About 70 to 80 percent of Government Revenue and 90% of foreign exchange revenues came from oil exports, which was the main source of income. Due to its reliance on oil exports, the nation’s economic success was strongly tied to the status of the global oil market.
High global oil prices between 2005 and 2009 boosted government Revenue with annual GDP growth averaged between 6 to 7 percent. In an effort to stabilize the economy against fluctuations in oil prices, the government created the Excess Crude Account (ECA) to save oil income beyond the planned benchmark price. Nonetheless, Nigeria’s economy was impacted by the 2008 global financial crisis, which resulted in a slowdown in GDP growth. Yet, the country still demonstrated tenacity in 2009 by recovering and growing at a noteworthy rate of 8.04%.
Drop in global oil prices affect the country’s economy.
Between 2010 and 2014, the nation’s GDP grew at a strong average pace of roughly 6-8% per year. Nigeria became the largest economy in Africa in 2014 when its GDP was rebased, resulting in a huge boost in GDP figures. Although oil revenue continued to be important, there was a steady diversification into industries like agriculture, services, and telecommunications. In late 2014 and early 2015, Nigeria’s revenue and GDP started to be seriously impacted by the drop in global oil prices. Due to declining oil Export revenue, Nigeria, a significant oil exporter, faced economic difficulties that affected its economy and resulted in financial difficulties and unstable economic conditions.
Afterward, the nation’s economy has been going through a difficult time since 2015, which has been characterized by several economic downturns and a difficult rebound. During the 2017 and 2019 period, the GDP grew at an average yearly pace of about 2-3% as the economy started to revive. The year 2020 comes with a serious economic downturn caused by the COVID-19 pandemic, which resulted in a 1.8% decline in GDP. Oil prices crashed, drastically cutting off government earnings. Even with a recovery in 2021, the growth rate was insufficient to make a substantial difference in the per capita income, which was mostly unchanged.
Government is attempting to diversify the economy.
Over the past ten years, several major factors have influenced Nigeria’s economic condition including the distortions of monetary and exchange rate policies, which have an impact on the stability of the economy as a whole, are crucial among them. Nigeria has also had to deal with declining oil production, growing budget deficits, mounting national debt, and the financial weight of an expensive fuel subsidy scheme. The government has invested in industries like manufacturing, services, Telecommunication and Agriculture in an attempt to diversify the country’s economy and lessen its reliance on oil. An increase of 7.21% in 2022 GDP compared to the previous year, indicated that these efforts were paying off.
Key sectors like agriculture have continuously contributed between 24-25 percent to the country’s GDP. The industry grew by about 2.1% in 2021, the National Bureau of Statistics (NBS) reports. Additionally, the ICT and telecommunications sectors have expanded greatly, and as of 2022, it accounted for 15% of the GDP. In recent years, it has shown growth rates of about 10–12% annually. Also, the Manufacturing sector makes up between 10 and 12 percent of the GDP. Yet, as of Q1 2024, Nigeria’s public debt portfolio, including both domestic and foreign debt, was ₦121.67 trillion (US$91.46 billion).
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As contained in the PricewaterhouseCoopers (PwC) Nigeria’s Economic Outlook for 2024, the nation’s economic trajectory was expected to be shaped by seven major trends. It highlights the necessity of striking a balance between bold fiscal reforms and efficient budget execution by projecting a slight decrease in Inflation and a 3.1% increase in GDP. The nation’s sustained growth and development depend heavily on the government’s initiatives to invest in Infrastructure and diversify the economy, as well as the deliberate alignment of monetary and fiscal policy. Everyone is keeping an eye on how these measures will benefit the nation economically in the long run as it progresses.