Nigeria is more than a resource story although dependency on oil leaves the economy vulnerable. Nigeria is the largest economy in Africa with 2016 GDP of USD 332.6 billion. As th the 7 most populated country globally st and 1 within the continent, the economy enjoys favourable demographics, with a population of 187 million, of which 54% are within the 15-64 years age bracket, and 27% of these are youths.
The economy has experienced improved social and economic performance over the past decade. However, it is facing significant headwinds following the adverse shock to the oil price since mid-2014, and more recently, significant production shortages following pipeline vandalism in the Niger-Delta region. In 2016, the economy officially slid into recession, recording negative growth of 1.5%. Foreign exchange shortages and high inflation have hampered the growth of the manufacturing and services sectors, with administrative controls put in place by the Central Bank resulting in a reduction in Foreign Direct Investment (FDI) and Foreign Portfolio Inflows (FPI). However, long-term prospects are positive, driven largely by the scale of Nigeria’s resources beyond oil which remain mainly untapped. According to PwC’s long term projections, Nigeria could become the 14th largest economy (currently: 1 23rd) in the world by 2050 , and record average growth of approximately 4% per annum in the long run, assuming the country succeeds in economic diversification. Growth will be largely driven by demographic changes, as Nigeria is poised to experience strong increases in total population and working age population between 2016 and 2050 which will push total population to 399 million, 3rd globally by 2050. To cope with this demographic challenge, Nigeria needs to implement reforms that will deliver inclusive growth. These include improving tax collection, deepening economic diversification, reducing corruption, easing the constraints to doing business and increasing overall labour productivity.
Trade flows have declined in line with weaker exports and slower economic growth
Nigeria’s total trade in 2016 was 2 estimated at USD 68.3 billion , a 60.3% decline from the peak of USD 172.0 billion in 2011. This reflects a trend of shrinking exports and imports, driven by reduced oil prices and lower domestic consumption as the economic growth stalled and its impact spread. Crude oil remains the dominant source of exports (82.0% of exports), while refined petroleum accounts for the largest share of imports. India is a major destination for Nigeria’s exports. In 2016, 18% of Nigeria’s goods were exported to India dominated by crude oil. The import composition shows that China, Netherlands and the United States of America (USA) account for 40% of Nigeria’s total imports (see Figure 3).