Nigeria: A Newly-Emerging Economy

Location:

• West Africa.
• Borders Benin, Niger, Chad and Cameroon.
• Its coast in the south lies on the Gulf of Guinea in the Atlantic Ocean.
• Capital city: Abuja - located in central Nigeria.

Key features:

• River Niger.
• Lake Chad.
• River Benue.
• Chappal Waddl.
• Jos Plateau.
• Mambilla Plateau. 
• North of Nigeria is semi-desert and savanna.

Nigeria has global importance because:

• It is experiencing a period of rapid economic development.
• In 2014, Nigeria became the world's 21st largest economy, it is predicted to continue rising anad be in the top 20 by 2050.
• Nigeria is the 12th largest producer of oil in the world, supplying 2.7%. 
• Diverse economy which has financial services, telecommunications and the media.
• Lagos is a global economic hub.
• Nigeria is the 5th largest contributor to UN peacekeeping missions around the world.

Northern Nigeria

• Far north east - semi-desert. 
• Further south - savanna: mainly used for grazing cattle and crops such as cotton, millet and groundnuts and grown.

Jos Platea:

• Central Nigeria.
• Upland region.
• Centred on city of Jos and is wetter and cooler than surrounding savanna.
• Densely populated farmland with some woodland.

Southern Nigeria:

• High temperatures and high annual rainfall.
• Majority is forest, with crops such as cocoa, oil palm and rubber.

• 30% of Nigeria's total trade is with the EU.
• Top importer is China - produces mass goods for cheap labour.
• Only two African countries among top trading partners. 

Why does Nigeria have an important role to play regionally and internationally?

• Exports across Africa but also with other countries and has trade links globally.
• Produces oil which is very valuable and is needed across the world.

Nigeria's importance in Africa

• Nigeria has one of the fastest-growing economies in Africa. 
• In 2014, it had the highest GDP in the continent and the third largest manufacturing sector.
• Nigeria has the largest population of any African country. 
• Nigeria has low levels of productivity and widespread issues over land ownership.
• Has the highest farm output in Africa. 
• 70% of population employed in agriculture. 
• Nigeria has the largest number of cattle in Africa. 
• Nigeria could lead the way in Africa's future development. 

• Nigeria is a major global trading nation.
• Main exports: crude and refined petroleum, natural gas, rubber, cocoa and cotton.
• Main imports: refined petroleum from the EU and the USA, cars from Brazil and the USA, telephones, rice and wheat.

Primary  - raw materials. E.g, timber, oil, food, metal, fishing, farming.

Secondary - producers.

Tertiary - services.

Quaternary - research and development.

1975 - Majority of GDP was primary sector : oil, cocoa and cotton.

2014 - Sectors started to even out, majority percentage share of GDP was tertiary sector.

• Could be because large companies have been spread to Nigeria because of cheap labour. 
• Employment in agriculture has decreased due to increase in the use of machinary, better pay and conditions. 
• Tertiary sector: growth in communcations, retail and finance - led to an increased share in GDP. 

Exam Q: With reference to one LIC, how can the manufacturing industry stimulate economic development? (6 marks)

The manufacturing industry can stimulate economic development by creating jobs for large amounts of people. This is evident in Nigeria where the car manufacturing sector has created thousands of well paid jobs.The increased number of jobs stimulates economic development positively by resulting in an increased number of people and manufacturing companies paying taxes.

Cultural context 

• Nigerian music is enjoyed across the continent and beyond.
• Nigeria is a multi-ethnic, multifaith country.
• 'Nollywood' is the second largest film industry in the world.
• Nigeria is home to many famous writers.

Social context

• Social diversity is Nigeria's biggest strengths but has also been the souce of multiple conflicts.
• Christianity, Islam and traditional African religions are widely practiced. 
• Nigeria have won the African cup on nations 3 times and have produced some great players.

