Nigeria Economic Outlook
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 subregional 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.
http://www.afdb.org/en/countries/west-africa/nigeria/nigeria-economic-outlook/
Oil economy
The economy of Nigeria historically was based on agriculture, and about 70% of the workforce is still engaged in farming (largely of a subsistence type). The chief crops are cocoa, peanuts, palm oil, corn, rice, sorghum, millet, soybeans, cassava, yams, and rubber. In addition, cattle, sheep, goats, and pigs are raised.
Petroleum is the leading mineral produced in Nigeria and provides about 95% of foreign exchange earnings and the majority of government revenues.
Economic diversification and strong growth have not translated into a significant decline in poverty levels – over 62% of Nigeria’s 170 million people live in extreme poverty.
All of the oil money is kept at the top of the system (top 1%). Around 70% of the people living in Niger River Delta are living off of less than $1 per day and 43% do not have access to clean water, yet this is the top oil export location in the country (produce 2.9 million barrels per day).
Since 1960, between $300 and 400 billion have been stolen by corrupt government officials.
http://www.infoplease.com/encyclopedia/world/nigeria-economy.htm
Read more: Nigeria: Economy http://www.infoplease.com/encyclopedia/world/nigeria-economy.html#ixzz3YAteSusR
How Boko Haram Activities Destroy Economy of the North
According to the Borno State Commissioner of Information, Mr. Inuwa Bwala, it will take the state 20 years to recover from the current predicament it has found itself.
Kano, which is reputed to be the hub of business and commercial activities in the entire 19 Northern states and beyond, is gradually losing steam. About 80 per cent of the industries are said to closed shops, due to power failure and the daunting security challenges.
http://www.thisdaylive.com/articles/how-boko-haram-activities-destroy-economy-of-the-north/122763/
Boko Haram And Nigeria’s Economy: Why The Poorest Suffer Most
“Nigeria’s north is definitely poorer than the south and the conflict is having a negative impact,” Amadou Sy, Africa economist at the Brookings Institute
Security issues in the North have effected farm production, which has led to an increase in food prices. Food prices rose 9.8 percent in June, and inflation hit 8.2 percent, the highest its been in 10 months. “The effects of conflict on the agricultural sector are largely due to the risk of being attacked by insurgents,” according to a Brookings report.
However, the impact is still most felt in these northern states, which have always been far from Nigeria’s positive development story. Indeed, though the number of Nigerians living in poverty has increased 55 percent in the past decade, the number of Nigerian millionaires topped 15,700 last year, up 44 percent since 2007. The country has been one of the largest recipients of foreign direct investment in the region, with inward flows jumping 28 percent to hit $21 billion last year.
On a macro level, Nigeria shows no signs of slowing down, even as the violence increases.
The stock markets remained relatively stable, and even the currency showed no real volatility, besides a drop in February when the former central bank governor Lamido Sanusi was suspended.
“The impact on the economy has actually remained muted given that the violence did not spread to Lagos or the oil-rich Niger Delta,”
http://www.ibtimes.com/boko-haram-nigerias-economy-why-poorest-suffer-most-1645190
Ceasefire?
On 28 January self-professed Boko Haram commander Mohammed Abudlazeez Ibn Idriss announced the group would cease attacks because of the difficult humanitarian situation the violence had caused.
He called on the Nigerian government to release all detained sect members to give room for dialogue and lasting peace. Some Kano residents welcomed the announcement, while others say they do not trust it.
The Nigerian military said it needed a one month’s peace guarantee before it takes the ceasefire seriously.
In Kano, taxi drivers are losing $9 million a day. $15 billion a year used to flow through and there used to be 2 million traders in town daily. Now 100 factories have left town and those remaining only operate at 30% capacity
http://www.irinnews.org/report/97462/boko-haram-attacks-cripple-northern-nigeria-s-economy
Funding for Boko Haram
St-Pierre says foreign militant groups, like al-Qaida in the Islamic Maghreb, may be partially funding Boko Haram, but their income likely comes from a much wider variety of sources.
“It is a very well-funded organization where it has so many sources of income including in Nigeria and that whole region,” he said. “It does get money from the piracy, especially from the west coast of Africa. Drug trafficking helps, smuggling.”
Boko Haram’s expenses, he adds, are considerably smaller than for a regular army. Mostly, St-Pierre says, the militants need money for weapons, which are increasingly available and cheap as unrest in other parts of Africa and the Middle East have created what he calls an arms trafficking “highway.”
Bank robberies and stealing from the Nigerian military are other ways Boko Haram has paid its bills
She says this suggests that as the insurgency drags on, destroying the economy in northeastern Nigeria and scaring away residents, Boko Haram’s funding may also suffer.
“If it’s funding itself and feeding itself by theft from the surrounding areas, then actually when there’s nothing left to take, that’s a serious question for the group,” she said. “It would have to throw its net wider.”
Between 2011 and 2013, $10.9 million in oil money has been stolen.
http://www.voanews.com/content/analysts-nigerias-boko-haram-funding-vast-varied/1875921.html
A Few Traceable Transactions
- Osama bin Laden sent an aide to Nigeria with $3 million in local currency to dispense among groups that shared al-Qaeda’s mission to impose Islamic rule. One of the “major beneficiaries,” reported the International Crisis Group, was Boko Haram.
- Boko Haram, for example, was paid $3 million when it freed a French family last year. Then this week, it released an Italian priest and a Canadian nun “as part of a prisoner exchange with a fee being paid,” an anonymous source told Agence France-Presse.
- According to Terrorism Research & Analysis Consortium, bank robberies also account for $6 million of the group’s wealth.
http://www.washingtonpost.com/news/morning-mix/wp/2014/06/06/this-is-how-boko-haram-funds-its-evil/