Nigeria Case Study

Nigeria is a former colony of the UK that can be found in West Africa.  It is growing rapidly as a country both economically and in terms of population.

Many people around the globe think that Nigeria could be Africa’s global superpower if it can overcome the many problems that limit its development. 

It already has the continent’s biggest economy, a huge military budget and is active in the West African and African continent.

Nigeria will be the fourth most populous country in the world after India, China and the United States with population projected to grow from 170 million to 320 million by 2040.

Nigeria is rich in oil, and this makes 75 per cent of government money, but income from services and production industries is increasing.

Nigeria has many political and economic links around the world and has moved on from its days as a Commonwealth country occupied by the UK (it gained independence in 1960).  Its main trading partners include the European Union (EU), the United States, India, Brazil, and China.

Nigeria has also stepped up its involvement in international affairs. The country ranks as the fifth largest contributor to UN peacekeeping missions (United Nations 2014) and had a non-permanent seat on the UN Security Council for 2014-15.

The economy of Nigeria is changing, and it is shifting from mainly PRIMARY based economy reliant on farming and extraction industries such as oil and gas, to one which is making more money or GDP from manufacturing or secondary industries and more services in the tertiary sector.

According to the World Bank, Nigeria would no longer be classified as a Low Income Country (LIC) with a GNI of less than $1,045; it is a Middle Income Country that is also a Newly Emerging Economy (NEE) with a GNI of $5,360. The economy of Nigeria grew at a massive 7% per year every year for over a decade (2004-2014).

Despite being Africa’s largest economy, Nigeria is not a rich country.  Estimates show that approximately 60 million people live below the national poverty line, and a further 60 million people live not far above it.

Nigeria now has 15% of the world’s children out of school and 10% of the world’s child and maternal deaths. Many girls and women are excluded from opportunities: only about 57% of girls in northern Nigeria attend primary school, and less than 1 in 4 go on to secondary school.

It has a large domestic market. It's geographical position in West Africa is beneficial. It has a large population and therefore a lot of human resources and it has plentiful natural resources such as crude oil.

On the other hand the country has poor infrastructure such as roads and limited access to financial services for small/medium businesses and poor people. Lack of electricity and job creation being limited by import and export taxes or barriers.

A reliance on agriculture with a low productivity is the main livelihood for poor people. Another factor is poor governance and ongoing instability - problems with corrupt politicians and recent terrorist attacks by Boko Haram in the north of the country.

Disputes over land and water and access to (government) resources have also created grievances and violence. The Niger Delta continues to be fragile, but there has been no significant return to violence since an amnesty was implemented in 2010. Also, Nigeria has only been democratic since 1999.

Manufacturing industry is important for many LICs and NEEs because the price they receive for primary goods is often low and varies a lot on the world market. Secondary goods command a higher price so the country can raise its GDP.

If an industry such as the Oil industry in Nigeria’s Niger Delta invests in manufacturing plants (such as an oil refinery like the Warri Oil refinery in Nigeria), there can be many knock on beneficial effects.

Manufacturing attracts jobs DIRECTLY within factory as locals take new jobs. These locals then spend their money in the local economy and pay taxes. This leads to knock on INDIRECT secondary positives. The industries that service the factory can make money, like a cleaning or catering company, or a component company.  

This boosts the economy further, allowing more money to be put into services, immigration to occur and innovation which could lead to other new industries.

There are often many TNCs involved in this process. Locals have also profited but in an illegal manner, stealing oil from pipelines and refining or manufacturing it themselves, causing toxic pollution of the environment.