Political context:

• Wars and lack of political stability affected Nigeria's development.
• Nigeria became fully independent from the UK in 1960.
• China is making major investments in construction in the capital, Abuja. 
• South Africa is investing in businesses and banking. 
• American companies such as General Electric are investing in new power plants. 
• American corporations such as Wal-Mart and Microsoft are operating in Nigeria. 
• Islamic group Boko Haram have caused terror and have scared away multiple investors, causing a rise in unemployment. 
• Economic inequality between north and south has created new religious and ethnic tensions.

Environmental context:

• Decreasing rainfall towards the north in West Africa. 
• To the north is the Sahel and Sahara Desert. 
• Southern Nigeria is host to high temperatures and high annual rainfall. 
• Much of the southern  area of Nigeria is covered by forests.
• In the south, the Tsetse fly spread a lethal parasite that prevents farmers keeping livestock.

1. African Union : economic planning and peacekeeping group. Nigeria is in alliance with Niger, Chad, Benin and Cameroon to provide troops.

2. ECOWAS (Economic Community of West African States): trading group made up of the countries of West Africa with headquarters in Abuja.

3. CEN-SAD (Community of Sahel-Subharan States) : similar aims to ECOWAS, also seeks to develop sporting links.

4. OPEC (Organisation of Petroleum Exporting Countries) : aims to stabilise the price of oil and to ensure a regular supply.

5. United Nations : in 2013, Nigeria contributed the 5th largest number of troops to the UN peacekeeping force. In 2014-15 it was a temporary member of the UN Security Council.

Factors for Nigeria's economy development:

• Rapid advances in technology.
• Greater concern for the environment.
• Many people speak English, giving potential for growth in telecommunications.
• Increased use of telecommunications - Nigeria is able to benefit from global finance and trade.
• Information technology is beginning to drive the economy rather than oil.
• Investment in science and technology training - Nigeria's huge populaton is seen as a potential asset for the country. 

Growth of manufacturing in Nigeria has increased in recent years and has caused economic development:

• Regular paid work - given Nigerian people a secure income and provides a larger home market for products such as cars and electrical appliances. 
• Manufacturing industries have stimulated growth through close links with eachother - e.g, companies supplying parts for production of cars. 
• Revenue from tax has increased due to growing industries - employed more people. 
• Foreign investors attracted to Nigeria's industrial sector - helps further economic growth. 
• Production of oil has created chemical by-products - growth of chemical industries/ 

• Life expectancy has increased in Nigeria from 45 in 1980 to 53 in 2015. 

HDI - Human Development Index

Measures: life expectancy, literacy rates and income per person. 

• HDI has increased in Nigeria from 0.25 in 1980 to 0.51 in 2015. 

TNC - Trans National Corporation. 

• They tend tend to have a major headquarters in richer nations where Research + Development, planning and media take place. 
• E.g, KFC in Nigeria.

Advantages:

• TNC's often have charities to help people in the country they work in -e.g, Shell.
• TNC's allow the import of new technologies into a country, improving it.
• TNC's can help countries develop by investing money, encouraging developing. 
• TNC's pay tax which can be used by the governments of countries to help their people. 
• Oil refineries like those in Nigeria use lots of local companies to help them run - creates multiplier effect. 
• TNC's can try to develop new sustainable products.
• Many TNC's try to clean up after they accidentally damage the environment. 
• TNC's create jobs. 

Disadvantages of TNC's:

• The jobs in LEDC's are not secure - workers could lose their jobs without warning if company decided to set up somewhere cheaper.
• TNC's have been accused of human rights abuses in the past.
• Employees in LIC's are working for long hours in poor conditions.
• Some TNC's have been known to use child labour in their factories.
• TNC's activities have polluted the environment in the past.
• Employees in LEDC's might be paid less than employees in MEDC's for doing higher intensity jobs. 
• Profits from the production go straight to the headquarters in the HIC - they aren't invested in the LIC. 
• Oil theft and sabotage are a huge problem . 

• A new manufacturer, such as Shell, start refining Oil in Nigeria.
• Local firms provide Shell's refinery with components or products.
• Local people earn more money from working in Shell or the local firms.
• Local people then spend more in local businesses. 
• Taxes to the government from businesses and people go up. 
• Government spends the money improving the infrastructure and attractions to bring in more manufacturing industries. 

