Nigeria is the largest country in Africa and accounts for 47% of West Africa’s population stretching a land are of 910,770 (sq. km). It richly endowed human and natural resources, making it the African destination of choice for serious investors to take advantage of a potentially large market. The government’s “Vision 20:2020” Plan seeks to position Nigeria as one of the top 20 economies in the world by the year 2020. Will Nigeria live up to its goal?
This essay seeks to address the question by examining its: i) economic indicators, ii) comparative advantage, iii) trade patterns in relation to gravity model of trade, iv) attractiveness for international firms and finally conclude by raising future economic problems.
The total population in Nigeria was last recorded at 168.8 million people in 2012 from 73.7 million in 1980. Population doubled in the last 30 years . (World Bank 2013) Over the last 20 years, it has a consistent average of 2.7% annual growth rate . The population of Nigeria represents 2.35 percent of the world´s total population which arguably means that one person in every 43 people on the planet is a resident of Nigeria. Its labor force constitute 1/3 of its population as close to half of its population are aged below 14 years and less than 5% aged 60 and above due to poverty or diseases. (UN 2013) However with its large population, it faces huge unemployment rate of 23.9% in 2011, up from 21.1% in 2010. Its average rate was 14.6 %. (Appendix 1) Unemployment in the 15-24 age group amounted to 37%, as for 25-44 years was 22.4%.
Gross Domestic Product (GDP)
Nigeria’s economy is worth 242.9billion US dollar, and is experiencing a period of overall growth. (Appendix 2) The non-oil sector continued to be a major driver of the economy, particularly agriculture, constructions, hotel and restaurants. Agriculture is the largest sector of the economy, accounting for 35.2% to its GDP. From 2005 till 2012, Nigeria GDP growth rate averaged 6.8% , reaching an all-time high in 2011 at 8% and lowest in 2005 at 5.4%. Despite Nigeria low GDP per capita compared to their peers in the MINT economy, there is a steady increase reaching up to 1052.33 US dollar by the end of 2012.
Inflation rate for the first time in three years dropped to a single digit, settling at 9.4 percent in July 2011 and reflecting the positive impact of tightening measures adopted by the Central Bank of Nigeria (CBN) since beginning of the year. (Appendix 4)However, it hit an all-time high of 15.6% in the first quarter of 2010. Overall, there is a general downward trend in Nigeria’s inflation rate despite the economic challenges that the country witnessed. As a result, the average inflation rate for the year 2012 stood at 12.2%. The major source of inflationary pressure appears to be structural and infrastructural constraints.
Nigeria currently bans importation of 24 groups of items. These include a...