Economy of Nigeria

Nigeria’s economy is classified as lower-middle-income, mixed, and emerging. It features growing activity in manufacturing, finance, services, communications, technology, and entertainment. Globally, it ranks 52nd by nominal GDP, second in Africa by purchasing power parity (PPP), and 19th worldwide by PPP. In 2013, its rebounding manufacturing sector became the largest on the continent, supplying many goods and services to West Africa. The IMF reported a debt-to-GDP ratio of 36.63% in 2021.

Oil revenues account for two-thirds of state income but only about 9% of GDP. Nigeria produces roughly 2.7% of the world’s oil. The agricultural sector, largely subsistence-based, has not kept pace with rapid population growth. Once a major net food exporter, the country now imports some food. Mechanization has spurred a manufacturing revival and food exports, moving the country toward greater food self-sufficiency.

In 2006, Nigeria reached an agreement with the Paris Club to buy back most of its debt for about US$12 billion in cash. A 2011 Citigroup report projected Nigeria would have the highest average GDP growth in the world between 2010 and 2050. It is one of two African countries among the 11 Global Growth Generators.

In 2014, Nigeria rebased its GDP to account for fast-growing industries like telecommunications, banking, and film. Human capital remains underdeveloped—Nigeria ranked 161 out of 189 in the 2019 UN Development Index—and non-energy infrastructure is inadequate. The country has advanced efforts toward universal primary education and environmental protection.

Government corruption has hampered economic development, though progress is visible in international corruption surveys. Nigeria’s ranking has mostly improved since 2001; in Transparency International’s 2021 Corruption Perceptions Index, it ranked 154 out of 180. The power sector faces an ongoing supply crisis. Despite rapid economic growth, large oil, coal, and gas deposits, and being Africa’s largest oil producer, residents frequently experience power shortages.

Two-thirds of Nigerians expect living conditions to improve in coming decades. According to the National Bureau of Statistics, GDP grew by 3.19% in Q2 2024. The non-oil sector drove this growth, expanding 4.13%, while the oil sector contracted by 3.83%.

Before 1800, the 14 Hausa states in northern Nigeria were civilizational leaders, with a body of Hausa literature including historical works like the Kano Chronicle and anthropological studies on the Yoruba. The Yoruba, through the Oyo Empire, formed a second power center, combining economic strength with military dominance. Slavery had long existed in parts of Nigeria but intensified from 1700 onward due to European demand for plantation labor in the Americas.

European trading posts existed only where the West African savannah reached the coast—tiny settlements that changed hands frequently due to illness among light-skinned inhabitants (Africa was considered the “white man’s grave”). Along longer stretches of mosquito-infested lagoons, European ships anchored offshore while local traders approached in small boats to sell goods including ivory, gold, and slaves. These coastal regions were named the Ivory Coast, Gold Coast (Ghana), and Slave Coast (Nigeria). According to historian Toyin Falola, European demand after 1700 transformed southern Nigeria’s mixed economy into a slave economy. Other buyers included Fulani rulers in northern Nigeria, who by 1805 had subjugated the 14 Hausa states and established an Islamic theocracy, leading to civilizational, technological, and economic decline in the north.

Due to Napoleon’s Continental Blockade, the transatlantic slave trade shifted to Portuguese, Cuban, and Brazilian ships. By 1800, England, Denmark, and Scotland had abolished slavery; in 1807, Great Britain passed the Slave Trade Act and began hunting slave ships, allocating a large portion of the Royal Navy’s budget to this effort. Freed slaves were disembarked, and crews tried in Freetown, Sierra Leone. The Royal Navy pressured local rulers to stop the trade but met resistance, as many kings (such as those of Benin or King Pebble of Bonny; in Lagos, the king’s sister Efunroye Tinubu controlled the trade) financed themselves by selling subjects into slavery. Local nobility had little interest in Britain’s sudden shift from slave traders to opponents. Meanwhile, British and German missionaries established outposts in Badagry, Abeokuta, and Calabar, building churches, hospitals, and mission schools, as well as trading houses to finance them (the firm that later became Nigeria’s largest cocoa trader was named accordingly).