• Shell is one of the world's largest oil companies.
• Shell has invested huge amounts of money and expertise into extracting oil in the Niger Delta.

Benefits:

• Making major contributions in taxes and export revenue.
• Providing direct employment for 65 000 Nigerian workers and a further 250 000 jobs in related industries.
• Giving 91% of Shell contracts to Nigerian companies.

Problems

• Oil spills have caused water pollution and soil degradation, reducing agricultural production and fishing yields.
• Frequent oil flares send toxic fumes into the air.
• Militant groups disrupt oil supply in the delta.
• Oil theft and sabotage are big problems in the region, reducing production levels and costing TNCs and the government billions of dollars every day.

Why does Nigeria need aid to help its development?

• Almost 100 million people live on less than a US $1 per day - 60 million people live below the poverty line.
• Birth rates and infant mortality rates are high and life expectancy is low.
• Many girls and women are excluded from opportunities.
• Lack of financial services --> limits people's ability to start businesses.
• Terrorism.

How does aid benefit Nigeria?

• In 2014, the World Bank approved to fund development projects and provide long-term loans to businesses - helps reduce over-dependence on oil exports.
• Aid from the USA helps to educate and protect people against the spread of AIDS/HIV.
• The USAID- funded Community Care in Nigeria project provides support packages for orphans and vunerable children.
• The NGO Nets for Life provides education on Malaria prevention and distributes anti-mosquito nets to many households.
• The UK Department for International Development has funded a health and HIV programme, providing health education in rural areas.

Industrial growth

• Harmful pollutants go directly into open drains and water channels, harming people and damages ecosystems downstream.
• Disposal of chemical waste by some industries threatening ground water quality.
• Industrial chimneys emit poisonous gases, causing respiratory problems.
• 70-80% of Nigerian forest have been destroyed.
• Desertification.

Urban growth

• Squatter settlements common in most cities.
• Services have failed to keep pace with the rate of economic growth.
• Waste disposal is a major issue.
• Traffic congestion - high levels of exhuast emissions.

Commerical farming and deforestation

• Led to degradation.
• Water pollution - chemicals.
• Soil erosion.
• Building of settlements and roads - destroyed habitats and added CO2 emissions.
• Many species have disappeared due to deforestation - 500 types of plant.

Mining and oil extraction

• Tin mining lead to soil erosion.
• Local water supplies polluted with toxic chemicals.
• Oil spills in Niger Delta - impacts on fresh water/marine ecosystems, oil spills can cause fires: sending CO2 into the atmosphere and acid rain.
• Caused violent conflicts with local people.

• Gold has been found in the jungle in the Atakumosa region of Osun state in south-west Nigeria.
• Nigerian government poorly regulates the industry - many illegal gold mines deep in the jungle where conditions are difficult and dangerous.
• Miners use crude implements, including daggers and shovels, to cut deep into the ground to find gold.
• Landscape left with scars.
• Wheels of trucks and vans cut deep ruts, often ruining the roads.
• Water contaminated with heavy metals, poisoning water sources and fish.

• In 2008-2009, there were two large oil spills in the Niger Delta. 
• It devastated the livelihoods of thousands of farmers and fishermen living in the swamps around the town of Bodo in the Niger Delta. 
• Leaks in a major pipeline --> 11 million gallons of crude oil to spill over a large area of creeks and swamps.
• In 2015, Shell agreed to pay £55 million compensation to individuals and to the community of Bodo. 
• Money used to build health clinics and improve schools.
• The largest compensation paid by an oil company to a local community affected by environmental damage. 
• Shell has agreed to clean up the swamps and fishing grounds. 

Quality of life improvements since Nigeria's economy developed:

• Reliable, better-paid jobs in manufacturing industries or services.
• Higher disposable income to spend on schooling, home improvements, food, clothes and recreation.
• Better access to safe water and sanitation. 
• Improvements to infrastructure such as roads.
• Improved access to a better diet means higher productivity at work and in school.
• Reliable electricity supplies providing lighting and heating - easier to go out at night, and for children to do homework.
• Better-quality health care, with more doctors and better-equipped hospitals. 

