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Nigeria Economy
 
 
 

General

Nigeria is classified as an emerging market, and is rapidly approaching middle income status, with its abundant supply of resources, well-developed financial, legal, communications, transport sectors and stock exchange (the Nigerian Stock Exchange), which is the second largest in Africa. Nigeria is ranked 37th in the world in terms of GDP (PPP) as of 2007. Nigeria is the United States' largest trading partner in sub-Saharan Africa and supplies a fifth of its oil (11% of oil imports). It has the seventh-largest trade surplus with the US of any country worldwide. Nigeria is currently the 50th-largest export market for US goods and the 14th-largest exporter of goods to the US. The US is also the country's largest foreign investor.

The bulk of economic activity is centred in 4 main cities: Lagos, Kaduna, Port Harcourt and Abuja. Beyond these three economic centres, development is marginal.

Previously, economic development had been hindered by years of military rule, corruption and mismanagement, the restoration of democracy and subsequent economic reforms have successfully put Nigeria back on track towards achieving its full economic potential as one of the Major Economies in Africa. According to the Economist Intelligence Unit and the World Bank, Nigerian GDP at purchasing power parity has nearly doubled from $170.7 billion in 2005 to $292.6 billion in 2007. The GDP per head has jumped from $692 per person in 2006 to $1,754 per person in 2007.

During the oil boom of the 1970s, Nigeria accumulated a significant foreign debt to finance major infrastructural investments. With the fall of oil prices during the oil glutthe 1980s, Nigeria struggled to keep up with its loan payments and eventually defaulted on its principal debt repayments, limiting repayment to the interest portion of the loans. Arrears and penalty interest accumulated on the unpaid principal which increased the size of the debt. However, after negotiations by the Nigeria authorities, in October 2005 Nigeria and its Paris Club creditors reached an agreement in which Nigeria repurchased its debt at a discount of approximately 60%. Nigeria used part of its oil profits to pay the residual 40%, freeing up at least $1.15 billion annually for poverty reduction programmes. Nigeria made history in April 2006 by becoming the first African Country to completely pay off its debt (estimated $30 billion) owed to the Paris Club.

Nigeria is the 12th largest producer of petroleum in the world and the 8th largest exporter, and has the 10th largest proven reserves. The country joined OPEC in 1971. Petroleum plays a large role in the Nigerian economy, accounting for 40% of GDP and 80% of Government earnings. However, agitation for better resource control in the Niger Delta, its main oil producing region, has led to disruptions in oil production and currently prevents the country from exporting at 100% capacity.

Nigeria has one of the fastest growing telecommunications markets in the world, major emerging market operators (like MTN, Etisalat, Zain and Globacom) basing their largest and most profitable centres in the country. The government has recently begun expanding this infrastructure to space based communications. Nigeria has a space satellite which is monitored at the Nigerian National Space Research and Development Agency Headquarters in Abuja.

The country has a highly developed financial services sector, with a mix of local and international banks, asset management companies, brokerage houses, insurance companies and brokers, private equity funds and investment banks.

Nigeria also has a wide array of underexploited mineral resources which include natural gas, coal, bauxite, tantalite, gold, tin, iron ore, limestone, niobium, lead and zinc. Despite huge deposits of these natural resources, the mining industry in Nigeria is still in it infancy.


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