There are prospects in Nigeria for sustained growth driven
by an improved performance of the key non-oil sectors –
agriculture, information and communication technology,
trade and services – but decline in the contribution of the
oil sector may dampen the positive outlook.
Social indicators are beginning to improve as efforts to
achieve the Millennium Development Goals are intensified
through the implementation of social-sector reforms, but
the northeast region still faces conflict-related challenges.
Adding value to exports of primary products, which is the
cornerstone of the Agricultural Transformation Agenda,
could help Nigeria climb up the value chain towards
industrialisation and provide opportunities to bring the large
informal sector progressively into the formal economy,
thereby making growth more inclusive and offering a high
potential for job creation, increased income and poverty
reduction.
Nigeria rebased its GDP from 1990 to 2010, resulting in an 89%
increase in the estimated size of the economy. As a result, the
country now boasts of having the largest economy in Africa with an
estimated nominal GDP of USD 510 billion, surpassing South
Africa’s USD 352 billion. The exercise also reveals a more
diversified economy than previously thought. Nigeria has
maintained its impressive growth over the past decade with a
record estimated 7.4% growth of real gross domestic product (GDP)
in 2013, up from 6.7% in 2012. This growth rate is higher than the
West African sub regional level and far higher than the sub-Saharan
Africa level. The performance of the economy continues to be
underpinned by favourable improvements in the non-oil sector, with
real GDP growth of 5.4%, 8.3% and 7.8% in 2011, 2012 and 2013,
respectively. Agriculture – particularly crop production – trade and
services continue to be the main drivers of non-oil sector growth.
The oil sector growth performance was not as impressive with
3.4%, -2.3% and 5.3% estimated growth rates in 2011, 2012 and
2013, correspondingly. Growth of the oil sector was hampered
throughout 2013 by supply disruptions arising from oil theft and
pipeline vandalism, and by weak investment in upstream activities
with no new oil finds.
Going forward, there are prospects of strong economic growth
although downside risks remain entrenched. Such prospects are
expected to hinge on continued recovery of the global economy,
favourable agricultural harvests and a possible boost in energy
supply arising from the power-sector reform, as well as on expected
positive outcomes from the Agricultural Transformation Agenda.
Comprehensive economic and structural reforms are also expected
to improve economic growth. Nevertheless, the country’s ongoing
GDP rebasing may influence the growth figures, possibly making
them lower going forward since the expected result is a larger
economy.
Risks to Nigeria’s economic growth are the sluggish recovery of the
global economy, security challenges in the northeastern part of the
country, continued agitation for resource control in the Niger Delta
and possible distraction from the ongoing reforms as a result of the
upcoming 2015 general elections. Negative growth of the oil sector
may also continue to drag down overall growth until a lasting
solution is found to the challenge of oil theft and weak investment
in exploration due to the uncertain state of play in the sector as a
result of non-passage of the Petroleum Industry Bill.
Nigeria faces an ongoing challenge of making its decade-long
sustained growth more inclusive. Poverty and unemployment
remain prominent among the major challenges facing the economy.
One reason for this is that the benefits of economic growth have
not sufficiently trickled down to the poor. The national authorities
are not oblivious of this reality. Thus, poverty reduction, mass job
creation and protection of the most vulnerable and those in the
large informal sector are the focus of current policy dialogue and
initiatives. In fact, the 2014 national budget that has just been
passed into law by the national assembly focuses mainly on
creating more jobs and making growth more inclusive.
Increased integration of the poor into global value chains is
essential for poverty reduction. Agriculture, which is largely
informal, employs about 70% of the labour force, a large portion of
which is poor. Adding value to agriculture tradables will create more
jobs through its upstream and downstream integration with other
sectors of the economy, increase export revenues, boost income of
the poor and reduce poverty incidence.
by an improved performance of the key non-oil sectors –
agriculture, information and communication technology,
trade and services – but decline in the contribution of the
oil sector may dampen the positive outlook.
Social indicators are beginning to improve as efforts to
achieve the Millennium Development Goals are intensified
through the implementation of social-sector reforms, but
the northeast region still faces conflict-related challenges.
Adding value to exports of primary products, which is the
cornerstone of the Agricultural Transformation Agenda,
could help Nigeria climb up the value chain towards
industrialisation and provide opportunities to bring the large
informal sector progressively into the formal economy,
thereby making growth more inclusive and offering a high
potential for job creation, increased income and poverty
reduction.
Nigeria rebased its GDP from 1990 to 2010, resulting in an 89%
increase in the estimated size of the economy. As a result, the
country now boasts of having the largest economy in Africa with an
estimated nominal GDP of USD 510 billion, surpassing South
Africa’s USD 352 billion. The exercise also reveals a more
diversified economy than previously thought. Nigeria has
maintained its impressive growth over the past decade with a
record estimated 7.4% growth of real gross domestic product (GDP)
in 2013, up from 6.7% in 2012. This growth rate is higher than the
West African sub regional level and far higher than the sub-Saharan
Africa level. The performance of the economy continues to be
underpinned by favourable improvements in the non-oil sector, with
real GDP growth of 5.4%, 8.3% and 7.8% in 2011, 2012 and 2013,
respectively. Agriculture – particularly crop production – trade and
services continue to be the main drivers of non-oil sector growth.
The oil sector growth performance was not as impressive with
3.4%, -2.3% and 5.3% estimated growth rates in 2011, 2012 and
2013, correspondingly. Growth of the oil sector was hampered
throughout 2013 by supply disruptions arising from oil theft and
pipeline vandalism, and by weak investment in upstream activities
with no new oil finds.
Going forward, there are prospects of strong economic growth
although downside risks remain entrenched. Such prospects are
expected to hinge on continued recovery of the global economy,
favourable agricultural harvests and a possible boost in energy
supply arising from the power-sector reform, as well as on expected
positive outcomes from the Agricultural Transformation Agenda.
Comprehensive economic and structural reforms are also expected
to improve economic growth. Nevertheless, the country’s ongoing
GDP rebasing may influence the growth figures, possibly making
them lower going forward since the expected result is a larger
economy.
Risks to Nigeria’s economic growth are the sluggish recovery of the
global economy, security challenges in the northeastern part of the
country, continued agitation for resource control in the Niger Delta
and possible distraction from the ongoing reforms as a result of the
upcoming 2015 general elections. Negative growth of the oil sector
may also continue to drag down overall growth until a lasting
solution is found to the challenge of oil theft and weak investment
in exploration due to the uncertain state of play in the sector as a
result of non-passage of the Petroleum Industry Bill.
Nigeria faces an ongoing challenge of making its decade-long
sustained growth more inclusive. Poverty and unemployment
remain prominent among the major challenges facing the economy.
One reason for this is that the benefits of economic growth have
not sufficiently trickled down to the poor. The national authorities
are not oblivious of this reality. Thus, poverty reduction, mass job
creation and protection of the most vulnerable and those in the
large informal sector are the focus of current policy dialogue and
initiatives. In fact, the 2014 national budget that has just been
passed into law by the national assembly focuses mainly on
creating more jobs and making growth more inclusive.
Increased integration of the poor into global value chains is
essential for poverty reduction. Agriculture, which is largely
informal, employs about 70% of the labour force, a large portion of
which is poor. Adding value to agriculture tradables will create more
jobs through its upstream and downstream integration with other
sectors of the economy, increase export revenues, boost income of
the poor and reduce poverty incidence.
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