• Quality of life is commonly measured by the United Nation's HDI (Human Development Index). 
• Nigeria's HDI has been increasing steadily since 2005, this trend is expected to continue. 
• In 2000, Nigeria was placed among the 'least developed nations' in terms of wealth and education. 
• In 2011, Nigeria had one of the highest average HDI improvements in the world over the past decade. 
• Economic development since 1990 has improved the quality of people's lives. 

Has everyone benefitted?

• Many people in Nigeria are still poor. 
• There is still limited access to services such as safe water, sanitation and reliable electricity. 
• Oil wealth has not been used effectively, and the gap between rich and poor has become wider. 
• Corruption has been a major factor and the oil wealth was not used to diversify the economy. 
• Price of oil has fallen and technology is leading to developments in shale oil elsewhere. 
• Nigeria's overdependence on oil could become a problem in the future. 

60% of Nigeria's population live in poverty. 

Challenges to improve quality of life:

• Political - the need for a continuing stable government to encourage inward investment.
• Environmental 

- The pollution of the Niger Delta by oil spills has devastated the lives of the local Ogeni people. 

- Pests restrict commercial livestock farming. 

- Parts of the far north are under threat from desertification. 

• Social 

- Historical distrust between several tribal groups. 

- Religious divide between the predominantly Christian south and the Muslim north.

- Kidnappings by terrorist group Boko Haram, spreading fear among Nigerians and potential investors. 

• Until 1960, Nigeria was part of the British Empire. 
• Its political links were with the UK and other members of the Empire. 
• Since becoming in independent in 1960, Nigeria has become a member of the British Commonwealth. 
• Nigeria has equal status with all countries including the UK.
• Nigeria still recognises the Queen as the Head of the Commonwealth. 
• In recent decades, it has becoming a leading member of African political and economic groups aswell as international organisations such as the United Nations. 

Nigeria's source of income:

• Traditionally, primary products has been Nigeria's main source of income.

Agricultural products: cocoa, timber, oil palm, groundnuts, cotton --> main exports.

• Discovery of oil in the Niger Delta in the 1950s led to a big change in Nigeria's economy. 
• Today oil accounts for about 14% of the country's GDP and 98% of its export earnings. 
• Nigeria has the 10th highest level of oil reserves. 
• It has around 50 years supply left. 

Nigeria's economy:

• Since 1999, there have been major changes in the country's industrial structure, 
• Employment in agriculture (primary sector) has fallen, due to increasing use of farm machinery and better pay and conditions in other sectors of the economy. 
• Industrialisation and economic growth (secondary sector) under a stable government has increased employment in oil production, manufacturing and industries such as construction, motor manufacturing, sugar refining, paper and pharmaceuticals. 
• The growth of communications, retail and finance in the service (tertiary) sector. 

These changes mean Nigeria now has a more balanced economy, with a more even balance between sectors

Aid - assisting people. 

• The providers of aid can be individuals, charities, non-governmental organisations, governments and international organisations (EU/UN.)

Types of aid:

• Emergency aid - usually follows a natural disaster, war or conflict. Aid may take the form of food, water, medical supplies and shelter.
• Developmental aid - long-term support given by charities, governments and multi-lateral organisations. It aims to improve quality of life by providing safe water, education or improvements to infrastructure such as roads and electricity supplies. 

Impacts of aid:

• Brought many benefits to people in poverty. 
• Most successful aid is projects that are community-based, supported by small charities and NGOs. 
• Often delivered directly to where help is needed. 
• Aid is all used for project and no money is wasted. 

What prevents aid being used effectively?

Official aid to Nigeria delivered through the government has been less successful than aid delivered directly to communities.

Reasons why:

• Corruption in government, and by individuals is a major factor in loss of aid.
• Government may divert money to be used for other purposes. 
• Donors may have political influence over what happens to aid.
• Money may be used to promote the commercial self-interest of the donor. 

Negative side to aid:
- By receiving aid, a country may become more dependent. This could slow down its economic development.